Employees need these reports in making collectivebargaining agreements (CBA) with the management, in thecase of labor unions or for individuals in discussing theircompensation,promotion and rankingsProspectiveinvestors make use offinancial statements toassess the viability of investing in a business. Financialanalyses are often used by investors and are prepared byprofessionals (financial analysts),thus providing them withthe basis formaking investment decisionsFinancialinstitutions (banks and other lending companiesuse them to decide whether to grant a company with freshworking capital or extend debt securities (such as a longterm bankloanordebentures)tofinance expansion andother significant expenditures.6
6 ➢ Employees need these reports in making collective bargaining agreements (CBA) with the management, in the case of labor unions or for individuals in discussing their compensation, promotion and rankings. ➢ Prospective investors make use of financial statements to assess the viability of investing in a business. Financial analyses are often used by investors and are prepared by professionals (financial analysts), thus providing them with the basis for making investment decisions. ➢ Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a longterm bank loan or debentures) to finance expansion and other significant expenditures
Government entities (taxauthorities)needfinanciastatements to ascertainthe propriety and accuracy oftaxes and other duties declared and paid by a companyVendors who extend credit to a business requirefinancial statementsto assess the creditworthiness ofthebusinessMedia and the general public are also interested infinancial statementsfor a variety of reasons
7 ➢ Government entities (tax authorities) need financial statements to ascertain the propriety and accuracy of taxes and other duties declared and paid by a company. ➢ Vendors who extend credit to a business require financial statements to assess the creditworthiness of the business. ➢ Media and the general public are also interested in financial statements for a variety of reasons
Case%光明乳业Diversified productsBright Dairysuch as powergeneration,MilkRAjetengines,medicalCtechnologiesandservicesFruitJuice&Sugar8
8 Case Fruit Juice & Sugar Diversified products, such as power generation, jet engines, medical technologies and services Milk
I.Balance SheetBalance sheetDecember31.2009AssetsCash$21,0004,500Accountsreceivable$40,000Equipment5,500Less:AccumulatedDepreciation34,500$60,000TotalassetsLiabilities$4,000AccountsPayable2,000SalariesPayable1,700InterestPayable19,500NotesPayable1,500UnearnedRevenue$28.700Total liabilityOwners'EguityCapital$29,7001,600Retained Earnings31,300Total owner's equity$60.000Total liabilities and owner's equity9
9 Ⅰ.Balance Sheet Balance sheet December 31, 2009 Assets Cash $ 21,000 Accounts receivable 4,500 Equipment $40,000 Less: Accumulated Depreciation 5,500 34,500 Total assets $ 60,000 Liabilities Accounts Payable $ 4,000 Salaries Payable 2,000 Interest Payable 1,700 Notes Payable 19,500 Unearned Revenue 1,500 Total liability $ 28,700 Owners’ Equity Capital $29,700 Retained Earnings 1,600 Total owner’s equity 31,300 Total liabilities and owner’s equity $ 60,000
Thebalance sheetisthefundamentalandbackboneof the wholeaccountingancreportingsystem.Itprovidesa snapshotof thebusiness's financial position,suchas assets,liabilities and owner's equity ataspecifictime.Assets = Liabilities + Owner's equity10
10 Assets = Liabilities + Owner’s equity The balance sheet is the fundamental and backbone of the whole accounting and reporting system. It provides a snapshot of the business’s financial position, such as assets, liabilities and owner’s equity at a specific time