MGT120 Financial Accounting

MGT120
! ! ! ! ! ! Blackboard Tutorials start the week of January 13th Test Dates: Feb. 12th and March 26th Information about Tests My Accounting Lab How to Get the Most out of the Course

Accounting Information in Decision Making

A Business 1.! Owner provides the funds Creditors may also provide the funds 2. These funds are used by the managers of the company to buy: Equipment Inventory Other Assets

3. Managers develop plans and sets goals; eg. To make a profit Sell a high quality product at a low price As the business operates: Goods are sold (revenue) Expenses are incurred Profit is invested in inventory, equipment, etc.

Financial Accounting
Purpose ! to provide financial (accounting) information for decision making ! financial statements summarize accounting information

Financial Statements
Income Statement Revenue Expenses Balance Sheet Assets Liabilities Equity Cash Flow Operating Investing Financing

Question #1
Assets are found on which of the following statements? a.! Income statement b.! Balance sheet c.! Cash flow statement

Income Statement
Revenue sales of product Less: expenses costs of running a business (salaries, advertising, rent, utilities, etc) = Profit (also called net income) Shows how well a company has performed

Blackberry (formerly Research in Motion or RIM)

! makes Blackberry phones ! based in Waterloo, Ontario ! slashing jobs, changing management team ! trying to boost profits ! waiting for sales to improve

Blackberry Income Statement

(in millions)
Year end: Revenue Expenses Net income Mar.2 2013 $11,073 11,719 $ (646) Mar.3 2012 $18,423 17,259 $ 1,164 Feb.26 2011 $19,907 16,496 $ 3,411

Apple Inc.
! sells Mac computers, ipads, iphones, ipods, itunes ! revenue up 140% ! profits up 198%

Apple Inc.- Income Statement

(in millions) Year end: Sept.29 2012
Revenue $156,508 Expenses 114,775 Net income $41,733

Sept.24 2011
$108,249 82,327 $25,922

Sept.25 2010
$65,225 51,212 $14,013

Balance Sheet
Assets things owned Liabilities what is owed to creditors Equity what is owed to owners Shows the financial position of the company at a point in time

Blackberry Balance Sheet

(in millions) As at: Assets Liabilities Equity Mar.2 2013 $13,165 $ 3,705 $ 9,460 Mar.3 2012 $13,731 $ 3,631 $10,100

Apple Inc.- Balance Sheet

(in millions) As at: Assets Liabilities Equity Sept.29 2012 $176,064 $ 57,854 $118,210 Sept. 24 2011 $116,371 $ 39,756 $ 76,615

Cash Flow Statement

Operating Activities Investing Activities Financing Activities Shows where the cash came from and where it was spent

Blackberry Statement of Cash Flow

(in millions) Year end: Operating Activities Investing Activities Financing Activities Mar.2 2013 $2,303 (2,240) (36) Mar.3 2012 $2,912 (3,024) (149)

Apple Inc. Statement of Cash Flow

(in millions) Year end: Sept.29 2012 $50,856 (48,227) (1,698) Sept.24 2011 $37,529 (40,419) 1,444

Operating Activities Investing Activities Financing Activities

Question #2
For the fiscal period ending March 2, 2013 the overall net cash flow for Operating Activities for Blackberry: a.! Increased b.! Decreased c.! Stayed the same

Users of Accounting Information

! primary users are investors and creditors Investors should I buy the companys stock? Creditors should I loan the company money?

Question #3
Who are the primary users? a.! Owners and creditors b.! Creditors and bankers c.! Government and owners