IMChap002
Chapter 2
FINANCIAL STATEMENTS, TAXES, AND CASH FLOW
CHAPTER WEBSITES
Websites may be referenced more than once in a chapter. This table just includes the section for the first reference.
Chapter Section
Web Address
2.1
finance.yahoo.com
money.cnn.com
www.disney.com
www.sec.gov
www.fasb.org
2.3
www.irs.gov
What’s On the Web? www.alcoa.com www.coca-cola.com
www.dukeenergy.com
www.coopertires.com
Lecture Notes:
Chapters 2 and 3 are primarily accounting review. This chapter covers the balance sheet and income statement, which should be very familiar to students. The approach to calculating cash flow from assets may be a new concept as they have probably been introduced to the standard accounting statement of cash flows.
ANNOTATED CHAPTER OUTLINE
Slide 2.2 Key Concepts and Skills
Slide 2.3 Chapter Outline
Slide 2.4 The Balance Sheet
Current Assets are listed first on the right-hand side because they are the most liquid. Fixed assets can include both tangible and intangible assets and generally are not very liquid.
Liabilities and equity (or ownership) components of the firm are listed on the right-hand side and indicate how the assets are paid for.
The Balance Sheet Identity: Assets = Liabilities + Shareholders’ equity
Slide 2.5 The Balance Sheet - Figure 2.1
All finance decisions are either investment decisions or financing decisions.
Investment decisions involve the purchase and sale of any assets (not just financial assets) and show up on the left-hand side of the balance sheet.
Financing decisions involve the choice of whether to borrow money to buy the assets or to issue new ownership shares and show up on the right-hand side of the balance sheet.
Shareholders’ equity consists of the common stock account, paid in surplus, retained earnings and treasury stock.
The firm’s net income belongs to the owners. It can either be paid out in dividends or reinvested in the firm. When it is reinvested in the firm, it becomes additional
FINANCIAL STATEMENTS, TAXES, AND CASH FLOW
CHAPTER WEBSITES
Websites may be referenced more than once in a chapter. This table just includes the section for the first reference.
Chapter Section
Web Address
2.1
finance.yahoo.com
money.cnn.com
www.disney.com
www.sec.gov
www.fasb.org
2.3
www.irs.gov
What’s On the Web? www.alcoa.com www.coca-cola.com
www.dukeenergy.com
www.coopertires.com
Lecture Notes:
Chapters 2 and 3 are primarily accounting review. This chapter covers the balance sheet and income statement, which should be very familiar to students. The approach to calculating cash flow from assets may be a new concept as they have probably been introduced to the standard accounting statement of cash flows.
ANNOTATED CHAPTER OUTLINE
Slide 2.2 Key Concepts and Skills
Slide 2.3 Chapter Outline
Slide 2.4 The Balance Sheet
Current Assets are listed first on the right-hand side because they are the most liquid. Fixed assets can include both tangible and intangible assets and generally are not very liquid.
Liabilities and equity (or ownership) components of the firm are listed on the right-hand side and indicate how the assets are paid for.
The Balance Sheet Identity: Assets = Liabilities + Shareholders’ equity
Slide 2.5 The Balance Sheet - Figure 2.1
All finance decisions are either investment decisions or financing decisions.
Investment decisions involve the purchase and sale of any assets (not just financial assets) and show up on the left-hand side of the balance sheet.
Financing decisions involve the choice of whether to borrow money to buy the assets or to issue new ownership shares and show up on the right-hand side of the balance sheet.
Shareholders’ equity consists of the common stock account, paid in surplus, retained earnings and treasury stock.
The firm’s net income belongs to the owners. It can either be paid out in dividends or reinvested in the firm. When it is reinvested in the firm, it becomes additional