Chapter 5 : The Annual Report Flashcards
balance sheets can appear in 2 forms :
the account form and the report form
the differences between the acount form and the report form in presenting the balance sheets
under the account form, assets items appear on the left, liabilities and owners’ equity appear on the right. meanwhile, the report form lists asset, liability, and owners’ equity accounts in order vertically.
(kalo account form itu dia kaya laporan, asset dikiri sisanya di kanan, kalu report form semuanya list lurus dari atas kebawah)
the differences between single step statement of operations and multi step statement of operations
single step statement of operation : one step in substractiong total operating expenses from total revenues (cuma sekali step aja, jd jumlah revenue - expenses trs kelar)
multi step statement of operation : draws subtotals for each category of revenues and expenses (revenue sama expenses punya banyak subnya jd semuanya dijumlah dulu masing-masing trs baru dijumlah lagi seexpenses atau serevenue baru dikurang)
the definition of gains and losses
gain is income obtained by a transaction other than a core business function (increases a company’s net income)
loss occurs when a company loses money on an activity that does not arise from normal business operations (decreases a company’s net income)
keuntungan yang didapat dari melakukan kegiatan disamping kegiatan utama perusahaan dinamakan
gains
why are gains and losses appear separately on the statement of operations?
because they are an income and losses of the company activities that are independent of the company’s core business function like selling insurance policies and annuities and investing premium income. because they are independent thats why the gains and losses appear separately on the statement of operations
definition of extraordinary items
a non-core business transaction that is unusual, rare in occurrence, and not based primarily on management decisions.
examples of extraordinary items
losses from natural disaster, losses from the enactment of a new law, and gains from the expropriation of a company’s land and buildings for a highway
gains and losses that are not considered extraordinary
- disposal of a business management
- changes in the value of a foreign country
- sale or disposal of a fixed asset
- effects of a labor strike
the formula of net incomes/loss if there is gains and losses
net income/loss = revenus - expenses + gains - losses
definition of statement of cashflows or cashflow statement
it’s an information about a company’s cash receipts (inflows) and cash disbursements (outflows) during a given accounting period
the function of statement of cash inflows
reconciles the cash the company has on hand at the beginning and at the end of the accounting period.
in accounting terminology, a cash flows is
a source of funds
in accounting terminology, a cash outflows is
a use of funds
yg menyebabkan cash inflows bertambah
- a decrease in an asset account (selling an assets for cash)
- an increase in a liability account (taking out a loan)
- an increase in stockholders’ equity (issuing common stock)
- a receipt of revenue (selling policies)
- net income
yang menyebabkan outflows bertambah
- an increase in an asset account (purchasing an asset)
- a decrease in a liability account (paying off a loan)
- a decrease in stockholders’ equity (retiring or repurchasing a company’s own common stock)
- a payment of expenses
- a net loss
formula for net cash inflows/outflows
net cash inflows/outflows = cash inflows - cash outflows or
net cash inflows/outflows = sources of funds - uses of funds
the net icash inflow or outflow represents
the net increase or decrease in cash for the accounting period
what is a net change in cash
the difference between the cash balance (as shown on the balance sheets) at the beginning of the period and the cash balance at the end of the period
2 method of calculating the cash flows
the direct method and the indirect method
perbedaan the direct and indirect method
direct tuh ditulis cashflowsnya semuanya trs baru dikurang/ditambah sama cash di awal kalau indirect, cashflowsnya digrupin dulu di jumlah dulu nnti kalo udh baru masuk dikurangin sama cash di awal
changes in a company’s cash flows occur as a result of three activities :
- operating activities
- investing activities
- financing activities
definition of operating activities
are those activities associated with a company’s major lines of business and involve transactions that directly determine a company’s net income. (in insurance company its associated with the sale and maintenance of insurance products and services)
activities in operating activities in insurance company
- selling insurance and annuity products
- paying claims
- receiving investment income (such as bond interest and dividend income on stocks)
- increasing or decreasing the liability for future policy benefits
- paying expenses
definition of investing activities
transactions that involve the purchase or sale of long-term assets and the lending of funds to another entity
insurance company investing activities include :
- purchasing and selling bonds, mortgage loans, stocks, real estate, equipment, and other long-term assets
- making loans and collecting the principal and interest on those loans
definition of financing activities
transactions involving borrowed funds and cash payments to or from owners of the company
financing activities of insurance company include :
- issuing, repurchasing, or retiring common stocks
- paying cash dividends to stockholders
- borrowing and repaying funds loaned by creditors
operating activities transactions resulting in cash inflows
- cash sales to customers
- receipt of securities interest and dividends
- increases in current abilities
operating activities transactions resulting in cash outflows
- payment to employees and suppliers
- interest payment to bondholders
- decreases in current liabilities
investing activities transactions resulting in cash inflows
- sales of bonds, mortgage loans, stocks, property, buildings and other long-term assets
- receipt of principal and interest of loan repayments
investing activities transactions resulting in cash outflows
- purchase of bonds, mortgage loans, stocks, property, buildings, and other long-term assets
- making loans to other
financial activities transactions resulting in cash inflows
- issuance of common stocks
- issuance of bonds and notes
- loans from creditors
financial activities transactions resulting in cash outflows
- dividend payments to stockholders
- payment of principal and interest on bonds, loans, notes, and other debt
events that cause owners’ equity accounts to change :
- issuance of stock
- purchase of treasury stocks
- retention of net income
- payment of cash dividends on stock
Stocks that has been issued is called
outstanding stocks
what is a dividends
distribution of earnings that the company pays to stockholders
the differences between the common stocks and preferred stocks
- common stocks : pemegang stock punya hak voting untuk pmeilihan direktur dan di pemilihan penting lain, serta mendapatkan dividen ( tp company gak wajib, dan dividennya bisa beda-beda)
- preferred stocks : gaada hak voting tapi punya prioritas dapet dividen sblm common stocks (dapet dividen diduluin preferred stocks)
what is treasury stocks
issued stocks that is no longer outstanding / represents an insurer’s purchase of its own outstanding stocks
reasons why company repurchasing its stocks
- to have stocks available for its employees’ stocks option program
- to prevent or reduce the possibility of a hostile takeover by another company
- to maintain a favorable market for its stock by creating an apparent demand and buoying the price per share
- to improve its earnings per share, a key financial ratio often used by potential investors
a treasury stock purchase reduce……..
the balance of assets (cash) and owners equity
