【正文】 term Notes Payable Collections in advance of unearned revenue Accrued Expenses Balance Sheet Format Chapter 312 Current assets Less: Current liabilities Equals: Working Capital Current assets Current liabilities = Working Capital Ratio Working Capital Chapter 313 Liability Classifications Noncurrent Liabilities Capital Leases Longterm Notes Payable Pension Liabilities Bonds Payable Balance Sheet Format Chapter 314 Equity Classifications Owners’ Equity Capital Stock Other Contributed Capital Treasury Stock Retained Earnings Balance Sheet Format Chapter 315 A corporation must disclose the changes in its stockholders’ equity account when issuing financial statements. This statement should show investments by and distributions to owners during the period, among other items. Statement of Changes in Stockholders’ Equity Chapter 316 FASB Statement of Concepts No. 6 defined investments by owners and distributions to owners, as follows: ? Investments by owners are increases in the equity of a pany resulting from transfers of something valuable to the pany from other entities in order to obtain or increase ownership interests. ? Distributions to owners are decreases in the equity of a pany caused by transferring assets, rendering services, or incurring liabilities to owners. Statement of Changes in Stockholders’ Equity Chapter 317 Balance, Jan. 1, 2022 $65,000 $143,400 $ 64,900 $10,000 $283,300 Unrealized increase in value of available forsale securities 2,000 2,000 Net ine 62,500 62,500 Cash dividends paid (11,200) (11,200) Common stock issued 6,500 30,500 37,000 Balance, Dec. 31, 2022 $71,500 $173,900 $116,200 $12,000 $373,600 SCHEDULE A CARON MANUFACTURING COMPANY Accumulated Common Additional Other Stock Paidin Retained Comprehensive $5 par Capital Earnings Ine Total Statement of Changes in Stockholders’ Equity For Year Ended December 31, 2022 Statement of Changes in Stockholders’ Equity Chapter 318 ? Offsetting assets and liabilities ? Loss and gain contingencies ? Valuations reported in the Balance Sheet ? Terminology ? Comparative Statements Additional Reporting Issues Chapter 319 Loss Probable (?) Reasonably estimated (?) No No or Disclosure and Yes Yes Report amount in financial statements Reasonably possible Disclose in notes to the financial statements Contingent Liabilities and Assets Chapter 320 ? Current value amounts generally are not shown on the Balance Sheet. ? Contains many estimates. ? Certain assets and liabilities are not shown on the Balance Sheet, ., human resources. Limitations of Balance Sheet Chapter 321 Economic Ine Accounting Ine vs. Ine Statement Chapter 322 Capital Maintenance Concept Under this concept, corporate ine for a period of time is the amount that may be paid to stockholders during that period and still enable the corporation to be as well off at the end of the period as it was at the beginning. Concepts of Ine Chapter 323 Assume a corporation has assets of $45,000 at the beginning and $80,000 at the end of the year, and that no additional investments or withdrawals were made. Ending assets $80,000 Less: Additional investment 0 Ending assets excluding investment $80,000 Less: Beginning assets (45,000 ) Total ine for the year $35,000 Capital Maintenance Concept The corporation could pay out $35,000 to stockholders and still be as well off at yearend. Concepts of Ine Chapter 324 Assume a corporation has assets of $45,000 at the beginning and $80,000 at the end of the year. Stockholders made additional capital investments of $10,000. Ending assets $80,000 Less: Additional investment (10,000 ) Ending assets excluding investment $70,000 Less: Beginning assets (45,000 ) Total ine for the year $25,000 Capital Maintenance Concept Concepts of Ine Chapter 325 Transactional Approach The transactional approach to ine measurement is used in accounting today. Concepts of Ine Chapter 326 Transactional Approach Under this concept, a pany records its assets at their historical cost, and it does not record changes in the asset and liabilities unless a transaction, event, or circumstance has occurred that provides reliable evidence of a change in value. Concepts of Ine Chapter 327 Transactional Approach A corporation’s ine for an accounting period currently is measured as follows: Net ine = Revenues – Expenses + Gains Losses Concepts of Ine Chapter 328 Revenues are inflows (or increases) of assets of a pany or settlement of its liabilities during a period from delivering or producing goods, rendering services, or other activities that are the pany’s ongoing major or central operations. Revenues Chapter 329 Recognition is the process of formally recording and reporting an item in a pany’s financial statements when they are earned. Revenues Recognition Chapter 330 A pany usually recognizes revenue at the time goods are sold or services are rendered. Revenues Chapter 331 Expenses are outflows of assets of a pany or incurrences of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that are the pany’s ongoing major or central operations. Expenses Chapter 332 1. Cause and effect (cost of goods sold and missions) 2. Systematic and rational (depreciation) 3. Immediate recognition (period costs) Expenses should be matched