Z Financial Statements
Z Financial Statements
balance sheet and results of its operations which is the statement of performance. Financial
statements are products of the accounting process.
STATEMENT OF FINANCIAL POSITION-is a structured financial statement that provides
information about entities’ resources, obligation and owner’s residual claim over its assets, in a
specific time.
The elements of the financial positions are as follows:
1. Assets are resources you control that have resulted from past events and can provide
you with the future economic benefits
2. Liabilities are your present obligations that have resulted from past events and can
require you give up resources when settling them.
3. Equity means assets minus liabilities. Other terms for equity are capital, net assets, and net
worth.
The above elements are termed Permanent Accounts because their life or usefulness continues
throughout the life of the company.
1. CURRENT ASSETS-resources that can be used or realized for current operations for short-
term or within the current operating cycle.
( cash, accounts receivables, Inventories and prepaid expenses. )
3. CURRENT LIABILITIES -obligations of the firm that will mature or need payment during
the current accounting period
(Accounts Payables, accrued expenses, unearned revenues)
4. NON-CURRENT LIABILITIES – all liabilities that will mature or become due beyond one year or
more than a year.
(Loans payable, Mortgage payable, bonds payable)
2,500,000
75,000
25,000
2,000,000
80,000
475,000
205,000
Financial Statements
Prepare a classified income statement for a merchandising firm
COGS Calculation
P
P
P
P
Net Sales
• Sales minus Sales Returns and Allowances and minus Sales Operating Expenses
Discounts
Selling Expenses -Expenses directly connected with
the selling activity, such as salaries of sales staff,
P advertising expenses, and delivery expenses
P
P
General Expenses - Expenses incurred in the
administration of a business, including office
expenses and any expenses that are not
completely classified as Selling Expenses or
Cost of Goods Sold Other Expenses
• A section of the income statement in which the
amount of the cost of the goods sold is calculated Other Income and Other Expenses
• Terms often used to describe the same thing are:
– Cost of merchandise sold Any income or expenses not related to ordinary
– Cost of sales operations (Examples: Interest revenue, Interest
expense)
Classified Income
Statement
P
P
P
Bay Air Tools
Income Statement
For Year Ended December 31, 20—
P
P
P
P
P
P