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    Financial Statement Presentation, Closing The Books and Financial Analysis

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    Shaila Marcelo
    This chapter discusses closing entries, reversing entries, and financial analysis using ratios. Closing entries involve transferring income, expenses, and the difference between the two to the capital account. Reversing entries undo adjusting entries made earlier. Financial analysis uses ratios to compare performance over time and between companies. Key ratios discussed are profitability ratios like profit margin, liquidity ratios like current ratio, and solvency ratios like debt ratio.

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    Financial Statement Presentation, Closing The Books and Financial Analysis

    Uploaded by

    Shaila Marcelo
    60 views8 pages
    This chapter discusses closing entries, reversing entries, and financial analysis using ratios. Closing entries involve transferring income, expenses, and the difference between the two to the capital account. Reversing entries undo adjusting entries made earlier. Financial analysis uses ratios to compare performance over time and between companies. Key ratios discussed are profitability ratios like profit margin, liquidity ratios like current ratio, and solvency ratios like debt ratio.

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    Chapter 8.pptx

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    This chapter discusses closing entries, reversing entries, and financial analysis using ratios. Closing entries involve transferring income, expenses, and the difference between the two to the capital account. Reversing entries undo adjusting entries made earlier. Financial analysis uses ratios to compare performance over time and between companies. Key ratios discussed are profitability ratios like profit margin, liquidity ratios like current ratio, and solvency ratios like debt ratio.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    60 views8 pages

    Financial Statement Presentation, Closing The Books and Financial Analysis

    Uploaded by

    Shaila Marcelo
    This chapter discusses closing entries, reversing entries, and financial analysis using ratios. Closing entries involve transferring income, expenses, and the difference between the two to the capital account. Reversing entries undo adjusting entries made earlier. Financial analysis uses ratios to compare performance over time and between companies. Key ratios discussed are profitability ratios like profit margin, liquidity ratios like current ratio, and solvency ratios like debt ratio.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    Chapter 8

    Financial Statement Presentation, Closing


    the books and Financial Analysis
    Closing Entries
    1. Income
    2. Expense
    3. Difference between 1 and 2
    4. Drawings
    Reversing entries
     Adjusting entries for expense and income method
     Other adjusting entries need not to be reversed
    Financial Analysis
     Analyzing result of operation thru ratio and percentages.
     To better intracompany and intercompany comparisons.
     Trend Percentages, Horizontal and Vertical Analysis and
    Financial Ratios
    Financial Ratios
     Profitability

     Profit Margin: Net Income/Revenues

     Return on Total Assets: Net Income/Average Total


    Assets

     Return on Equity: Net Income/Average Owner’s


    Equity
    Financial Ratios
     Liquidity

     Working Capital: Current Asset – Current Liabilities

     Current Ratio: Current Assets/Current Liabilities

     Quick Ratio/Acid-test Ratio: Quick Assets/Current


    Liabilities
    Financial Ratios
     Solvency

     Debt Ratio: Total Liabilities/Total Assets

     Equity Ratio: Total Equity/Total Assets


    Trial Balance
    Accounts DR CR
    Cash On Hand 5,000
    Cash In Bank 20,000
    Prepaid Insurance 24,000
    Linen Supplies 19,000
    Land 150,000
    Lodge 700,000
    Furniture 168,000
    Accounts Payable 53,000
    Unearned rent 46,000
    Mortgage Payable 350,000
    Sawyer, Capital 600,000
    Sawyer, Personal 10,000
    Rent Revenue 92,000
    Advertising Expense 5,000
    Salaries Expense 30,000
    Utilities Expense 10,000
    Total 1,141,000 1,141,000

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