DBE_የሂሳብ_መግለጫ_አዘገጃጀትና_እና_ትንተና፥_ማሰልጠኛ_ስላይድ_May_2022_Revised.ppt

በኢትዮጵያ ልማት ባንክ
እና
በኢትዮጵያ የንግድና ዘርፍ ማኅበራት
ምክር ቤት
የኢትዮጵያ ልማት ባንክ
Development Bank of Ethiopia
የኢትዮጵያ የንግድና ዘርፍ ማኅበራት
ምክር ቤት
Ethiopian Chamber of Commerce &
Sectoral Associations
1

2
የሂሳብ መግለጫ አዘገጃጀትና እና
ትንተና (Financial Statement
Preparation and Analysis)
ዝግጅት: ወጋየሁ ወ/ኢየሱስ
ኢትዮጵያ
ÓO 2014 ዓ.ም

እንደምን
አደራችሁ?
እንኳን ደህና
መጣችሁ!!!
3

1. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞችን የሂሳብ መግለጫ
አዘገጃጀት (Financial Statements Preparation) እና
የሂሳብ መግለጫ ትንተና ( Financial Statements
Analysis ) መሰረታዊ እውቀት ማስጨበጥ ፤
2. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞች (SMEs) የተበደሩትን
ብር በአግባቡ መጠቀም እንዲችሉና እያንዳንዱ ገቢ እና ወጪ
እንድቆጣጠሩ የኣካውንቲንግ ሚና ማስገንዘብ ፤
3. ጥቃቅንና ኣነስተኛ ኢንተርፕራይዞች (SMEs) ገበያ ላይ
ተወዳዳሪ ሆነው እንዲዘልቁ እና ቁመናቸው በየጊዜው
እንድመዝኑ የሂሳብ መግለጫ ትንተና ስልቶችን እንድተገብሩ
ማብቃት ፡፡
የሥልጠናው ዋና ዋና ዓላማዎች
5

ሥልጠናው ሲጠናቀቅ ሠልጣኙ:
1) Accounting Cycle (አካውንቲንግ ኡደት ) ይገነዘባል፤
2) Types of Financial Statements ( የ ሂሳብ መግለጫ አይነቶችን ) ይለያል፤
3) Financial Statements Elements ( የሂሳብ መግለጫ ኢለመንቶችን ) ይገነዘባል ፤
4) Financial Statements (የሂሳብ መግለጫዎችን ) ማዘጋጀት ይችላል፤
5) Financial Analysis Techniques ( የሂሳብ መግለጫ ትንተና ስልቶችን ) ይገነዘባል፤
6) Financial Analysis ( የሂሳብ መግለጫ ትንተና ን) ይሠራል ::
የሥልጠናው ንዑስ ዓላማዎች
6

1) የጊዜ አስተዳደር
(የሥልጠናው አስተባባሪ እና ሰዓት ተቆጣጣሪ)
2) የሥልጠና ደንቦችን ማውጣት
3) የአነቃቂ ቡድን
(Fun Groups & Energizers )
የሥልጠናው አካሄድ
7

What is Accounting ?
(አካውንቲንግ / የሂሳብ መዝገብ አያያዝ ማለት ምን ማለት
ነው?)
Accounting :
 It is the language of business;
 It is an information system.
 It is a process/activity;
 It is a means and not an end;
 It deals with financial information and
transactions.
 Its outcome are financial/accounting reports;
9

 Accounting - consists of three basic activities. It :
1. Identifies (የመለየት ሂደት)
2. records) (የምዝገባ ሂደት) and
3. communicates (ሪፖርት የማዘጋጀት ሂደት)
the economic events of an organization to interested users.
(አካውንቲንግ / የሂሳብ መዝገብ አያያዝ ማለት ምን ማለት
ነው?)
10

Three Activities
The activities of the accounting
process
The accounting process includes
the bookkeeping function.
(አካውንቲንግ / የሂሳብ መዝገብ አያያዝ ማለት ምን
ማለት ነው?)
11

Characteristics of Accounting Information
(የ አካዉንቲንግ መረጃ ባህሪያት)
1. Financial - expressed in terms of monetary terms.
2. Quantitative- measurable events.
3. Understandable, complete, accurate, relevant, reliable,
etc.
4. Business transactions - Sources of accounting data.
5. Output- Various summaries, analysis and reports
6. Process - Manual accounting system or an electronic
data processing machines.
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2

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Internal Users Information Need
1. Managers ( የድርጅቱ
ሐላፊዎች )
 Top level managers ,
 Middle level managers,
 Operational level Mangers,
 To plan future operations
 To conduct day-to-day operations;
 To evaluate current operations;
Users of Accounting Information
(የ አካዉንቲንግ መረጃ ተጠቃሚዎች )…

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S. No External users: Information Need
1 Investors (ባለሃብቶች)  financial soundness, profitability and
riskiness of investments
2 Creditors
( አበዳሪዎች እና
አቅራብዎች)
 financial soundness of customers
before granting credit or loan.
3 Customers (ደንበኞች)  product quality, price and
warranties.
4 Government ( መንግስት )  formulation and inaction of national
policies.
5 Tax-authorities
(ገቢዎች እና ጉምሩክ)
 imposing and collecting taxes.
(የ አካዉንቲንግ መረጃ ተጠቃሚዎች ) ….

15
S. No External users Information Need
…… ………………………………….. ..................................................................
7 Industrial Authorities
(የኢንዱስትሪ ዎች ተቆጣጣሪ
ባለሥልጣን)
 development and supervision of industries in
the country.
8 Board of Directors
( የድርጅቱ ቦርድ አባላት)
 business concerns/decisions
9 Parliament ( የሕዝብ ተወካዮች )  national socio economic decisions.
10 Economists and Researchers
(የምጣኔ ባለሙያዎች እና
ተመራማሪዎች )
 research-work & developmental thesis.
(የ አካዉንቲንግ መረጃ ተጠቃሚዎች ) ….

Proprietorship
(የ ግለሰብ ድርጅት)
Partnership
( የ ሸርክና ድርጅት )
Corporation
( የ አክስዮን ማህበር ድርጅት)
 Owned by two or more
persons.
 Often retail and service-
type businesses
 Generally unlimited
personal liability
 Partnership agreement
 Ownership divided into
shares of stock
 Separate legal entity
organized under state
corporation law
 Limited liability
 Generally owned by one
person.
 Often small service-type
businesses
 Owner receives any
profits, suffers any
losses, and is personally
liable for all debts.
Forms of Business Ownership
( የንግድ ድርጅቶች )
16

1. Business entity/ Economic Entity Concept
( የንግድ ድርጅት እሳቤ )
 It requires that the activities of the business entity should be
kept separate and distinct from that of owners & other parties.
ምሳሌ ፡ Bank Account , Properties, Debts, Revenues, Expenses,
Accounting Records and Reports, etc.
1
7
Accounting Concepts and Principles
(የ አካዉንቲንግ ፅንሰ-ሀሳቦች እና መርሆች )

Which one of the following is correct as per Business entity/ Economic Entity
Concept ?
a. Having the same bank account for business and personal purpose.
b. Separation of personal properties from business properties.
c. Buying automobile to the spouse from business income.
d. Reporting personal expenses on the income statement.
Accounting Concepts and Principles
(የ አካዉንቲንግ ፅንሰ-ሀሳቦች እና መርሆች )
ይሞክሩት!
18

 Provides the underlying framework for recording and summarizing economic events.
 Assets are claimed by either creditors or owners.
 Claims of creditors must be paid before ownership claims.
Assets
(ሃብት )
Liabilities
(እዳ)
Owner’s Equity
( የተጣራ ሃብት )
= +
Basic Accounting Equation
(የ አካዉንቲንግ መሪ ቀመር )…
19

Assets
(ሃብት )
Liabilities
(እዳ)
Owner’s Equity
= +
 Resources a business controls.
 provide future economic services or benefits to the entities that use them.
 Cash, Inventory, Equipment, Machine, Furniture, Vehicle, Land, Building, etc.
Asset (ሃብት)
20

 Claims against assets (debts and obligations).
 creditor’s claim on total assts.
 Creditors - party to whom money is owed.
 Accounts payable, Accrued Liabilities/Expenses, Unearned Revenues,
Mortgage Liability , Lease Liability , etc.
Liabilitiy (እዳ)
Assets
(ሃብት )
Liabilities
(እዳ)
Owner’s Equity
= +
21

 Ownership claim on total assets.
 Referred to as residual equity.
 Investment by owners and revenues (+)
 Drawings and expenses (-).
Owner’s Equity / Capital / Net Asset (የተጣራ ሃብት)
Assets
(ሃብት )
Liabilities
(እዳ)
Owner’s Equity
= +
22

1. Investments by owner are the assets the owner puts into the business.
2. Revenues result from business activities entered into for the purpose of earning
income.
 Common sources of revenue are: sales, fees, services, commissions, interest,
dividends, royalties, and rent.
Owner’s Equity (የተጣራ ሃብት)…
Increases in Owner’s Equity
23

1. Drawings An owner may withdraw cash or other assets for personal use.
2. Expenses are the cost of assets consumed or services used in the process of earning
revenue.
 Common expenses are: salaries expense, rent expense, utilities expense, tax expense,
etc.
Decreases in Owner’s Equity
24

Net income will result during a time period when:
a. assets exceed liabilities.
b. assets exceed revenues.
c. expenses exceed revenues.
d. revenues exceed expenses.
ይሞክሩት!
25

 What is a business
transaction ?
Business transaction - is an economic event or condition that directly
changes an entity’s financial condition or directly affects its results of
operations.
Business Transaction (የንግድ ልውውጥ / ግብይት )
2
6

ምሳሌ: Are the following events recorded in the accounting records?
Event
(ክስተት)
Purchase computer
(ኮምፒውተር ገዛ)
Criterion
( መስፈርት )
Is the financial position (assets, liabilities, or equity) of the company
changed?
Discuss product
design with
customer.
Pay rent
(የቢሮ ኪራይ ከፈለ)
Record/ Don’t Record
(ውሳኔ)
የሚከተሉት ክስተቶች ይመዘገባሉ / አይመዘገቡም ?
ይሞክሩት!
27

Transaction Analysis ( የንግድ ግብይት ትንታኔ )
ግብይት (1). Investment by Shareholders. R. Jonson decides to open a computer
programming service which he names Software Company. On September 1, 2014, they invest
€15,000 cash in exchange for €15,000 of ordinary shares.
28

ግብይት (2). Purchase of Equipment for Cash . Software Company
purchases computer equipment for €7,000 cash.
29

ግብይት (3). Purchase of Supplies on Credit. Software Company purchases
for €1,600 from Acme Supply Company computer paper and other supplies
expected to last several months. The purchase is on account.
30

ግብይት (4). Services Provided for Cash. Software Company receives €1,200
cash from customers for programming services it has provided.
31

ግብይት (5). Purchase of Advertising on Credit. Software Company receives a bill for €250
from the Daily News for advertising but postpones payment until a later date.
32

ግብይት (6). Services Provided for Cash and Credit. Software Company provides €3,500 of
programming services for customers. The company receives cash of €1,500 from customers,
and it bills the balance of €2,000 on account.
33

ግብይት (7). Payment of Expenses. Software Company pays the following expenses in cash
for September: store rent €600, salaries and wages of employees €900, and utilities €200.
34

ግብይት(8). Payment of Accounts Payable. Software Company pays its €250
Daily News bill in cash.
35

ግብይት (9). Receipt of Cash on Account. Software Company receives €600
in cash from customers who had been billed for services [in Transaction (6)].
36

ግብይት (10). Dividends. The corporation pays a dividend of €1,300 in cash.
37

ግብይት (10) . Drawing : R. Jonson withdraws $1,300 in cash from the business for his personal
use.
38

Accounting Cycle (የ አካዉንቲንግ ኡደት)…
39

Accounting cycle (የአካውንቲንግ ኡደት)…
40
 Accounting Cycle in Computerized System/data processing
cycle consists of four steps:
1. Data input ( መረጃ ማስገባት)
2. Data storage ( መረጃ ማከማቸት)
3. Data processing ( መረጃ ማጠናቀር)
4. Information Output ( ሪፖርት ማዘጋጀት)

Accounting cycle (የአካውንቲንግ ኡደት)…
INPUT
(ግብዓት)
OUTPUT
(ውጤት)
PROCESS
(ሂደት)
FEEDBACK
DATA INFORMATION
41

42
Recording Business Transactions and Preparation
of Financial Statements
(የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት እና የሂሳብ
መግለጫ ዝግጅት)

I.
The Recording Process
(የሂሳብ መዝገብ አያያዝ የምዝገባ
ሂደት )
43

Flow of Business Transactions
(የንግድ ግብይቶች ፊሰት )
1 Transaction
authorized 2 Transaction takes
place 3 Document
prepared
4
Entry recorded in
journal 5
Entry posted to
ledger
44

Account Name
Debit / Dr. Credit / Cr.
 Record of increases and decreases in a specific
asset, liability, equity, revenue, or expense item.
 Debit = “Left”
 Credit = “Right”
Account
An account can be illustrated in a
T-account form.
Account/ Ledger Account (አካውንት/ ሂሳብ)
45

Double-entry system ( ሚዛናዊ የ ምዝገባ ስርዓት )
► Each transaction must affect two or more accounts to keep the basic accounting
equation in balance.
► Recording done by debiting at least one account and crediting another.
► DEBITS must equal CREDITS.
► Italy in 15th century (1494).
► Franciscan monk , Luca Pacioli, Italian Renaissance
mathematician.
Debits and Credits ( ዴቢት እና ክሬዲት )
Account/ Ledger Account (አካውንት/ ሂሳብ)
46

Account Name
If Debit amounts are greater than Credit amounts, the account will have a
debit balance.
$10,000 $3,000
$15,000
8,000
Transaction #3
Balance
Transaction #1
Debits and Credits ( ዴቢት እና ክሬዲት)
47

Account Name
$10,000 $3,000
Balance
Transaction #1
$1,000
8,000
If Debit amounts are less than Credit amounts, the account will have a
credit balance.
48

 Assets - Debits should exceed credits.
 Liabilities – Credits should exceed debits.
 Normal balance is on the increase side.
Chapter
3-23
Assets
Assets
Normal Balance
Normal Balance
Chapter
3-24
Liabilities
Liabilities
Normal Balance
Normal Balance
49

 Owner’s investments and revenues increase
owner’s equity (credit).
 Owner’s drawings and expenses decrease
owner’s equity (debit).
Chapter
3-25
Normal Balance
Owner’s Capital
Chapter
3-23
Owner’s Drawing
Normal Balance
Chapter
3-25
Normal Balance
Owner’s Equity
Helpful Hint Because
revenues increase owner’s
equity, a revenue account
has the same debit/credit
rules as the Owner’s
Capital account. Expenses
have the opposite effect.
50

Chapter
3-27
Normal Balance
Normal Balance
Expense
Expense
Chapter
3-26
Normal Balance
Normal Balance
Revenue
Revenue
 The purpose of earning revenues is to benefit
the owner(s).
 The effect of debits and credits on revenue
accounts is the same as their effect on Owner’s
Capital.
 Expenses have the opposite effect: expenses
decrease owner’s equity.
51

Debits:
a. increase both assets and liabilities.
b. decrease both assets and liabilities.
c. increase assets and decrease liabilities.
d. decrease assets and increase liabilities.
Debits/Credits Rules (የዴቢት እና ክሬዲት ህጎች )
ይሞክሩት!
52

Accounts that normally have debit balances are:
a. assets, expenses, and revenues.
b. assets, expenses, and equity.
c. assets, liabilities, and owner’s drawing.
d. assets, owner’s drawing, and expenses.
Debits/Credits Rules (የዴቢት እና ክሬዲት ህጎች )
ይሞክሩት!
53

 Business documents - such as a sales slip, a check, a bill, or a cash register
tape, provide evidence of the transaction.
Analyze each transaction Enter transaction in a journal Transfer journal information to ledger
accounts
Steps in the Recording Process
(የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት)
54

 Book of original entry.
 Transactions recorded in chronological order.
 Contributions to the recording process:
1. Discloses the complete effects of a transaction.
2. Provides a chronological record of transactions.
3. Helps to prevent or locate errors because the debit and credit amounts can be easily
compared.
Journal (ጆርናል / የሂሳብ መዝገብ)
55

Journalizing - Entering transaction data in the journal.
ምሳሌ # 1 : On September 1, R. Johnson invested $15,000 cash in the business, and
Software Company purchased computer equipment for $7,000 cash.
Account Title Ref. Debit Credit
Date
Cash
Owner’s Capital
Sept. 1 15,000
15,000
General Journal
Equipment
Cash
7,000
7,000
56

ምሳሌ # 2: On July 1, Software Company purchases a delivery truck costing $14,000.
It pays $8,000 cash now and agrees to pay the remaining $6,000 on account.
Account Title Ref. Debit Credit
Date
Equipment
Cash
July 1 14,000
8,000
General Journal
6,000
Accounts payable
57

 General Ledger contains the entire group of accounts maintained by a company.
Ledger (ለጄር / የሂሳብ sƒ)
58

( የሂሳብ መዝገብ አያያዝ የምዝገባ ሂደት )
Standard Form of Account ( የተለመደ ሌጀር አካውንት ፎርም )
59

Posting –
process of
transferring
amounts from the
journal to the ledger
accounts.
Steps of Posting ( ከ ጆርናል ወደ ሌጀር የ ማስተላለፍ
ሂደት )
60

Posting:
a. normally occurs before journalizing.
b. transfers ledger transaction data to the journal.
c. is an optional step in the recording process.
d. transfers journal entries to ledger accounts.
Posting ( ከ ጆርናል ወደ ሌጀር ማስተላለፍ )
ይሞክሩት!
61

 Accounts and account numbers arranged in sequence in which they are presented in the
financial statements.
Chart of Accounts ( የሌጀር አካዉንት ቻርት/ዝርዝር)
62

Follow these steps:
1. Determine what type of
account is involved.
2. Determine what items
increased or decreased
and by how much.
3. Translate the increases
and decreases into debits
and credits.
The Recording Process (የምዝገባ ሂደት
ምሳሌዎች )
63

The Recording Process (የምዝገባ ሂደት ምሳሌዎች )
64

65

66

67

68

69

70

71

72

Kate Brown recorded the following transactions in a general journal during the month of
March. Post these entries to the Cash account.
Mar. 4 Cash 2,280
Service Revenue 2,280
Mar. 15 Salaries and Wages Expense 400
Cash 400
Mar. 19 Utilities Expense 92
Cash 92
ይሞክሩት !

Summary of Journalizing ( የምዝገባ ሂደት
ማጠቃለያ )
74

75
Summary of Posting (ከ ጆርናል ወደ ሌጀር የ ማስተላለፍ ሂደት
ማጠቃለያ )

Trial Balance ( የ ሂሳብ ሚዛን )
76

The trial balance may balance even when
1. a transaction is not journalized,
2. a correct journal entry is not posted,
3. a journal entry is posted twice,
4. incorrect accounts are used in journalizing or posting, or
5. offsetting errors are made in recording the amount of a transaction.
Trial Balance ( የ ሂሳብ ሚዛን )
Limitations of a Trial Balance ( የ ሂሳብ ሚዛን ጉድለቶች )
77

78
II.
Adjusting the Accounts
(የሂሳብ መዝገብ አያያዝ የ ሂሳቦች
ማስተካከያ ሂደት )

Generally a
 month,
 quarter, or
 year.
Accountants divide the economic life of a business into artificial time periods
(Time Period Assumption).
Jan. Feb. Mar. Apr. Dec.
. . . . .
Alternative Terminology
The time period assumption
is also called the
periodicity assumption.
Timing Issues ( የጊዜ ጉዳይ )
79

Cash-Basis Accounting ( ገንዘብ - መር አካውንቲንግ ) :
 Revenues recognized when cash is received.
 Expenses recognized when cash is paid.
 Cash-basis accounting is not in accordance with generally accepted
accounting principles (GAAP).
Cash Basis Accounting versus Accrual Basis Accounting
80

Accrual-Basis Accounting ( ድርጊት - መር አካውንቲንግ )
 Transactions recorded in the periods in which the events occur.
 Companies recognize revenues when they perform services (rather than when
cash is received).
 Expenses are recognized when incurred (rather than when paid).
Basis of Accounting ( የ አካውንቲንግ ስርዓቶች )
81

Revenue Recognition Principle ( የገቢ ምዝገባ መርህ )
Recognize revenue in the accounting
period in which the performance obligation
is satisfied.
82

Expense Recognition Principle ( የወጪ ምዝገባ
መርህ )
Match expenses with revenues in the
period when the expense makes its
contribution to revenue.
“Let the expenses follow the revenues.”
83

One of the following statements about the accrual basis of accounting is false? That
statement is:
a. Events that change a company’s financial statements are recorded in the periods in
which the events occur.
b. Revenue is recognized in the period in which the performance obligation is satisfied.
c. The accrual basis of accounting is in accord with generally accepted accounting
principles.
d. Revenue is recorded only when cash is received, and expenses are recorded only
when cash is paid.
ይሞክሩት !
84

 Adjusting Entries -
 Ensure that the revenue recognition and expense recognition principles are
followed.
 Necessary because the trial balance may not contain up-to-date and complete
data.
 Required every time a company prepares financial statements.
 Will include one income statement account and one balance sheet account.
Adjusting Entries (የ ሂሳቦች ማስተካከያ ምዝገባ ሂደት)
85

 Adjusting entries are made to ensure that:
a. expenses are recognized in the period in which they are incurred.
b. revenues are recorded in the period in which services are performed.
c. balance sheet and income statement accounts have correct balances at
the end of an accounting period.
d. all of the above.
ይሞክሩት !
86

Types of Adjusting Entries (የ ሂሳቦች ማስተካከያ ዓይነቶች)
1. Prepaid Expenses. Expenses paid in
cash before they are used or consumed.
Deferrals
1. Accrued Revenues. Revenues for
services performed but not yet received in
cash or recorded.
2. Accrued Expenses. Expenses incurred
but not yet paid in cash or recorded.
2. Unearned Revenues.
Cash received before services are
performed.
Accruals
87

Trial Balance – Each
account is analyzed to
determine whether it is
complete and up-to-date.
Types of Adjusting Entries (የ ሂሳቦች ማስተካከያ ዓይነቶች)
88

Deferrals - are expenses or revenues that are recognized at a date later
than the point when cash was originally exchanged. There are two types:
 Prepaid expenses and
 Unearned revenues.
Adjusting Entries for Deferrals ( ድፌራሎችን ማስተካከል )
Adjusting Entries ( የ ሂሳቦች ማስተካከያ ምዝገባ ሂደት )
89

Payment of cash, that is recorded as an asset because service or benefit will be
received in the future.
 insurance
 supplies
 advertising
Cash Payment Expense Recorded
BEFORE
 rent
 equipment
 buildings
Prepayments often occur in regard to:
Prepaid Expenses ( ቅድመ-ክፍያ ለወጪ)
90

 Expire either with the passage of time or through use.
 Adjusting entry:
► Increase (debit) to an expense account and
► Decrease (credit) to an asset account.
Prepaid Expenses ( ቅድመ-ክፍያ ለወጪ)
91

ምሳሌ : Pioneer Advertising Agency purchased supplies
costing $2,500 on October 5. Pioneer recorded the
payment by increasing (debiting) the asset Supplies. This
account shows a balance of $2,500 in the October 31 trial
balance. An inventory count at the close of business on
October 31 reveals that $1,000 of supplies are still on hand.
Supplies 1,500
Supplies expense 1,500
Oct. 31
92

93

ምሳሌ : On October 4, Pioneer Advertising Agency paid $600
for a one-year fire insurance policy. Coverage began on October
1. Pioneer recorded the payment by increasing (debiting)
Prepaid Insurance. This account shows a balance of $600 in the
October 31 trial balance. Insurance of $50 ($600 ÷ 12) expires
each month.
Prepaid insurance 50
Insurance expense 50
Oct. 31
94

95

Depreciation ( የእርጅና ቅናሽ )
 Buildings, equipment, and motor vehicles (assets that provide service for many
years) are recorded as assets, rather than an expense, in the year acquired.
 Depreciation is the process of allocating the cost of an asset to expense over
its useful life.
 Depreciation does not attempt to report the actual change in the value of the
asset.
96

40
ምሳሌ : For Pioneer Advertising, assume that depreciation
on the equipment is $480 a year, or $40 per month.
Accumulated depreciation 40
Depreciation expense
Oct. 31
Accumulated Depreciation is called a contra asset
account.
97

98

Receipt of cash that is recorded as a liability because the service has not been
performed.
 Rent
 Airline tickets
Cash Receipt Revenue Recorded
BEFORE
 Magazine subscriptions
 Customer deposits
Unearned revenues often occur in regard to:
Unearned Revenue (ቅድመ-ክፍያ ለገቢ)
99

 Adjusting entry is made to record the revenue for services performed during the
period and to show the liability that remains at the end of the period.
 Results in a decrease (debit) to a liability account and an increase (credit) to a
revenue account.
Unearned Revenues (ቅድመ-ክፍያ ለገቢ)
100

ምሳሌ : Pioneer Advertising Agency received $1,200 on October 2 from a customer
for advertising services expected to be completed by December 31. Unearned Service
Revenue shows a balance of $1,200 in the October 31 trial balance. Analysis reveals that
the company performed $400 of services in October.
Service revenue 400
Unearned service revenue 400
Oct. 31
101

102

Accruals are made to record-
 Revenues for services performed
OR
 Expenses incurred
in the current accounting period that have not been recognized through daily
entries.
Adjusting Entries for Accruals (አኩራሎችን ማስተካከል )
103

Revenues for services performed but not yet received in cash or recorded.
 Rent
 Interest
 Services performed
Accrued revenues often occur in regard to:
Accrued Revenues (Assets) ( ያልተሰበሰቡ ገቢዎች )
BEFORE Cash Receipt
Revenue Recorded
104

 Adjusting entry shows the receivable that exists and records the revenues for
services performed.
► Increases (debits) an asset account and
► Increases (credits) a revenue account.
Accrued Revenues (Assets) ( ያልተሰበሰቡ ገቢዎች )
105

ምሳሌ : In October Pioneer Advertising Agency earned $200 for
advertising services that had not been recorded.
Accounts receivable 200
Cash 200
Nov. 10
200
Service revenue 200
Accounts receivable
Oct. 31
On November 10, Pioneer receives cash of $200 for the
services performed.
106

107

Expenses incurred but not yet paid in cash or recorded.
 Rent
 Interest
 Taxes
 Salaries
Accrued expenses often occur in regard to:
BEFORE Cash Payment
Expense Recorded
Accrued Expenses ( Liabilities) ( ያልተከፈሉ ወጪዎች )
108

 Adjusting entry records the obligation and recognizes the expense.
► Increase (debit) an expense account and
► Increase (credit) a liability account.
Accrued Expenses ( Liabilities ) ( ያልተከፈሉ ወጪዎች )
109

ምሳሌ: Pioneer Advertising Agency signed a three-month note payable in the amount
of $5,000 on October 1. The note requires Pioneer to pay interest at an annual rate of
12%.
Interest payable 50
Interest expense 50
Oct. 31
110

111

ምሳሌ : Pioneer Advertising Agency last paid salaries on October 26; the next
payment of salaries will not occur until November 9. The employees receive total salaries
of $2,000 for a five-day work week, or $400 per day. Thus, accrued salaries at October 31
are $1,200 ($400 x 3 days).
112

113

III.
Completing the Accounting Cycle
(የአካውንቲንግ ኡደት የ ማጠናቀቅ ሂደት)
114

 Multiple-column form used in preparing financial statements.
 Not a permanent accounting record.
 Five step process.
 Use of worksheet is optional.
Worksheet ፡
Worksheet ( የሂሳብ ሥራ አጋዥ ሰንጠረዥ )
115

Steps in Preparing a Worksheet ( የሂሳብ ሥራ አጋዥ ሰንጠረዥ አዘገጃጀት
ሂደት )
116

Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 15,200
Supplies 2,500
Prepaid Insurance 600
Office Equipment 5,000
Notes Payable 5,000
Accounts Payable 2,500
Unearned Revenue 1,200
Owner's Capital 10,000
Owner's Drawing 500
Service Revenue 10,000
Salaries Expense 4,000
Rent Expense 900
Totals 28,700 28,700
Balance Sheet
Adjusted Income
Trial Balance Adjustments Trial Balance Statement
1. Prepare a Trial Balance on the Worksheet
Trial balance amounts come directly from
ledger accounts.
Include all accounts with
balances.
ሂደት )
117

Adjusting Entries
ሂደት )
118

Cash 15,200
Supplies 2,500 1,500
Prepaid Insurance 600 50
Office Equipment 5,000
Notes Payable 5,000
Accounts Payable 2,500
Unearned Revenue 1,200 400
Owner's Capital 10,000
Owner's Drawing 500
Service Revenue 10,000 400
200
Salaries Expense 4,000 1,200
Rent Expense 900
Totals 28,700 28,700
Supplies Expense 1,500
Insurance Expense 50
Accumulated Depreciation 40
Depreciation Expense 40
Accounts Receivable 200
Interest Expense 50
Interest Payable 50
Salaries Payable 1,200
Totals 3,440 3,440
Balance Sheet
Adjusted Income
2. Enter the Adjustments in the Adjustments Columns
(a)
(b)
(a)
(g)
(c)
(d)
(d)
(e)
(b)
(e)
(f)
(f)
(g)
(c)
Enter adjustment amounts, total adjustments
columns,
and check for equality.
Add additional accounts as needed.
Adjustments Key:
(a) Supplies Used.
(b) Insurance Expired.
(c) Depreciation Expensed.
(d) Service Revenue Earned.
(e) Service Revenue Accrued.
(f) Interest Accrued.
(g) Salaries Accrued.
ሂደት )
119

Cash 15,200 15,200
Supplies 2,500 1,500 1,000
Prepaid Insurance 600 50 550
Office Equipment 5,000 5,000
Notes Payable 5,000 5,000
Accounts Payable 2,500 2,500
Unearned Revenue 1,200 400 800
Owner's Capital 10,000 10,000
Owner's Drawing 500 500
Service Revenue 10,000 400 10,600
200
Salaries Expense 4,000 1,200 5,200
Rent Expense 900 900
Totals 28,700 28,700
Supplies Expense 1,500 1,500
Insurance Expense 50 50
Accumulated Depreciation 40 40
Depreciation Expense 40 40
Accounts Receivable 200 200
Interest Expense 50 50
Interest Payable 50 50
Salaries Payable 1,200 1,200
Totals 3,440 3,440 30,190 30,190
Balance Sheet
Adjusted Income
3. Complete the Adjusted Trial Balance Columns
(a)
(b)
(a)
(g)
(c)
(d)
(d)
(e)
(b)
(e)
(f)
(f)
(g)
(c)
Total the adjusted trial balance columns and check
for equality.
ሂደት )
120

Cash 15,200 15,200
Supplies 2,500 1,500 1,000
Prepaid Insurance 600 50 550
Office Equipment 5,000 5,000
Notes Payable 5,000 5,000
Accounts Payable 2,500 2,500
Unearned Revenue 1,200 400 800
Owner's Capital 10,000 10,000
Owner's Drawing 500 500
Service Revenue 10,000 400 10,600 10,600
200
Salaries Expense 4,000 1,200 5,200 5,200
Rent Expense 900 900 900
Totals 28,700 28,700
Supplies Expense 1,500 1,500 1,500
Insurance Expense 50 50 50
Accumulated Depreciation 40 40
Depreciation Expense 40 40 40
Accounts Receivable 200 200
Interest Expense 50 50 50
Interest Payable 50 50
Salaries Payable 1,200 1,200
Totals 3,440 3,440 30,190 30,190 7,740 10,600
Balance Sheet
Adjusted Income
4. Extend Amounts to Financial Statement Columns
(a)
(b)
(a)
(g)
(c)
(d)
(d)
(e)
(b)
(e)
(f)
(f)
(g)
(c)
Extend all revenue and expense account balances to the
income statement columns.
ሂደት )
121

Cash 15,200 15,200 15,200
Supplies 2,500 1,500 1,000 1,000
Prepaid Insurance 600 50 550 550
Office Equipment 5,000 5,000 5,000
Notes Payable 5,000 5,000 5,000
Accounts Payable 2,500 2,500 2,500
Unearned Revenue 1,200 400 800 800
Owner's Capital 10,000 10,000 10,000
Owner's Drawing 500 500 500
Service Revenue 10,000 400 10,600 10,600
200
Totals 28,700 28,700
Accumulated Depreciation 40 40 40
Accounts Receivable 200 200 200
Interest Payable 50 50 50
Salaries Payable 1,200 1,200 1,200
Totals 3,440 3,440 30,190 30,190 7,740 10,600 22,450 19,590
Net Income 2,860 2,860
Totals 10,600 10,600 22,450 22,450
Balance Sheet
Adjusted Income
(a)
(b)
(a)
(g)
(c)
(d)
(d)
(e)
(b)
(e)
(f)
(f)
(g)
(c)
ሂደት )
Compute Net Income or Net Loss.
5. Total Columns, Compute Net Income (Loss)
122

Net income is shown on a worksheet in the:
a. income statement debit column only.
b. balance sheet debit column only.
c. income statement credit column and balance sheet debit column.
d. income statement debit column and balance sheet credit column.
ይሞክሩት !
ሂደት )
123

124
Financial Statements Preparation
(የ ሂሳብ መግለጫ አዘገጃጀት)

Financial Statements (የሂሳብ መግለጫዎች )…
125
 They are the end products of accounting cycle.
 They provide information about ፡
i. the financial position ;
ii. financial performance and
iii. cash flows of an entity that is useful to users in
making business decisions.

126
 There are four (4) basic kinds of Financial Statements.
1. Statement of Financial Performance or Income
Statement (የገቢ ና ወጪ መግለጫ )
2. Statement of Owners’ Equity or Capital Statement
(የካፒታል/ የተጣራ ሃብት መግለጫ )
3. Statement of Financial Position or Balance Sheet)
( የሃብትና እዳ መግለጫ )
4. Statement of Cash Flow (የጥሬ ገንዘብ ፍሰት
መግለጫ )

127
 International Accounting Standards 1 (IAS 1) covers
the guidelines for the presentation, structure and
content of financial statements.
 The main components are:
1) Statement of financial position
2) Statement of profit or loss and other comprehensive
income
3) Statement of changes in equity
4) Statement of cash flows
5) Notes to the financial statements

 Reports the revenues and expenses for a specific period of time.
 Lists revenues first, followed by expenses.
 Shows net income (or net loss).
Income Statement
128

 Reports the changes in owner’s equity for a specific period of time.
 The time period is the same as that covered by the income statement.
Owner’s Equity Statement
129

 Proprietorship - one capital account.
 Partnership - capital account for each partner.
 Corporation - Capital Stock and Retained Earnings.
Owner’s Equity
130

LO 8 Understand the four financial statements and how they are prepared.
 Reports the assets, liabilities, and owner’s equity at a specific date.
 Lists assets at the top, followed by liabilities and owner’s equity.
 Total assets must equal total liabilities and owner’s equity.
 Is a snapshot of the company’s financial condition at a specific moment in time
(usually the month-end or year-end).
Balance Sheet
131

 Information for a specific period of time.
 Answers the following:
1. Where did cash come from?
2. What was cash used for?
3. What was the change in the cash balance?
Statement of Cash Flows
132

Which of the following financial statements is prepared as of a specific date?
a. Balance sheet.
b. Income statement.
c. Owner's equity statement.
d. Statement of cash flows.
LO 8 Understand the four financial statements and how they are prepared.
ይሞክሩት !
133

General Features of Presentation of F/S
( የ ሂሳብ መግለጫ አዘገጃጀት መርሆች)
1. Fair presentation & compliance with IFRS
2. Going concern
3. Accrual basis of accounting
4. Materiality & aggregation
5. Offsetting
6. Frequency of reporting
7. Consistency of presentation
134

Owner’s Equity
Statement
Financial Statements are prepared directly from the Adjusted Trial Balance.
Income
Statement
Balance Sheet
Financial Statements (የሂሳብ መግለጫዎች )
135

1. Income statement is prepared from the income statement columns.
2. Balance sheet and owner’s equity statement are prepared from the balance
sheet columns.
3. Companies journalize and post adjusting entries.
Preparing Statements from a Worksheet
(ከ ሂሳብ ሥራ አጋዥ ሰንጠረዥ የሂሳብ መግለጫዎችን
ማዘጋጀት)
138

Cash 15,200 15,200 15,200
Supplies 2,500 1,500 1,000 1,000
Prepaid Insurance 600 50 550 550
Office Equipment 5,000 5,000 5,000
Notes Payable 5,000 5,000 5,000
Accounts Payable 2,500 2,500 2,500
Unearned Revenue 1,200 400 800 800
Owner's Capital 10,000 10,000 10,000
Owner's Drawing 500 500 500
Service Revenue 10,000 400 10,600 10,600
200
Totals 28,700 28,700
Accumulated Depreciation 40 40 40
Accounts Receivable 200 200 200
Interest Payable 50 50 50
Salaries Payable 1,200 1,200 1,200
Totals 3,440 3,440 30,190 30,190 7,740 10,600 22,450 19,590
Net Income 2,860 2,860
Totals 10,600 10,600 22,450 22,450
Balance Sheet
Adjusted Income
(a)
(b)
(a)
(g)
(c)
(d)
(d)
(e)
(b)
(e)
(f)
(f)
(g)
(c)
(ከ ሂሳብ ሥራ አጋዥ ሰንጠረዥ የሂሳብ መግለጫዎችን ማዘጋጀት)
5. Total Columns, Compute Net Income (Loss)
139

LO 1 Prepare a worksheet.
ማዘጋጀት)

ማዘጋጀት)

ማዘጋጀት) Illustration 4-4

 Adjusting entries are prepared from the adjustments columns of the worksheet.
 Journalizing and posting of adjusting entries follows the preparation of financial
statements when a worksheet is used.
Preparing Adjusting Entries from a Worksheet
( ከ ሂሳብ ሥራ አጋዥ ሰንጠረዥ የ ሂሳቦች ማስተካከያ
መመዝገብ )

At the end of the accounting period, the company makes the accounts ready for
the next period.
Closing the Books ( ሂሳብ የ መዝጋት ሂደት)
144

Closing entries formally recognize, in the general ledger, the transfer of
 net income (or net loss) and
 owner’s drawing
to owner’s capital.
Closing entries are only made at the end of the annual accounting period.
Closing the Books (ሂሳብ የ መዝጋት ሂደት)
Preparing Closing Entries
145

Owner’s Capital is a permanent
account; all other accounts are
temporary accounts.
Owner’s Drawing is closed directly to
Capital and not to Income Summary
because Owner’s Drawing is not an
expense.
Note:
146

Closing
Entries
147

Posting
Closing
Entries
148

Purpose is to prove the equality of the permanent account balances after journalizing
and posting of closing entries.
Post-Closing Trial Balance (ድህረ-መዝጊያ የሂሳብ
ሚዛን )
149

 Unnecessary if the records are error-free.
 Made whenever an error is discovered.
 Must be posted before closing entries.
Instead of preparing a correcting entry, it is possible to reverse the incorrect entry
and then prepare the correct entry.
Correcting Entries (የሂሳብ ምዝገባ ስህተቶችን የ ማረም
ሂደት)
Correcting Entries—An Avoidable Step
150

ምሳሌ # 1 : On May 10, Mercato Co. journalized and posted a $50 cash collection on account
from a customer as a debit to Cash $50 and a credit to Service Revenue $50. The company
discovered the error on May 20, when the customer paid the remaining balance in full.
Cash 50
Incorrect entry
Service Revenue 50
Cash 50
Correct entry
Service Revenue 50
Correcting entry
Correcting Entries (የሂሳብ ምዝገባ ስህተቶችን የ ማረም ሂደት)
151

ምሳሌ # 2 : On May 18, Mercato purchased on account equipment costing $450. The
transaction was journalized and posted as a debit to Equipment $45 and a credit to Accounts
Payable $45. The error was discovered on June 3,
Correcting Entries (የሂሳብ ምዝገባ ስህተቶችን የ ማረም ሂደት)
Equipment 45
Incorrect entry
Accounts Payable 45
Equipment 450
Correct entry
Accounts Payable 450
Equipment 405
Correcting entry
Accounts Payable 405
152

Financial Statements Analysis
(የሂሳብ መግለጫ መተንተን)
153

Financial Statements Analysis ( የሂሳብ መግለጫ
መተንተን )
154
 It is also called Financial Analysis / Accounting analysis /
Analysis of finance.
 It is the process of analyzing a company's financial
statements for decision-making purposes.
 It is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing relationship
between financial statements items for certain period.
 It is concerned with the selection, evaluation, and
interpretation of financial data to assist investment, financing,
and dividend decisions.

 Major Types of Financial Analysis (ዋና ዋና
የሂሳብ መግለጫ ትንተና ስልቶች )
I. Ratio Analysis ( ሬሾ /አንፃራዊ ትንተና )
II. Horizontal Analysis ( አግድም ትንተና )
III. Vertical Analysis ( ሰያፍ ትንተና )
Techniques of Financial Analysis
(የሂሳብ መግለጫ ትንተና ስልቶች)
157

I) Ratio Analysis (ሬሾ /አንፃራዊ ትንተና ሬሾ ትንተና
) …
 Ratio analysis is an analytical technique that typically
involves a comparison of the relationship between two
financial statement items;
 Financial ratios are used to evaluate the financial
condition and profitability of the firm. Ratio analysis is a
powerful tool of financial analysis. Ratios are more
meaningful if there is standard of measurement or
comparison.
158

ሬሾ በተለያየ መልኩ ሊገለጽ ይችላል:
i. በ ንፅፅር (፡ ) , current ratio of 2:1
ii. በ መቶኛ (%) , profit margin of 2%
iii.በ ዋጋ ( $ ) , EPS of $2.25
I) Ratio Analysis (ሬሾ /አንፃራዊ ትንተና ) …
159

Major Types of Financial Ratios (ዋና ዋና ሬሾ ዓይነቶች
) I) Liquidity Ratios
 የ ገንዘብ ክምችት መለኪያ ሬሾዎች
II) Asset Management/ Activity /Efficiency Ratios
 የ ሃብት አጠቃቀም መለኪያ ሬሾዎች
II) Debt Management Ratios
 የ ብድር አጠቃቀም መለኪያ ሬሾዎች
III) Profitability Tests
 የ ትርፋማነት መለኪያ ሬሾዎች
I) Ratio Analysis (ሬሾ /አንፃራዊ ትንተና )
…
160

1) Liquidity Ratios (የ ገንዘብ ክምችት መለኪያ
ሬሾዎች)… ….
161
a) Current Ratio:
 It measures the ability of the firm to meet short-term obligations
from its current assets.
 It is a measure of a firm’s short-term solvency.
 Generally, the Current ratio greater than or equal the standard is
desirable. Thus it must be 1 or more.

162
b) Quick/Acid Test Ratio :
 It measures an entity's ability to pay its current liabilities by using
its most liquid assets excluding least liquid inventories.
 Generally, Quick ratio greater than or equal to the standard is
desirable. Thus its quick ratio must be 1 or more.
1) Liquidity Ratios (የ ገንዘብ ክምችት መለኪያ
ሬሾዎች)…

163
a) Inventory Turnover (ITO):
 It measures the average number time per year that an entity
sells or turns over its inventory
 High inventory turnover ratios are taken as a sign of efficient
management of inventory where as low inventory turnover is
a sign of slow moving or obsolete items in inventory.
 Generally, higher ITO is desirable.
2) Asset Management Ratios (የ ሃብት አጠቃቀም መለኪያ
ሬሾዎች )…

164
b) Receivable Turn over (RTO) :
 It tells us the number of times A/R have been turned
over/ turned into cash during the year.
 Generally, RTO greater than or equal to the standard is
desirable.
ሬሾዎች )…

165
c) Average Collection Period (ACP):
 It is called Receivable Turn Over in Days (RTD) or Days
Sales Outstanding.
 It tells us the average number of days that receivables
are outstanding before being collected.
 Generally, a lower ACP is desirable.
ሬሾዎች )…

166
d)Fixed Assets Turnover (FATO)
 It is used to measure how effectively the firm uses its
plant assets in generating sales.
 Generally, FATO greater than or equal to the standard
is desirable.
ሬሾዎች )…

167
f) Total Assets turn over (TATO)
 It shows the firm’s ability in generating sales from all
financial resources committed to total assets.
 Generally, TATO greater than or equal to the standard is
desirable.
ሬሾዎች )…

3) Debt Management Ratios (የ ብድር አጠቃቀም መለኪያ
ሬሾዎች)…
168
a) Debt (D/A) Ratio :
 It measures the extent to which the firm is using borrowed
money.
 Generally, creditors would like a lower debt ratio.

169
4) Profitability Ratios (የ ትርፋማነት መለኪያ
ሬሾዎች)
a) Gross Profit Margin (GPM)Ratio :
 It reflects management’s effectiveness in pricing policy,
generating sales and production efficiency.
 Generally, gross profit margin ratio greater than or equal
to the standard is desirable.

170
b) Net Profit Margin (NPM) Ratio :
 It indicates management’s efficiency in manufacturing,
administering, selling, financing, pricing and tax management.
 Generally, net profit margin ratio greater than or equal to the
standard is desirable.
ሬሾዎች)

171
c) Return on Investment (ROI) :
 It is also called Return on Assets (ROA) .
 It measures the amount of profit generated on
investments in assets .
 Generally, a higher ROA is desirable.
ሬሾዎች)

172
d) Return of Equity (ROE) :
 It is also called the Return on Stockholders’ Equity/ Return on Net
Worth.
 It measures the return earned by stockholders’ on their investment
and serves as an indicator of management performance.
 Generally, a higher ROE is desirable
4) Profitability Ratios (የ ትርፋማነት መለኪያ ሬሾዎች)

173
ሬሾዎች)
e) Earnings per Share (EPS):
 It simply shows the profitability of the firm on a
per share basis during the reporting period.
 Generally, higher EPS is desirable.

174
ሬሾዎች)
f) Dividend per Share (DPS) :
 It represents the Birr amount of cash dividends a
corporation paid on each share of its common
stock outstanding during the reporting period.
 Generally, higher DPS is desirable.

175
g) Payout (P/O) Ratio :
 It shows the percentage of earnings paid to
stockholders.
 That is, the payout ratio expresses the cash dividend paid
per share as a percentage of EPS.
 Generally, higher P/O is desirable.
ሬሾዎች)

II) Horizontal Analysis ( የ አግድም ትንተና
)…
 Horizontal analysis –
 It is used in the review of a company's financial
performance over multiple periods.
 It allows users to easily spot trends and growth
patterns over a number of accounting periods
 It is used to compare historical data, such as ratios,
or line items, over a number of accounting periods.
 የተለያዩ የሂሳብ መግለጫዎችን በመጠቀም ከግዜ ወደ
ግዜ ያለዉን ለውጥ ማየት
176

)…
ይሞክሩት !
በተሰጠው የሁለት ዓመት ዳታ
መሰረት የድርጅቱ የኣግድም
ትንተና ከውን !
177

ABC CORPORATION
Comparative Balance Sheets
December 31, 2020 and 2019
I
2020 2019 A
Assets
Current assets:
Cash 12,000
$ 23,500
$
Accounts receivable, net 60,000 40,000
Inventory 80,000 100,000
Prepaid expenses 3,000 1,200
Total current assets 155,000 164,700
Property and equipment:
Land 40,000 40,000
Buildings and equipment, net 120,000 85,000
Total property and equipment 160,000 125,000
Total assets 303,000
$ 23,500
$
178

 የብር መጠን ለውጥ ለማስላት 2020 ከ 2019 አንጻር
ለማስላት፡
ለውጥ =
–
)…
179

ለውጡን በመቶኛ ለማስላት
=
II) Horizontal Analysis ( የ አግድም ትንተና )…
180

ABC CORPORATION
December 31,2020 and 2019
Increase (Decrease)
2020 2019 Amount %
Assets
Current assets:
Cash 12,000
$ 23,500
$ (11,500)
$
Inventory 80,000 100,000
Land 40,000 40,000
$ 289,700
$
$12,000 – $23,500 = $(11,500)
)…
181

Increase (Decrease)
2020 2019 Amount %
Assets
Current assets:
Cash 12,000
$ 23,500
$ (11,500)
$ (48.9)
Inventory 80,000 100,000
Land 40,000 40,000
$ 289,700
$
($11,500 ÷ $23,500) × 100% = 48.9%
)…
182

ABC CORPORATION
Increase (Decrease)
2020 2019 Amount %
Assets
Current assets:
Cash 12,000
$ 23,500
$ (11,500)
$ (48.9)
Accounts receivable, net 60,000 40,000 20,000 50.0
Inventory 80,000 100,000 (20,000) (20.0)
Prepaid expenses 3,000 1,200 1,800 150.0
Total current assets 155,000 164,700 (9,700) (5.9)
Land 40,000 40,000 - 0.0
Buildings and equipment, net 120,000 85,000 35,000 41.2
Total property and equipment 160,000 125,000 35,000 28.0
$ 289,700
$ 25,300
$ 8.7
)…
183

)…
184

ABC CORPORATION
Increase (Decrease)
2020 2019 Amount %
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 67,000
$ 44,000
$ 23,000
$ 52.3
Notes payable 3,000 6,000 (3,000) (50.0)
Total current liabilities 70,000 50,000 20,000 40.0
Long-term liabilities:
Bonds payable, 8% 75,000 80,000 (5,000) (6.3)
Total liabilities 145,000 130,000 15,000 11.5
Stockholders' equity:
Preferred stock 20,000 20,000 - 0.0
Common stock 60,000 60,000 - 0.0
Additional paid-in capital 10,000 10,000 - 0.0
Total paid-in capital 90,000 90,000 - 0.0
Retained earnings 80,000 69,700 10,300 14.8
Total stockholders' equity 170,000 159,700 10,300 6.4
Total liabilities and stockholders' equity 315,000
$ 289,700
$ 25,300
$ 8.7
)…
185

)…
186

ABC CORPORATION
Comparative Income Statements
For the Years Ended December 31, 2020 and 2019
Increase (Decrease)
20120 2019 Amount %
Net sales 520,000
$ 480,000
$ 40,000
$ 8.3
Cost of goods sold 360,000 315,000 45,000 14.3
Gross margin 160,000 165,000 (5,000) (3.0)
Operating expenses 128,600 126,000 2,600 2.1
Net operating income 31,400 39,000 (7,600) (19.5)
Interest expense 6,400 7,000 (600) (8.6)
Net income before taxes 25,000 32,000 (7,000) (21.9)
Less income taxes (30%) 7,500 9,600 (2,100) (21.9)
Net income 17,500
$ 22,400
$ (4,900)
$ (21.9)
)…
187

ABC CORPORATION
Increase (Decrease)
2020 2019 Amount %
Net sales 520,000
$ 480,000
$ 40,000
$ 8.3
Gross margin 160,000 165,000 (5,000) (3.0)
Net income 17,500
$ 22,400
$ (4,900)
$ (21.9)
Sales increased by 8.3% while net income decreased by 21.9%.
)…
188

ABC CORPORATION
Increase (Decrease)
2020 2019 Amount %
Net sales 520,000
$ 480,000
$ 40,000
$ 8.3
Gross margin 160,000 165,000 (5,000) (3.0)
Net income 17,500
$ 22,400
$ (4,900)
$ (21.9)
There were increases in both cost of goods sold (14.3%) and operating
expenses (2.1%). These increased costs more than offset the increase in
sales, yielding an overall decrease in net income.
)…
189

3) Vertical Analysis ( ሰያፍ ትንተና )
…
Vertical Analysis – It is a method of financial analysis in
which each line item is listed as a percentage of a base
figure within the statement.
 Thus, line items on an income statement can be stated as
a percentage of sales/revenue, while line items on a
balance sheet can be stated as a percentage of total
assets .
 የአንድን የሂሳብ መግለጫ ኢለመንቶችን እርስ በራስ በማወዳደር
ያሉበትን ሁነታ ማሰስ ፡፡ ለምሳሌ፡ የአመቱ የተጣራ ትርፍ ከ
ኣጠቃላይ ሽያጭ ኣንጻር
190

Sample Company
Balance Sheet (Assets)
At December 31, 2020 and 2019
% of Total Assets
2020 2019 2020 2019
Cash 82,000
$ 30,000
$ 17% 8%
Accts. Rec. 120,000 100,000 25% 26%
Inventory 87,000 82,000 18% 21%
Land 101,000 90,000 21% 23%
Equipment 110,000 100,000 23% 26%
Accum. Depr. (17,000) (15,000) -4% -4%
Total 483,000
$ 387,000
$ 100% 100%
$82,000 ÷ $483,000 = 17% rounded
$30,000 ÷ $387,000 = 8% rounded
3) Vertical Analysis ( ሰያፍ ትንተና ) …
191

Sample Company
Balance Sheet (Assets)
% of Total Assets
2020 2019 2020 2019
Cash 82,000
$ 30,000
$ 17% 8%
Accts. Rec. 120,000 100,000 25% 26%
Inventory 87,000 82,000 18% 21%
Land 101,000 90,000 21% 23%
Equipment 110,000 100,000 23% 26%
Accum. Depr. (17,000) (15,000) -4% -4%
Total 483,000
$ 387,000
$ 100% 100%
192

Sample Company
Balance Sheet (Liabilities & Stockholders' Equity)
% of Total Assets
2020 2019 2020 2019
Acts. Payable 76,000
$ 60,000
$ 16% 16%
Wages Payable 33,000 17,000 7% 4%
Notes Payable 50,000 50,000 10% 13%
Common Stock 170,000 160,000 35% 41%
Retained Earnings 154,000 100,000 32% 26%
Total 483,000
$ 387,000
$ 100% 100%
$76,000 ÷ $483,000 = 16% rounded
193

1. የኣንድ ቢዝነስ ህልውና የጀርባ ኣጥንት ፋይናንስ ነው፡፡
2. ይህ ፋይናንስ በቀጣይነት ለማግኘት ኣግባብነት ያለው
ኣካውንቲንግ ሲስተም መዘርጋት ግዴታ ነው፡፡
3. ይህ ሲሆን ቢዝነሱ ትርፉና ኪሳራዉን በኣግባቡ እየመዘገበ
እንዲሁም ያለበትን ፖዚሽን በኣግባቡ መመዝገብ እና
ኣስፈላጊውን እርምት በግዜ እንዲወስድ ይረዳዋል፡፡
4. ከዚህም በተጨማሪ እዳዉን ለመክፈልም በቂ ኣቅም ይኖረዋል፡፡
5. ኣበዳሪዎችም በቀጣይነት ፋይናንስ ለማድረግ ዝግጁ ይሆናሉ፡፡
ማጠቃለያ
194

የሥልጠናዉ መጨረሻ
አመሰግናለሁ!
195

DBE_የሂሳብ_መግለጫ_አዘገጃጀትና_እና_ትንተና፥_ማሰልጠኛ_ስላይድ_May_2022_Revised.ppt

DBE_የሂሳብ_መግለጫ_አዘገጃጀትና_እና_ትንተና፥_ማሰልጠኛ_ስላይድ_May_2022_Revised.ppt

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DBE_የሂሳብ_መግለጫ_አዘገጃጀትና_እና_ትንተና፥_ማሰልጠኛ_ስላይድ_May_2022_Revised.ppt

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