Study Set Content:
This form is applicable for merchandising
businesses.
Multiple step-form
Arranges all accounts of income in one
group, all accounts of expenses in another
group, and then deducts the total amount of
expenses from the total amount of income
in a single-step operation subtraction to find
the total net income or net loss.
The Single-Step Form
This form is applicable for service
businesses.
The Single-Step Form
Guidelines for Preparing the Income Statement
1. The heading of the income statement must
be placed at the center.
2. The accounts must be arranged from
highest to lowest amount or according to
relative importance to the user.
3. Miscellaneous accounts, whether income or
expense account must be written as the last
account regardless of the amount.
4. The peso sign must be written on the first
amount in every arithmetic operation and
every after ruling.
5. The single rule to all additions and the
double rule for the final results whether it is
net loss or net income must be applied.
Reports the current financial position of the
business. It shows what a business owns,
what it owes, and how much is left over, at a
specific point in time or as of a given date.
Its objective is to show the ability of
management to steward and safeguard the
value of a company’s assets and to make
use of the assets widely and prudently, thus
maximizing owner’s equity.
Balance Sheet
As a result, this
is considered as the business portfolio of
the
“Statement of Final Position.”
- consists of three lines
Heading
Heading - consists of three lines
a. The name of the business
b. The name of the statement
c. The date of the statement
are on the left side of the
accounting equation
Assets
are on the right side of the
accounting equation
Liabilities
is on the right side of the
accounting equation
Owner's Equity
The most liquid asset;
Cash
Lifeblood of the pharmacy
Cash
While it is commonly thought that cash flow
problems are more evident in companies with poor
sale levels, this is not necessarily true. It is possible
for a thriving pharmacy to experience cash flow
troubles, especially if the vast majority of its
prescriptions are
dispensed under government and
private-third party programs.
is mainly an
internal statement used by the management
to keep track of cash flow over time.
Cash Flow statement
it reflects a series of
transactions over a specific period of time
but it is usually () for cash flow statements
3 months
Cash inflows to the pharmacy from cash
sales, collection on accounts receivable,
sales of assets, loans to the pharmacy and
additional investment made by the owner.
Taken from the receipts journal, these
represent the total amount of cash coming
into the pharmacy for its use. When cash
receipts are too low, additional cash must
be obtained through either loans or the
sales of the assets, or by delaying
payments to the creditors.
Cash Receipts
Payments of cash will be for merchandise
and raw materials, operating expenses,
payment of debt,and withdrawal of the funds
by the owner. All of these need to be
reflected in the cash flow statement since
they act as cash drains on the pharmacy.
Cash disbursements
If cash excesses exist for a prolonged
period of time, management should
consider using all or a portion of the excess
to purchase more inventories or to buy
something else the owner finds potentially
profitable. Otherwise the excess cash
should be invested in some highly liquid
short-term securities that will pay interest on
the money.
Reconciliation of Cash Excess or
Deficiencies
If there is cash deficiency, management is
faced with a potentially serious problem.
Creditors must be stalled; money is
borrowed; and/or assets are sold for cash.
While none of these alternatives are
desirable, at least the manager will be able
to recognize an imminent problem and deal
with it accordingly. This is better than being
faced with a crisis and having to borrow or
sell on unfavorable terms, or damage credit
relations with a supplier.
Reconciliation of Cash Excess or
Deficiencies
