Assignment4_JuanHerrera.pptx reporting to management

reporting to management

1. Reporting to management Business accounting Juan Herrera

2. What is the purpose of a balance sheet?

3. Accounts found in a balance sheet

4. Reason for the Amounts in Balance Sheet Cash: $49,280 (Cash Inflow – Cash outflow) Supplies Inventory: $1,333 (Inventory Inflow – Inventory Outflow) Vehicles: $13,953 (Asset value – Depreciation) Deposit at Vendor - $500 (Vendor Down payment) Assets

5. Reason for the Amounts in Balance Sheet Loan Payable - $40,000 (Loan taken) Interest Payable - $233 ( Interest for loan) Liabilities Equity Common Stock - $20,000 (Tradeable Assets/Security) Retained Earnings - $4,833 (Previous year profit of business).

6. Ratio analysis

7. Purpose of Profit & Loss Account A profit and loss account is a financial report that shows how much your business has spent and earned over a specified time. It summarizes all the activity recorded in your income and expenses accounts over said time. It additionally displays your profit or loss within that period. This statement includes all sales, including credit sales that customers might not have paid yet. It also includes bills for expenses that you have incurred but not paid yet.

8. Profit and loss statement

9. Purpose of the Statement of Cash Flows. The purpose of the statement of cash flows is to provide a summary of cash receipt and cash payment information for a period and to reconcile the difference between beginning and ending cash balances shown on the balance sheet and to present cash inflows and outflows. These inflows and outflows are further classified into operating, investing, and financing activities

10. Activities Operating Activity: Cash flow is happening because of inventory purchases and cash deposits, for deposit venue and interest paid. Investing Activity: Net cash invested for the purchase of a vehicle for $14,250 and because of depreciation, the asset’s value is reduced to $13,953. Financing Activities: Cash received from the loan payable plus the common stock is $60,000.

11. Item in each activity

12. Internal controls

13.  Key terms and concepts I learned  This class pushed me a lot because it was about things that I had never dealt with before, but it made me realize how accounting is very enjoyable and it also helped me understand and it taught me a lot of things that I know will be extremely necessary when managing my own finances, which is something this class also taught me; how to properly manage my own finances and an easy way to do it. Here are some key terms that I learned that I know will be very important for me in the future.

14. References Nolan Accounting. (n.d.). 5 reasons why balance sheets are important for small business. Retrieved from https://nolanaccounting.com/5-reasons-why-balance-sheets-are-important-for-small-business/ Xero. (n.d.). Profit and loss statement. Retrieved from https://www.xero.com/us/glossary/profit-loss-statement/# Saylordotorg. (n.d.). Purpose of the Statement of Cash Flows. Retrieved from https://saylordotorg.github.io/text_managerial-accounting/s16-01-purpose-of-the-statement-of-ca.html#:~:text=The%20purpose%20of%20the%20statement%20of%20cash%20flows%20is%20to,shown%20on%20the%20balance%20sheet . Chase. (n.d.). The purpose of a balance sheet. Retrieved from www.chase.com/business/knowledge-center/start/the-purpose-of-a-balance-sheet#:~:text=A%20balance%20sheet%20gives%20you . Corporate Finance Institute. (n.d.). Balance Sheet. Retrieved from https://corporatefinanceinstitute.com/resources/accounting/balance-sheet/