GAWA NI VANTIFILM
FABM REVIEWER
LESSON 1 THE STATEMENT OF FINANCIAL POSITION (SFP)
4 Financial Statement (Interconnected Reports)
1.) Statement of Financial Postion - As of the year ended
- Assets, liabilities & equity should be balanced
2.) Statement of Comprehensive Income - For the year ended
- Revenue - expenses = net income 3.) Statement of of changes in equity - For
the year ended
- Balance of january and december - Nakuha ang net income sa
comprehensive
4.) Statement of Cash Flow - Investing, Operation, Financial
- For the year ended
- Cash in flow from operation activities - Investing activities
- Financing activities
- Net change in cash
- Cash January 2x21
- Cash December 2x21
First section of SFP
- List of the asset of the company 1. Resources controlled by the company 2.
Potential to produce economic benefits
Second section of SFP
- Liabilities & equity, capital owner
Assets - resources with potential economics that are within the control of the
company.
Cash - money owned by the company > On hand - kept in the company premises
> In bank - kept in a saving or checking account
> Time deposits - are not categorized as cash (post dated check)
Receivables - refers to the company’s right to collect or claim payment from
debtors
Inventory - report the cost of unsold merchandise
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> Debit - cost of merchandise purchase >Credit - merchandise sold
Prepaid Expense - prepayment - refer to a future expense that the company had
paid for in advance.
> Debit- Advance payment (rent, insurance, communication
> Credit - cost of service used (specific service/through passage time)
Property, Plant and Equipment - are long term assets that are used in the
operations of the company.
> Depreciation - linked to usage, Necessary to estimate the pattern of usage to
compute > Annual Depreciation = Depreciable Cost/Useful life = cost - salvage
value
Intangible assets - have no tangible properties (that cannot see or touch) there may
be a piece of paper as evidence of the assets
Liabilities - obligations that the company is required to pay
Payables - opposite of receivables. Obligation to make payment to creditors
N/P - promissory note
A/P - verbally
Accrued Expense - is increase by unpaid expenses that are already used on the
contrary (unpaid expense)
A/P - decrease by payments
Unearned INcome/Revenue - increase by advance payments received from
customers.
- On the other hand decrease by rendering of service or delivery or
marchandise
Long-Term Liabilities (Bank loans) - obligation with due dates that fall more than
one year from a date of the SFP
Equity - net assets of the business (Owner’s Investment)
PRESENTATION OF SFP
- There are two acceptable formats of the SFP - the account form and the repost
form
Account form - mimics the general ledger T-Account
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Assets are reported on the left and the list of liabilities and equity are on the right
side
Account Format - the total assets and the total liabilities and equity are shown side
by side to highlight that total are equal
LESSON 2 STATEMENT OF COMPREHENSIVE INCOME
SCI statement that reports the result of operations of the business for one
accounting period. This statement contains the following information.
A. Revenue generated by operating the business
B. Cost spent to generate the revenue C. Income which is the excess of
revenue is over cost
FOR THE PERIOD - The SCI is described as a “for the period” report - means that
the amounts presented on the report include only those that occurred within the
given period.
COMPONENTS OF SCI
● Income - it refers to a transaction that increases assets and or decreases
liabilities leading to increases in equity resulting from the operation of the
business and not from the owner’s contribution
● Revenue - income generated from the primary operations of the business
● Gains - income derived from other activities of the business
● Expenses - are transaction that decrease assets and or liabilities leading to
decrease in equity resulting from the operations of the business and not
because of distributions to owners
● .> Expenses - related to the primary operations of the business (Regular) >
Losses - from the other activities the business (Limited occurrence)
ELEMENTS OF SCI REVENUE
Service Income - account generally used to described revenue derived from
rendering services
- Rental Income
- Professional fees
- Tuition fee revenue
Sales - revenue generally used to describe revenue derived from selling of goods
- Office supplies sales
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- Book sales
- Food sales
Revenue from sales of good in recognized when goods have been delivered
Cost of Goods Sold/Cost of Sales - Account use by a companies that sells goods
instead of service
- Price inventory
- Brokerage
- Shipment cost/Freight in
Operating Expenses - refers to all other expense related to the operation of the
business other that cost of sales
- Salaries of employees
- Supplies
- Gasoline
- Representation
- Bad debts
- Amortization
- Depreciatio
Net Sales - is reported on the face of the SCI
Gross Sales
Less: Sales reuters and allowances
Cost of goods sold/Cost of sales
Beginning Inventory
Add: Net Purchases
Cost of Goods available for sale
Less: Ending inventory
—-----------------------------------
COST OF GOODS SOLD
Purchases
Add: Freight In
Less: Purchase Returs
Purchase Discounts
—--------------------------------------
Net Purcahses
PRESENTATION OF SCI Single- Step SCI
GAWA NI VANTIFILM
- Closely related to the nature of expense format. It is list down the expenses
based on the sources of expenses.
- Group all revenue items together and all the expense items together
- So called because net income is computed using only one step, deducting totale
expenses from total ravenous
PRESENTATION OF SCI Multi - Step SCI
- Associated with the function of expense
- Characterized by the presentation of several subtotals until net income is
determined. It is popularly used in business
- The subtotals are additional information that give the readers more understanding
of the operations of the business
- First subtotal is GROSS PROFIT - Next subtotal is INCOME FROM
OPERATIONS
- Last is the bottom line which is the NET INCOME
Net Income - is used to describe the portion of profit or loss attributable to the
owner’s of the company
Mortgage Payable - an example of a long-term liability on the SFP
Operating Income/Revenue - term for revenue earned by a company from its
primary business activities
Cost of Good Sold - an example of an operating expense
Statement of Retained Earnings - Financial statement complements the SFP by
showing changes in equity over a period
The owner’s investment in the business - Owner’s equity on the SFP
represents
To display the company’s profitability during a specific period - the primary purpose
GAWA NI VANTIFILM
of the SCI
Assets - section of the SFP typically includes items like cash, account
receivables and inventory
Statement of Financial Position - a financial statement that provides a snapshot
of a company financial position at a specific point in time.
Balance Sheet - other term for “Statement of Financial Position”
Operating Income - a financial metric represents the profitability of a company’s
core operations, excluding non-operating items
Interest Income - an example of
non-operating expense
How are assets and liabilities organized on a Statement of Financial Position -
Assets are listed first, followedby liabilities
Statement of Comprehensive Income (SCI) - a financial statement would you find
the company’s total comprehensive income for a specific period
Statement of Changes in Equity - a financial statement would find details about
the changes of equity during a specific period.
FORMULA:
Net Income = Revenue - Expenses
Operating Income = Revenue - Operating Expense
When preparing a statement of Financial Position, what is the fundamental
accounting equation it follows
Assets = Liabilities + Owner’s Equity
What is the formula for calculating Owner’s Equity on the Statement of Financial
Position
Owner’s Equity = Assets - Liabilities
