Slides explain change in financial position

• Standard: With 80% accuracy: • Classify revenues and expenses cash basis • Calculate net income cash basis for a period of time • Enter relevant report data to solve financial positio

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Explain Change in Financial

Position Over a Period of Time

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Terminal Learning Objective

• Action: Explain Change in Financial Position Over

a Period of Time

• Condition: Given access to all regulations/course

handouts, and awareness of Operational

Environment (OE)/Contemporary Operational

Environment (COE) variables and actors.

• Standard: With 80% accuracy:

• Classify revenues and expenses (cash basis)

• Calculate net income (cash basis) for a period of time

• Enter relevant report data to solve financial position equation (using macros provided in Excel template)

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What if Gomer inherits $1,000,000?

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Changes in Financial Position

• The Statement of Financial Position (Balance Sheet) reflects the Assets, Liabilities and Net Assets as of a SINGLE DATE (Like a snapshot)

Beginning

Financial

Position

Ending Financial Position Statement of Activities

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• The Statement of Activities, or Income

Statement, reflects activity for a PERIOD OF

TIME (Like a video)

Beginning

Financial

Position

Ending Financial Position Statement of Activities

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• Under the Cash Basis of Accounting:

• Revenues:

• Represent earnings received in cash

• Increase Assets and Increase Financial Position

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• Revenues:

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• Revenues:

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• Revenues:

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Check on Learning

• What is the equation for the change in

financial position?

• What is the name of the statement that

describes changes in financial position?

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The Simmons:

Financial Activity for January

Task: Calculate the Net Change in Financial Position for

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The Simmons:

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The Simmons:

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The Simmons:

• What are the Revenues?

• Gomer’s gross pay and Madge’s babysitting

• What are the Costs?

• Tax withholding , gasoline, doughnuts, groceries, dentist, window, and mortgage interest

• What is the Net Change in Financial Position?

• Revenues $2,025 – Costs $1,993 = 2 Increase

• What is the Ending Financial Position?

• Beginning $9,327 + Increase $32 = Ending $9,359

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The Simmons:

• Gomer’s gross pay and Madge’s babysitting $1875

• Tax withholding , gasoline, doughnuts, groceries, dentist, window, and mortgage interest

• Revenues $2,025 – Costs $1,993 = Increase

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The Simmons:

• Gasoline, doughnuts, groceries, dentist, window, and mortgage interest = $1843

• Revenues $2,025 – Costs $1,993 = 32 Increase

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The Simmons:

• Gasoline, doughnuts, groceries, dentist, window, and mortgage interest = $1843

• Revenues $1875 – Costs $1843 = $32 Increase

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The Simmons:

• Gomer’s gross pay and Madge’s babysitting

• Gasoline, doughnuts, groceries, dentist, window, and mortgage interest

• Revenues $1875 – Costs $1843 = $32 Increase

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The Simmons:

Statement of Activities for month of January 2011

Net Change in Financial Position 32

Add: Financial Position January 1, 2011 9,327

Financial Position January 31, 2011 $9,359

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Graphic Representation of Net Change

$32

$2025

$1993

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Graphic Representation of Net Change

$32

$9359

$9327

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Practical Exercise

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Statement of Activities Spreadsheet

Enter Transaction Data into the register

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After entering Data, Press button to Create Statement

Of Activities

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Statement of Activities shows: Total Revenues, Total Costs , Change in Financial Position, and Ending Financial Position

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Practical Exercise

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