Accounting 211Financial and Managerial Accounting

Teaching Assistant

Hyun Jung (JoAnn) Lee

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Contents

1. Introduction

2. Review of Chapter 12

3. Practice

Introduction1

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Click on “ACCTG 211 Spring 2008”

Office : 381A Business Building, 814-863-3796

Office Hour : 8 AM. ~ 10:00 AM on Tuesday

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Recitation Materials

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NO MORE WILEY!!~

Grading componentsProfessor Ketz : Financial AccountingProfessor Ketz : Financial Accounting

Professor Huddart : Managerial Accounting Professor Huddart : Managerial Accounting

Number Grade = 2/3 * Financial Acc. +1/3*Managerial Acc.Number Grade = 2/3 * Financial Acc. +1/3*Managerial Acc.

Financial AccountingMAX(A, B)MAX(A, B)

A : ( Homework + Exam1+ Exam2 )/3A : ( Homework + Exam1+ Exam2 )/3

B : ( Exam1+ Exam2 )/2B : ( Exam1+ Exam2 )/2

Exam 2 : Exam 2 : Mar 26, 8:15 to 10:00 PM. Mar 26, 8:15 to 10:00 PM.

Exam Information will be announcedExam Information will be announced

Evaluation

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Ask “W.G. Deng” for “PERMISSION”

Contact Information

Office : 350A Business BuildingOffice : 350A Business Building

Phone : 863-5467Phone : 863-5467

Email : wxd139@psu.eduEmail : wxd139@psu.edu

Office Hours : Mon & Thrs from 1pm until 3pm and by appointment.Office Hours : Mon & Thrs from 1pm until 3pm and by appointment.

Only one chance to take it

Makeup for the Second Exam : Makeup for the Second Exam : April 5th on SaturdayApril 5th on Saturday

Make-up Exam Assignments

Review of Chapter 12 2

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Direct Method : not covered

Shows net cash inflow (outflow) from operations by converting Shows net cash inflow (outflow) from operations by converting

accrual numbers (i.e. sales & expenses) to cash numbers.accrual numbers (i.e. sales & expenses) to cash numbers.

Recommended by the FASB, but rarely used.Recommended by the FASB, but rarely used.

Requires “reconciliation” (which is actually the Indirect Method so Requires “reconciliation” (which is actually the Indirect Method so

you have to do both Direct & Indirect; easy to see why so many use you have to do both Direct & Indirect; easy to see why so many use

the Indirect Methodthe Indirect Method

Indirect Method : Covered this courseShows net cash inflow (outflow) from operations as an adjustment Shows net cash inflow (outflow) from operations as an adjustment of net income.of net income.

Used by 97% of companies.Used by 97% of companies.

Two Alternative Approaches

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The direct method provides more detail about cash from

operating activities.

Shows individual operating cash flows.Shows individual operating cash flows.

Shows reconciliation of operating cash flows to net income in a Shows reconciliation of operating cash flows to net income in a

supplemental schedule.supplemental schedule.

The investing and financing sections for the two

methods are identical.

Net cash flow is the same for both methods.

Summary of Differences Between DM and IM

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Cash Inflow!~Receipts from customers.Receipts from customers.

Interest on receivables.Interest on receivables.

Dividends received.Dividends received.

Cash Outflow!~ Payments to suppliers.Payments to suppliers.

Interest paid on liabilities.Interest paid on liabilities.

Income taxes paid.Income taxes paid.

Salary and wages payments.Salary and wages payments.

Cash Flow from Operating

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Cash Collect from Customer

Cash Paid to Counter party!~

Cash Flow from Operating, conti.

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Cash Flow from Investing

Capital Expenditure : Long-term Invest!~

Cash Inflows include proceeds from:

Sales of property, plant, and equipment.Sales of property, plant, and equipment.

Sales of investments in securities.Sales of investments in securities.

Collection of principal on loans made to others.Collection of principal on loans made to others.

Outflows include payments for:

The purchase of property, plant and equipment.The purchase of property, plant and equipment.

The purchase of long-term investments.The purchase of long-term investments.

Loans to others.Loans to others.

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Cash Flow from Financing

Dividends paid ; Debt or Equity Issuance; Repayment

Inflows include:

Proceeds from sale of stock.Proceeds from sale of stock.

Proceeds from sale of bonds and from borrowings.Proceeds from sale of bonds and from borrowings.

Outflows include:

Payments to purchase treasury stock.Payments to purchase treasury stock.

Principal payments to retire bonds and loans.Principal payments to retire bonds and loans.

Dividends paid to owners.Dividends paid to owners.

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Indirect Method template

3Practice!!!

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Problem 12-9

Professor has opened up a number of problems

(including the solutions) on WileyPLUS should YOU

wish to work more problems.

Chapter 9: Practice A

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Do you have any questions?

Welcome to Accounting World!!~

381A Business Building

814-863-3796, hul152@psu.edu