Kế toán, kiểm toán - Chapter 03: The accounting information system and measurement issues

CHAPTER 3:THE ACCOUNTING INFORMATION SYSTEM AND MEASUREMENT ISSUES2After studying Appendix 3A, you should be able to: Prepare a 10-column work sheet and financial statements.After studying Appendix 3B, you should be able to: Understand and apply present value concepts.3Chapter 3: THE ACCOUNTING INFORMATION SYSTEM AND MEASUREMENT ISSUESThe Accounting Information System and Measurement Issues4Appendix 3A: Using a Work Sheet5Companies often use a work sheet to make the financial statement preparation process easier.Does not replace the financial statementsCompleting the worksheet gives certainty that all of the details have been captured in the end-of-period financial statements. Appendix 3A: Using a Work Sheet6Appendix 3B: Present Value Concepts7The value of one dollar today is not equal to the value of one dollar in the future. Money today can be invested and interest can be earned over time. The more risk involved in the investment, the higher the interest rate. Appendix 3B: Present Value Concepts8There are three fundamental variables in PV calculations:Principal: The amount borrowed or investedInterest Rate: A percentage applied to the outstanding principal. Generally stated as an annual rate.Time: The duration or number of periodsAppendix 3B: Present Value Concepts9The simple interest calculation is:P = PrincipalI = rate of interest for a single periodN = number of periods PINAppendix 3B: Present Value Concepts10There are many different ways to calculate present values, including the following: Present value formulasPresent value tablesFinancial CalculatorsSpreadsheets (Excel)Appendix 3B: Present Value Concepts11Example (PV of a Single Future Amount)Assume you want to invest a sum of money at 5% in order to have $1,000 at the end of one year. The amount that you would need to invest today is called the present value of $1,000 discounted for one year at 5%Appendix 3B: Present Value Concepts12Example – Present Value FormulaAssume you want to invest a sum of money at 5% in order to have $1,000 at the end of one year. The amount that you would need to invest today is called the present value of $1,000 discounted for one year at 5%Present Value (PV) = Future Value (FV) (1 + i)nPV = $1,000 / (1 + 5%)1 = $1,000 / 1.05= $952.38Appendix 3B: Present Value Concepts13Example – Present Value TableAssume you want to invest a sum of money at 5% in order to have $1,000 at the end of one year. The amount that you would need to invest today is called the present value of $1,000 discounted for one year at 5%Present Value (PV) = $1,000 x 0.95238= $952.38Appendix 3B: Present Value Concepts14Example – Financial CalculatorsAssume you want to invest a sum of money at 5% in order to have $1,000 at the end of one year. The amount that you would need to invest today is called the present value of $1,000 discounted for one year at 5% PV = Present Value ? I = Interest Rate 5% N = Number of Periods 1 FV = Future Value $1,000Appendix 3B: Present Value Concepts15Example – Financial CalculatorsAssume you want to invest a sum of money at 5% in order to have $1,000 at the end of one year. The amount that you would need to invest today is called the present value of $1,000 discounted for one year at 5% PV = Present Value 952.38 I = Interest Rate 5% N = Number of Periods 1 FV = Future Value $1,000Appendix 3B: Present Value Concepts16Example – Spreadsheets (Excel)Assume you want to invest a sum of money at 5% in order to have $1,000 at the end of one year. The amount that you would need to invest today is called the present value of $1,000 discounted for one year at 5%Appendix 3B: Present Value Concepts17Example – Spreadsheets (Excel)Inputs:PV = Present ValueRate = Interest RateNper = Number of PeriodsPmt = PaymentFV = Future ValueType = Type of AnnuityAppendix 3B: Present Value Concepts18Example – Spreadsheets (Excel)Inputs:PV = to be calculatedRate = 0.05 or 5%Nper = 1Pmt = 0FV = $-1,000Type = Type of AnnuityAppendix 3B: Present Value Concepts19Example – Spreadsheets (Excel)Inputs:PV = to be calculatedRate = 0.05 or 5%Nper = 1Pmt = 0FV = $-1,000Type = Type of AnnuityAppendix 3B: Present Value Concepts20Example (PV of a Series of Future Cash Flows)Assume you want will pay $1,000 cash annually for three years (at the end of the year) and that the discount rate is 4%Appendix 3B: Present Value Concepts21Example – Present Value FormulaAssume you want will pay $1,000 cash annually for three years (at the end of the year) and that the discount rate is 4%Present Value (PV) = Future Value (FV) (1 + i)nPV = $1,000 / (1 + 4%)1 + $1,000/(1+4%)2 + $1,000/(1+4)3 = $961.54 + $924.56 + $889.00= $2,775.10Appendix 3B: Present Value Concepts22Example – Present Value TableAssume you want will pay $1,000 cash annually for three years (at the end of the year) and that the discount rate is 4%Future Value x PV Factor (4%) = Present Value$1,000 (one year away) x 0.96154 = $961.54$1,000 (two years away) x 0.92456 = $924.56$1,000 (three years away) x 0.88900 = $889.00Total 2.77510 = $2,775.10Appendix 3B: Present Value Concepts23Example – Financial CalculatorsAssume you want will pay $1,000 cash annually for three years (at the end of the year) and that the discount rate is 4% PV = Present Value ? I = Interest Rate 4% N = Number of Periods 3 PMT = Payment -$1,000Appendix 3B: Present Value Concepts24Example – Financial CalculatorsAssume you want will pay $1,000 cash annually for three years (at the end of the year) and that the discount rate is 4% PV = Present Value $2,775.09 I = Interest Rate 4% N = Number of Periods 3 PMT = Payment -$1,000Appendix 3B: Present Value Concepts25Example – Spreadsheets (Excel)Inputs:PV = Present ValueRate = Interest RateNper = Number of PeriodsPmt = PaymentFV = Future ValueType = Type of AnnuityAppendix 3B: Present Value Concepts26Example – Spreadsheets (Excel)Inputs:PV = to be calculatedRate = 0.04 or 4%Nper = 3Pmt = -1,000FV = n/aType = 0Appendix 3B: Present Value Concepts27Example – Spreadsheets (Excel)Inputs:PV = to be calculatedRate = 0.05 or 5%Nper = 1Pmt = 0FV = $1,000Type = Type of Annuity