企业财务管理的经典实用课件管理会计教案本量利分析.docx

1、企业财务管理的经典实用课件管理会计教案本量利分析企业财务管理经典实用课件：管理会计教案本量利分析Learning outcomesYou should be able to:Prepare an income statementDiscuss the nature and purpose of the income statement3.Explain the main accounting principles related to the income statement.Discuss the main measurement issues that must be considered

2、 when preparing an income statement.Lecture 2: Measuring and reporting financial performanceThe income statementThe purpose of the income statement (or profit and loss account) is to measure and report how much profit/loss the business has generated over a period.Profit (loss) for the period= total

3、revenue for the period less total expenses incurred in generating the revenue.RevenueRevenue is a measure of the inflow of economic benefits arising from the ordinary activities of a business.These benefits will result in an increase in current assets (cash or easily convertible to cash Trade Receiv

4、ables).The recognition of revenueIt is probable that the economic benefits will be received.The amount of revenue can be measured reliably.Basic criteria that must be met before revenue is recognised: An additional criterion to be applied where the revenue comes from the sale of goods:Ownership and

5、control of the item should pass to the buyer.ExpensesExpenses represent the outflow of economic benefits arising from the ordinary activities of a businessThese benefits will result in either a decrease in asset (cash) or an increase in liabilities Trade Payable.To summariseRevenues do not necessari

6、ly represent cash receipts.Also, not all the expenses are paid in cash.Therefore, profit is a measurement of achievement, rather than of cash generated.These are the concepts of Accruals Accounting.Balance sheet and income statements are prepared on the basis of accruals accounting.Cash flow stateme

7、nts follow cash basis of accounting.The matching conventionExpenses should be matched to the revenue they help to generate.For example: an income statement should include all expenses incurred in generating the reported revenue.This means that the expense reported may not be the same as the cash exp

8、ended on that expense in an accounting period.When the expense is more than the cash paid A firm pays 2% sales commission to staff.Total sales for year are ?300,000Commissions to be paid = 0.02 x 300,000 = ?6,000However, at year end, only ?5,000 has been paidRecognizing expenses:Accounting for sales

9、 commissionSales commission expense ?6,000Income statement (profit and loss account)Balance sheet at year endCash ?5,000AC Payable ?1,000Cash - ?,5000Cash flow statement When the amount paid during the year is more than the full expense of the periodA firm pays its rent quarterly in advance (1st Jan

10、; 1st April, 1st July and 1st Oct).On the last day of its accounting year (31st December), it pays the next quarters rent (?4,000) to the following 31 March, which was a day earlier than required.To summariseRent for 4 quarters = 4 X ? 4,000 = ?16,000.Cash payments = 5 X ? 4,000 = ? 20,000.When the

11、amount paid during the year is more than the full expense of the period: Accounting for rent payableRent payable expense ?16,000Income statementBalance sheet at year endCash ?20,000Prepaid expense ?4,000Cash - ?20,000Cash flow statementIncome statement layout 25,500Profit for the year (1,100)Loan in

12、terest 2,000Interest received from investments 24,600Operating profit (600)Depreciation motor van (1,000)Depreciation fixtures and fittings (3,400)Motor vehicle running expenses (1,000)Insurance (1,200)Telephone and postage(7,500)Heat and light(14,200)Rent and rates(24,500)Salaries and wages 78,000

13、Gross/Trading profit 154,000Cost of sales 232,000Sales revenue ?The calculation of depreciationTo calculate a depreciation charge for a period, four factors have to be considered:The useful life of the assetThe residual value of the assetThe cost of the assetThe depreciation method.What is Depreciat

14、ion?Depreciation is a non-cash expense that reduces the value of an asset over time. Assets depreciate for two reasons: Wear and tear. For example, an auto will decrease in value because of the mileage, wear on tires, and other factors related to the use of the vehicle. Obsolescence. Assets also dec

15、rease in value as they are replaced by newer models. Last year's car model is less valuable because there is a newer model in the marketplace.Calculation of depreciationThe cost of an assetIncludes all costs incurred by the business to bring the asset to its required location and to make it rea

16、dy for use.Includes cost of asset, delivery costs and installation costs.The useful life of the assetPhysical life and economic life.Economic life is affected by technological progress.Economic life may be much shorter than physical life.For charge of depreciation, economic life is considered.The re

17、sidual value of the assetDisposal value of the asset at the end of its economic life.Depreciation methodsThere are a number of depreciation methods.Once a depreciation method is adopted, it can not be changed without a valid reason (consistency and comparability).Methods:1. Straight line method (the

18、 same amount is deducted each year)2. Reducing balance method (a high annual depreciation charge in the early years of an asset's life but the annual depreciation charge reduces progressively as the asset ages).Depreciation methods Expense recognised depends on: Cost (C) Useful life (N) Scrap o

19、r residual value (S) Depreciation method: Straight-line methodDepreciation Charge = (C S) NReducing Balance methodDepreciation Charge = constant percentage on the decreasing balance, beginning with the original cost and reducing it to scrap value. Straight-line methodEquipmentPurchase ?75,000 (C)Lif

20、e 5 years (N)Scrap value ?5,000 (S)Depreciation Charge = (75,000 5,000)/5= ?14,000Reduce fixed asset, and increase expensesDepreciation as a period cost(70,000)(70,000)Total(5000)5,000Sale(14,000)(14,000)5,000Year 5(14,000)(14,000)19,000Year 4(14,000)(14,000)33,000Year 3(14,000)(14,000)47,000Year 2(

21、14,000)(14,000)61,000Year 175,000 (75,000)Jan 1Rev-ExpsEquipmentCashReducing balance methodApplies a fixed percentage of depreciation on the decreasing balance, beginning with the original cost and reducing it to scrap value.Higher annual depreciation charges in the initial years, and lower charges

22、in later yearsDepreciation = Reducing balance method Cost of machine ?40,000. Useful life 4 years. Estimated residual value at the end of 4 years ? 1,024 Depreciation % =60% every yearReducing balance methodSelection of deprecation methodThe most appropriate method is the one that best matches expen

23、se to economic benefits.For assets evenly consumed over time (e.g. buildings), straight-line method may be applicable.For assets that lose their efficiency over time (e.g. machinery), reducing balance method may be applicable.Tax implicationsCosting inventories Inventory (stock) comprises: raw mater

24、ials, work in progress and finished goods.ImportanceAffect pattern of profit.InformationCost of sales P&L.Unsold and unused stock Balance Sheet.Calculation of cost of salesCase (1): Prices are NOT changing:Cost of sales (COS) or cost of goods sold (COGS) in a period = opening stock + purchases c

25、losing stockExample: A firm has ?2,000 of stock at 1st January 2009; it buys ?14,000 of stock over the year and has ?3,000 of stock left at 31st Dec. COGS = 2,000 + 14,000 - 3,000 = ?13,000Last in, first out (LIFO)Weighted average cost (AVCO)First in, first out (FIFO)Common assumptions used are:Case

26、 (2): Inventory costing when prices are changing? Example Calculate cost of sales and closing stock given the information below: 1 Jan No stock 1 Feb Buy 1,000 15 = 150001 Mar Buy 500 18 = 90001 May Sell 500 30 = 150001 July Buy 1,000 20 200001 Nov Sell 400 35 = 14000 2,500 44000 900 = 29000FIFO Clo

27、sing stock =100?15 + 500?18 + 1000?20 = ?30,50013,50044,000160030,5006,000(400) ?151 Nov36,50020,0001000?201 July16,5007,500(500) ?151 May24,0009,000500 ?181 Mar15,00015,0001000?151FebBalanceStock A/CCost ofSalesPurchaseCostLIFOClosing stock = 1000?15+600?20= ?27,00017,00044,000160027,0008,000(400)?

28、201 Nov35,00020,0001000?201 July15,0009,000(500)?181 May24,0009,000500 ?181 Mar15,00015,0001000?151FebBalanceStock A/CCost ofSalesPurchaseCostAVCOClosing stock = 1,600?18 = ?28,80015,20044,000160028,8007,200(400)?181 Nov36,00020,0001000?201 July16,0008,000(500)?161 May24,0009,000500 ?181 Mar15,00015

29、,0001000?151FebBalanceStock A/CCost ofSalesPurchaseCostAVCO: NotesOn 1st MarchCost of stock = 24,000Stock units = 1,000 + 500 = 1,500AVCO = 24,000 / 1,500 = ?16On 1st JulyCost of stock = 36,000Stock units = 1,000 + 500 500 + 1000 = 2,000AVCO = 36,000 / 2,000 = ?18Summary28,80027,00030,500Closing stock13,80012,00015,500Profit15,20017,00013,500Cost of sales29,00029,00029,000SalesAVCOLIFOFIFO