U4.1 FinancialStats_BalanceSheet_0a22d2065d703cb131d2536a62454fb6.pdf

gestión contable y financiera de la empresa de moda

1. A & FM in Fashion firms
FINANCIAL ACCOUNTING
U4.Financial Statements:
BALANCE SHEET
Accounting and Financial Management in Fashion firms
BA in Fashion Industry Management -UDC

2. A & FM in Fashion firms 2
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Understand the purpose of the balance sheet and its components
Know the basic accounting equation
Understand the impact of economic transactions on the BS through the basic accounting equation
Context
Accounting for beginners
Limitations
Limited to a few examples to understand the basics
Evaluation
Continuous formative assessment
OBJECTIVES
Purpose
Structure
Recording

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IN THIS CHAPTER WE’LL SEE…
Balance sheet
Purpose of the balance sheet
Basic accounting equation & recording of transactions
Structure of the balance sheet
Income statement
Purpose of the income statement
Accrual accounting & recording of transactions
Structure of the income statement
Income statement vs Cash flow statement
Unit 4
Financial Statements: BALANCE SHEET
OBJECTIVES
Purpose
Structure
Recording

4. A & FM in Fashion firms
BEFORE WE BEGIN

5. A & FM in Fashion firms 5
BEFORE WE BEGIN
Course structure
Unit 4
Financial Statements: BALANCE SHEET
Business activity and the need
for information
U3.Financial and non- financial information
Financial accounting
U4. Financial statements
U5. Accounting records
U6. Accounting cycle
Financial analysis
U7. Content of basic financial statements
U8.Profitability
U9. Liquidity and solvency

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Section 2 (“Financial accounting”) structure
Unit 4
Financial Statements: BALANCE SHEET

7. A & FM in Fashion firms
PURPOSE OF THE
BALANCE SHEET

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Objectives
PURPOSE
BALANCE SHEET
Purpose
The balance sheet gives a list of a firm’s resources and sources of capitalon a given day
Unit 4
Financial Statements: BALANCE SHEET
“a snapshot”
CompanyA Balance sheet
31 December 2022
Resources = Sourcesof capital
1-for instance? 2-for instance?
Structure
Recording

9. A & FM in Fashion firms 9
BALANCE SHEET
Basic accounting equation
Unit 4
Financial Statements: BALANCE SHEET
Assets
amounts currently owed by the company to
creditors
the amount invested or reinvested in the
company by its shareholders
resources currently ownedby the company
that generate future economic benefit
Stockholders’
Equity
Liabilities
=
+
Objectives
PURPOSE
Structure
Recording

10. A & FM in Fashion firms
STRUCTURE OF THE
BALANCE SHEET

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STRUCTURE OF THE BALANCE SHEET
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Purpose
STRUCTURE
ASSETS = LIABILITIES + EQUITY
Resources = Sources of capital
Economic structure = Financial structure
Recording

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STRUCTURE OF THE BALANCE SHEET
Spanish GAP
The GAP provides both normal and abbreviated formats for the annual reports
E.g., abbreviated assets:
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Purpose
STRUCTURE
Recording

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Abbreviated liabs& equity:
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Purpose
STRUCTURE
Recording

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BALANCE SHEET STRUCTURE
AFMFF
For the purposes of this subject,
we will use this balance sheet
structure and individual
accounts in each category:
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Purpose
STRUCTURE
Recording

15. A & FM in Fashion firms
RECORDING OF
TRANSACTIONS

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RECORDING OF TRANSACTIONS
Recording
A continuous process whenever a relevant economic transaction is identified
Transactions
A transaction may affect assets, liabilities and/or owners’ equity
It affects at least two accountsin any of those three categories
The balance sheet identity(basic accounting equation)is preserved after each transaction
:
Assets = Liabilities + Owners’ equity
The effect of a transaction on the left-hand side of the balance sheet equation is always
the same as its effect on the right- hand side
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Purpose
RECORDING
Structure

17. A & FM in Fashion firms 17
EXAMPLE
Mallorca InterioresSA -Balance (adapted from Sutton 2004, p. 27)
Unit 4
Financial Statements: BALANCE SHEET
Mary and Alfred move to Mallorca. Shortly after their arrival in December they create a company devoted to
interior design. The following events occur during the week prior to the opening on January 8, 20X1:
1.On January 2, they complete the necessary legal steps to form a company, to be called Mallorca
interiores, S.A. and contribute €20,000 of their personal funds to start the business
Complete Excel file
A4_Assignments
Objectives
Purpose
RECORDING
Structure

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EXAMPLE
Unit 4
Financial Statements: BALANCE SHEET
Answer 1.
The balance sheet identity
is preserved after each
transaction…
Objectives
Purpose
RECORDING
Structure

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Unit 4
Financial Statements: BALANCE SHEET
2.The next day, the company buys some
inventory for €6,000. The payment to the
supplier will be done upon delivery of the
clothes (not expected before they open
their first store...)
3.On January 4, equipment (furniture, a
computer and a multifunction printer) is
bought for €9,000, paid in cash. The
equipment is expected to have a life of
several years
Objectives
Purpose
RECORDING
Structure

20. A & FM in Fashion firms 20
EXAMPLEMallorca InterioresSA -Balance
Unit 4
Financial Statements: BALANCE SHEET
The resulting balance sheet in
our example would be:
Objectives
Purpose
RECORDING
Structure
4.The same day, the company borrows
€12,000 from a bank for a three- year
period

21. A & FM in Fashion firms 21
PRACTICE U4-1
Recording of transactions – balance sheet
→ AUTONOMOUS LEARNING
Unit 4. Problem assignments
Assignment U4_A1. Exercise 1
•Record the transactions and show the resulting balance sheet of Holmes Company
Assignment U4_A1. Exercise 2
•Record the transactions and show the resulting balance sheet of Greenwood Company
Assignment U4_A3
•Complete the balance sheet of Liwe Española
Unit 4
Financial Statements: BALANCE SHEET
Objectives
Purpose
RECORDING
Structure

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References
PHILLIPS, F., LIBBY, R., LIBBY, P.A. Fundamentals of financial accounting. McGraw-Hill. Chapter 1 and 2
SUTTON, T. Corporate financial accounting and reporting, Prentice Hall. Chapter 2
Spanish General Accounting Plan