Potters & Sculptors - Making Rock from Mud
Week 4 Project - Part 1
Task 1 - Understand the financial reports presented in Lesson 6 at beancounter's website, especially balance sheet and income statement - you will create and use these very often. The others are for more long term information and for business planning.
Task 2 -Exercises - use the corrected ending data that I posted for Week 3 (attached below) to generate an accurate balance sheet for Joe Potter's business following the last transaction. Also generate an income statement for the period of March 1 through March 30. If you find that you cannot complete either of these statements, because you lack data, immediately send a message to the group from the group's main page, advising us as to what is needed.
Part 2 - Set up an account at wave accounting.com with your userID and password, along with basic information about your own business (business name, address, etc.), and take a look at the different tools that are available to you.
Sunday is Easter - Not a good time to meet for a chat session. We can change one or all the chat sessions to any of Monday, Wednesday, or Thursday evenings. I can be available for any 90 minutes between 6:30 and 11:30 pm EDT, or we can try for another weekend time. We really need at least one reasonably well attended chat session each week to have any chance of covering the most common questions that people might have. So please try to make this one commitment to the class, if at all possible.
Here are my end of Week 4 files. For the Income (Profit & Loss) statement, I cleared out all transactions before and after the month of March. I also deleted all T accounts except Revenue and expense accounts to simplify identification of the targeted accounts and transactions.
There was not enough detailed information passed along in the 4/11/2012 chat session to bother with posting a transcript. June, Wes, Troy and George were present. It sounded like the concepts of balance sheets and income statements were fairly well understood.
Essential points of the balance sheet were that it comes pretty directly from a balanced expanded accounting equation, which is a form of trial balance. The equation had already been completed at the end of Week 3.
Income statement covers only Revenue from operations and operations related expenses for a set period of time. Be careful about including income items that have been declared in previous periods, such as payments to accounts receivable where the revenue item originated in a previous accounting period.
Here is the Excel version of my end of Week 4 balance sheet.