Fundamentals of Financial Accounting Lecture 1 PDF

Fundamentals of Financial Accounting Source: Financial Reporting & Analysis Gibson, 13th edition, CENGAGE Learning (Chapters 1, 2, 3 and 4) Learning Outcomes Understand: Forms of business organisation Users of financial information The accounting equation...

Fundamentals of Financial Accounting Source: Financial Reporting & Analysis Gibson, 13th edition, CENGAGE Learning (Chapters 1, 2, 3 and 4) Learning Outcomes Understand: Forms of business organisation Users of financial information The accounting equation The financial statements 2 3 Users And Uses Of Financial Information Internal Users 4 4  Users and Uses of Financial Information External Users  Qualities of useful financial information Fundamental qualities Relevance The financial information presented must be relevant in terms of its ability to infl uence the decision of the user of the Any set of financial information. statements must necessarily possess these Faithful representation The information must be complete, truthful and unbiased. Enhancing qualities Comparability: Accounting procedures should be consistent with GAAP to facilitate comparison with peers and competitors These qualities are not Verifiability: The results should be capable of being replicated by a professional accountant if he were to use the same necessary, but desirable to accounting methods as the company claims to use and apply facilitate better understanding Understandability: The financial information should be prepared and presented in a manner, easily understandable to an average reader Consistency: Accounting procedures should remain the same year-after-year to facilitate comparison across time Timeliness: Financial information should be presented on a timely basis, i.e. quarterly or annually or both, as required by law 21 7 8 9 1 0  Four Key Financial Statements Statement Retained Statement of Financial Income Earnings of Cash Position or Statement Statement Flows Balance Sheet Notes to The Financial Statements: An integral part of the financial statements.  Summary of significant accounting policies  Contingent liabilities  Subsequent events relating to conditions that existed at the balance sheet date  Subsequent events relating to conditions that did not exist at the balance sheet date. 11 The five key elements of Financial Accounts Any set of accounting standards (GAAP) require that the financial accounts of a company provide information about the following five elements of the business: 1. Revenues 2. Expenses 3. Assets 4. Liabilities 5. Owner’s Equity 1 2 A bird’s eye view Revenues Expenses Assets Liabilities Equity Income Balance Sheet Statement Financial performance Financial position 1 3 1. Revenues These represent the amount of money the business earns from its main / normal business activities Revenues form the main source of survival of the business (why else do you think businesses treat their customers as kings?) The purpose of revenues is to help the business meet its big and small expenses Higher the revenues of an entity, higher its reported profitability 1 4 2. Expenses These represent money spent or costs incurred by the business, to generate revenues For instance, Payment to suppliers for raw material purchased Salaries to employees Income taxes paid to the State Depreciation on plant and machinery Though expenses are necessary to generate revenues, very high expenses can significantly affect profitability 1 5  3. Assets These represent resources owned and controlled by the entity, which are expected to generate some future economic benefit For instance, Plant and machinery in the factory Computer equipment in the offi ce building Goodwill, Patents, Copyrights and Trademarks Cash balances Higher the asset-size of the business, stronger its financial position 1 6 4. Liabilities These represent debts or financial obligations, that will have to repaid/ settled by the business in the future In other words, they indicate probable future outflows of money For instance, Bank loan Unpaid salaries, taxes and other expense 1 7 5. Equity This represents the total amount due from the business to its owners, which must be eventually returned However, ownership entitles these providers of capital to any profit that may be earned through the use of this money Therefore, the Equity balance at any given point is given as: Total Equity contribution + Accumulated profits till date 1 8  The balance sheet lists all the assets owned by a firm and all financial resources, at a given point inBalance time sheet Assets Equity Liabilities Total of assets = Total of equity & liabilities Accounting equation Every $ in business assets must have come from somewhere – either through debt or equity OR Every $ received in debt or equity must be invested in some or the other business asset Format Account form (side by side) Report form The big picture… Assets Equity-Liabilities Current Assets Equity Inventories Retained earnings Trade receivables ??? Marketable securities Current liabilities Cash & equivalents Trade payables Remember: debts < 1 year These are Non Current assets e n d - o f- Intangible assets year Long term debts Tangible assets items! Investments debts > 1year (such as 31/12/2021 ) On the assets side of the balance sheet, one finds: Non current assets: those are required for the operating cycle that is not transformed as part of it. This class of assets encompasses: Tangible non current assets (land, machinery, buildings…) Intangible non current assets (brands, patents, …) How are Goodwill assets Investments (shares, financial products) fi n a n c e d ? Inventories and trade receivables (current assets). (e.g. of finite products or raw materials). Those assets are temporary and created by the production life cycle. There are often referred to as the current assets because they tend to turn over during the operating cycle Marketable securities and cash.  Equity-liabilities side of the balance sheet, one finds the resources used to finance assets The equity: this is the capital provided by shareholders, plus retained earnings (part of previous exercises gains kept by the firm). Yo u b u y a fl a t i n t h e The debts: borrowings of any kind. Debts center of are often classified by their maturity: Rennes. Short-term debts (e.g. smaller than 1y), form the What are current liabilities. Medium and Long-term borrowings. your assets, liabilities and debts? 2 3  ABC Company Statement of Financial Position As at December 31, 2018 (in $000) Assets Liabilities Currents Assets Current Liabilities Cash 32,800 Accounts payable 49,000 Account Format Accounts receivable 300 Accrued expenses 450 Balance Sheet Prepaid rent 1000 Unearned revenue 1,000 Inventory 39,800 Total current liabilities 50,450 Total Current Assets 73,900 Non-Current Liabilities Non-Current Assets Notes payable 99,500 Property plant & equipment 48,000 Total Non-Current liabilities 99,500 Total Liabilities 149,950 Leasehold improvements 45,000 Owner’s Equity Less: accumulated depreciation (2,000) 43,000 Goodwill 7,000 Common Stock 11,950 Total non-current assets 98,000 Retained Earnings 10,000 Total owner’s Equity 21,950 Total assets 171,900 Total Liabilities & Owner’s equity 171,900 24 The Balance Sheet (Cont’d) Usefulness: Computing rates of return. Evaluating the capital structure. Assess risk and future cash flows. Assess the company’s:  Liquidity,  Solvency, and  Financial flexibility. 25 The Balance Sheet (Cont’d) Limitations Most assets and liabilities are reported at historical cost. Use of judgments and estimates. Many items of financial value are omitted. 26 The Income Statement Purpose: To determine financial performance of the business for the relevant accounting period By financial performance, one means profitability Profitability is simply the difference between what is earned and that which is spent Profit for the period = Revenues – Expenses If Revenues > Expenses: The business reports a profit If Revenues < Expenses : The business reports a loss There are two common ways to prepare an Income Statement – Single and multi-step 2 7 The types of Income Statement The Income Statement is prepared with the objective of measuring the financial performance of the business, i.e. the profit or loss generated over the last accounting period However, it can be prepared in two ways that differ only in the degree of detail that they offer – the single-step and the multi-step income statement Ultimately, both offer the same end-result, the Net Income 2 8 Single-Step Income Statement What it does: It simply calculates net profit/ loss in one step by subtracting from sales revenue, total business expenses Advantages: Easy to prepare and read Disadvantages: Not very informative. Only one measure of profitability, the Net Income is calculated and reported. All business expenses are treated as ‘homogenous’ 2 9 Single-Step Income Statement Single-Step Income Statement 30 Multi-Step Income Statement What it does: It calculates net profit/ loss in multiple steps by subtracting different categories of expenses from sales revenue Advantages:  Several measures of profotability available in addition to Net Income, such as Gross Profit, EBIT etc. Disadvantages:  Very detailed. Takes time to both prepare as well as interpret. 3 1 General structure: Multi-step Income P&L statement Year t statement Net Sales Different types of earnings… - Cost of sales = Gross Margin (A) The earnings before taxes and Selling expenses nonrecurring items (EBT) are + General & Admin. Expenses obtained by deducting from the EBIT, the total interest charge = Total Operation Expenses (B) of borrowings. (A-B) EBITDA - depreciation, amortisation Debt outstanding – reported on - impairment losses on assets the B/S Interests on debt – reported on the = EBIT P&L - Interest charges on debts = EBT The earnings after taxes (or net - taxes income) (EAT) are obtained by = EAT deducting taxes and non - Dividends recurring items from the EBT. = Retained earnings These go in the B/S Basic Elements Of The Income Statement Net Sales (Revenues)  Revenue from the sale of principal goods or services sold to customers.  Shown net of sales discounts, allowances and returns. Cost of Goods Sold (Cost of Sales)  direct costs associated with selling products to generate revenue. This line item can also be called Cost of Sales if the company is a service business.  Examples: direct labor, direct materials, and an allocation of other expenses such Retailer Manufacturer Beginning Inventory as depreciation + Purchases Beginning Inventory − Ending Inventory + Cost of Goods Manufactured Cost of Goods Sold − Ending Inventory Cost of Goods Sold 33  Cont… Gross Profit or Margin:  Calculated by subtracting Cost of Goods Sold (or Cost of Sales) from Sales Revenue. Operating Expenses  Selling expenses  Administrative expenses Other Income or Expense  Secondary activities not directly related to operations  Dividend income. Interest income, Gains (losses) from sale of assets, and Interest expense 34  Cont… Income Taxes  refer to the relevant taxes charged on pre-tax income. Net Income  calculated by deducting income taxes from pre-tax income.  This is the amount that flows into retained earnings on the balance sheet, after deductions for any dividends. 35 Multiple-Step Key Items:  Sales 36 Multiple-Step Key Items:  Sales  Gross Profit 37 Multiple-Step Key Items:  Sales  Gross Profit  Operating Expenses 38 Multiple-Step Key Items:  Sales  Gross Profit  Operating Expenses  Nonoperating Activities 39 (Return Link) Multiple-Step Key Items:  Sales  Gross Profit  Operating Expenses  Nonoperating Activities  Net Income 40 Example – The Construction Experts Company Limited Mr. X, an architect, set up the Construction Experts Company in June 2010. After one month, the business had the following balances: Cash, $20,000; Accounts Receivable, $7,000; Offi ce Supplies, $10,000; Offi ce Equipment, $30,000; Payables, $9,000; Equity, X’s Capital, $58,000. The following transactions took place in July 2010: (a) Billed clients for services, $29,000 (g) Paid electricity expenses, $1,300 (b) Paid assistant’s salary, $2,500 (h) Bought offi ce supplies on credit, $2,800 (c) Provided services and received cash, $14,000 (i) Took a bank loan, $15,000 (d) Collected payments due from clients, $26,000 (j) Bought offi ce equipment for cash, $16,000 (e) Bought equipment on credit, $11,000 (k) Dividends paid, $12,000 (f) Paid suppliers for past purchases, $3,000 Required: 1. Record each transaction using the Tabular System of Accounting (first enter beginning balances) 2. Prepare an Income Statement, Statement of retained Earnings and a Balance Sheet 4 1 Step 1: Preparing the Table ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivables Office Equipment Payables Creditors Creditors Bank Loan Owner’ Supplies for for Supplies s Equipment Equity Note: As one can see above, all we have done is started with the basic accounting equation and eventually, added a column for the different types of assets and liabilities that are relevant to this particular business, based on a reading of its balances and transactions. Before we can start recording any new transactions, we must remember to write old balances against all relevant accounts. 2 3 Step 2: Writing opening balances ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances Total = $67,000 Total = $9,000 Total = $58,000 Assets = Liabilities + Equity 67,000 = 9,000 + 58,000 Indeed! We are good to go for recording 2 4 Step 3: Recording new transactions (a) Billed clients for services, $29,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 Note that the process of ‘billing’ implies that cash for this sale of services has not been received yet. This creates a Receivable (an asset). On the other hand, billing generates revenue (even when not received yet), which increases Owner’s Equity. 4 4 (b) Paid assistant’s salary, $2,500 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 Payment of assistant’s salary is in the nature of an Expense. All expenses reduce Equity (since they reduce profitability). Since the salary is paid in cash, Cash goes down too. 4 5 (c) Provided services and received cash, $14,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 Providing services results in Revenue. All Revenues increase Equity. On the other hand, Cash balance goes up too. 4 6 (d) Collected payments due from clients, $26,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 Collection from clients or customers increases the cash balance. However, customers who pay us now cease to be Receivables. This is a classic case of ‘conversion of an asset into another’, without any change in either Liabilities or Equity. 4 7 (e) Bought equipment on credit, $11,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 Equipment is an asset, so any purchase of it increases an asset balance. However, since payment for this purchase has not been made, this creates a liability called ‘Creditors for Equipment’ till the time the payment is actually settled. 4 8 (f) Paid suppliers for past purchases, $3,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 4 9 (g) Paid electricity expenses, $1,300 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 (g) - 1,300 - 1,300 5 0 (h) Bought office supplies on credit, $2,800 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivable Office Equipment Payables Creditors Creditors Bank Loan Owner’s s Supplies for for Equity Equipment Supplies Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 (g) - 1,300 - 1,300 (h) + 2,800 + 2,800 32 (i) Took a bank loan, $15,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivables Office Equipment Payables Creditors Creditors Bank Loan Owner’s Supplies for for Supplies Equity Equipment Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 (g) - 1,300 - 1,300 (h) + 2,800 + 2,800 (i) + 15,000 + 15,000 5 2 (j) Bought offi ce equipment for cash, $16,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivables Office Equipment Payables Creditors Creditors Bank Loan Owner’s Supplies for for Supplies Equity Equipment Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 (g) - 1,300 - 1,300 (h) + 2,800 + 2,800 (i) + 15,000 + 15,000 (j) - 16,000 + 16,000 5 3 (k) Dividends paid, $12,000 ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivables Office Equipment Payables Creditors Creditors Bank Loan Owner’s Supplies for for Supplies Equity Equipment Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 (g) - 1,300 - 1,300 (h) + 2,800 + 2,800 (i) + 15,000 + 15,000 (j) - 16,000 + 16,000 (k) - 12,000 - 12,000 5 4  Step 4: Calculating totals ASSETS = LIABILITIES + EQUITY ASSETS LIABILITIES EQUITY Cash Receivables Office Equipment Payables Creditors for Creditors for Bank Loan Owner’s Supplies Equipment Supplies Equity Opening 20,000 7,000 10,000 30,000 9,000 0 0 0 58,000 balances (a) + 29,000 + 29,000 (b) - 2,500 - 2,500 (c) + 14,000 + 14,000 (d) + 26,000 - 26,000 (e) + 11,000 + 11,000 (f) - 3,000 - 3,000 (g) - 1,300 - 1,300 (h) + 2,800 + 2,800 (i) + 15,000 + 15,000 (j) - 16,000 + 16,000 (k) - 12,000 - 12,000 Total 40,200 10,000 12,800 57,000 6,000 11,000 2,800 15,000 85,200 Total ASSETS = $120,000 Total LIABILITIES = $34,800 To3t6al EQUITY = $85,200 Step 5: Preparing Financial Statements The Construction Experts Company Income Statement, for the month ended July 2010 Amount (in $) Amount (in $) Revenues (29,000 + 14,000) (A) 43,000 Less: Expenses (B) - Assistant’s Salary 2,500 - Electricity 1,300 (3,800) Net Income (A – B) 39,200 Statement of Retained Earnings, for the month ended July 2010 Opening balance of Retained Earnings (C) 0 Add: Net Income for the period (D) 39,200 Earnings available for distribution (C + D) 39,200 Less: Dividends paid (12,000) Retained Earnings, transferred to Balance Sheet 27,200 5 6  The Construction Experts Company Balance Sheet, as on July 31, 2010 Amount (in $) Amount (in $) ASSETS Cash 40,200 Receivables 10,000 Offi ce supplies 12,800 Equipment 57,000 120,000 LIABILITIES Payables 6,000 Creditors for Equipment 11,000 Creditors for Supplies 2,800 Bank Loan 15,000 34,800 EQUITY Opening balance of Equity 58,000 Add: Retained Earnings for the period 27,200 85,200 Total of Liabilities + Equity 120,000 5 7  Exercise 1 PEPSICO (PEP*) 12/27/2008 BALANCE SHEET ($ in millions) ASSETS STOCKHOLDERS' EQUITY Goodwill 5,124 Contributed capital 0,381 Other intangible assets 1,860 Retained earnings 30,638 Property, plant, and equipment, Treasury stock and other 11,663 (18,913) net equity Long-term investments 3,883 Other noncurrent assets 2,658 LIABILITIES Inventories 2,522 Long-term debt 7,858 Accounts receivable, net 4,683 Other noncurrent liabilities 7,243 Other current assets 1,324 Accounts payable 2,846 Short-term investments 0,213 Other current liabilities 5,572 Cash and cash equivalents 2,064 Short-term debt 0,369 © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected Total Assets website for classroom use. $35,994 Total SE & L $35,994 1. Identify the accounting equation amounts for PepsiCo Corporation. 2. Will the accounting equation hold true for every corporation? Why? 3. How is this company financed? Primarily with (liabilities / equity). How can you tell? 4. Use PepsiCo’s balance sheet to answer the following questions: A. What amount of cash does this company expect to receive from customers within the next few months? B. How much does this company currently owe suppliers? C. Since the company started business, a. what is the total amount shareholders have paid for their shares of stock? b. Since the company started business, how much net income was earned and not yet distributed as dividends? © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exercise 2 High wave ltd. realized during the year: 1. - Sale of tires for € 100,000, paid by check 2. - Sale of Services for € 250,000, paid by check 3. - Payments by check: a. - salaries for € 45,000 b. - purchases of raw material for € 65,000 c. - taxes for € 20,000 d. - financial expenses for € 5,000 Prepare an income statement for High Wave ltd. Has this company made any profits? © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Quiz 1- Which financial statement reports… a. whether the company was profitable or not? (BS / IS / CF) b. whether assets are primarily financed with debt or equity? (BS / IS / CF) c. cash received from customers during the accounting period? (BS / IS / CF) d. the revenues of a corporation? (BS / IS / CF) e. the liabilities of a corporation? (BS / IS / CF) 2- Circle whether the account is classified as an (A)sset, (L)iability, or part of Stockholders' Equity (SE) on the balance sheet. a. Cash (A / L / SE) b. Accounts receivable (A / L / SE) h. Building (A / L / SE) c. Accounts payable (A / L / SE) i. Notes payable (A / L / SE) d. Common stock (A / L / SE) j. Retained earnings (A / L / SE) e. Equipment (A / L / SE) k. Land (A / L / SE) f. Inventory (A / L / SE) l. Bonds payable (A / L / SE) g. Mortgage payable (A / L / SE) 3. © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3- Circle whether the account is classified as a (Rev)enue, (Exp)ense, or (Not) reported on the income statement. a. Wage expense (Rev / Exp / Not) d. Building (Rev / Exp / Not) b. Inventory (Rev / Exp / Not) e. Rent expense (Rev / Exp / Not) c. Cost of goods sold (Rev / Exp / Not) f. Service revenue (Rev / Exp / Not) 4- Identify which of the following items refer to the operating cycle a. Property, plant, and equipment f. Short-term debt b. Current maturities of long-term debt g. Accounts payable c. Inventories h. Net income d. Accounts receivable i. Accumulated depreciation e. Common stock j. Dividends © 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Thank you! 6 3