1. Accounting and Financial Information
Chapter 16
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2. Review
Review exam
Assign HW2

3. Learning Objectives
Know the differences between managerial accounting and financial accounting.
Identify users of accounting information.
Explain the income statement.
Explain the balance sheet.
Calculate a break-even point.
Evaluate a company’s performance using financial statements and ratio analysis.
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4. Accounting
Why do accounting?
Who needs the information?

5. Managerial Accounting
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6. Financial Accounting
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7. Financial Accounting Uniform set of rules In U.S. Internationally
GAAP, generally accepted accounting principles
Created by FASB
Internationally
IFRS, international financial reporting standards
Created by IASB

8. Basic Financial Accounting Statements
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9. Income Statement Did the firm make a profit? Over a period of time
Over a monthly, quarter, or fiscal year

10. Income Statement Stress-Buster Revenues COGS Gross margin (%)
Month Ended September 30, 2016
Sales (100x$10.00)
$1,000
Less cost of goods sold (100x$6)
600
Gross profit (100x ($10 -$6))
400
Less operating expenses
Salaries
240
Advertising 40
Table rental 20
300
Operating income ($400-$300)
100
Taxes 25
Net income (profit)
$75
Revenues
COGS
Gross margin (%)
Operating expenses
Earnings
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