{"id":157,"date":"2024-09-06T16:46:59","date_gmt":"2024-09-06T16:46:59","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/introduction-to-financial-statement-presentation\/"},"modified":"2024-09-06T16:46:59","modified_gmt":"2024-09-06T16:46:59","slug":"introduction-to-financial-statement-presentation","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/introduction-to-financial-statement-presentation\/","title":{"raw":"Introduction to Financial Statement Presentation","rendered":"Introduction to Financial Statement Presentation"},"content":{"raw":"\n

What you'll learn to do: Present cash and cash equivalents on the financial statements<\/h2>\nIn most textbooks and examples on the web, you\u2019ll see a simple trial balance listed as follows:\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Adjusted Trial Balance<\/caption>\n
Accounts<\/span><\/th>\nDebits<\/th>\nCredits<\/th>\n<\/tr>\n<\/thead>\n
Cash<\/td>\n$22,900<\/td>\n<\/td>\n<\/tr>\n
Prepaid Insurance<\/td>\n4,000<\/td>\n<\/td>\n<\/tr>\n
Fixed Assets<\/td>\n44,000<\/td>\n<\/td>\n<\/tr>\n
Notes Payable<\/td>\n<\/td>\n$ 40,000<\/td>\n<\/tr>\n
Common Stock<\/td>\n<\/td>\n25,000<\/td>\n<\/tr>\n
Retained Earnings<\/td>\n<\/td>\n48,350<\/td>\n<\/tr>\n
Dividends<\/td>\n22,000<\/td>\n<\/td>\n<\/tr>\n
Sales Revenue<\/td>\n<\/td>\n150,000<\/td>\n<\/tr>\n
Automobile Expense<\/td>\n26,500<\/td>\n<\/td>\n<\/tr>\n
Insurance Expense<\/td>\n20,000<\/td>\n<\/td>\n<\/tr>\n
Salaries Expense<\/td>\n122,500<\/td>\n<\/td>\n<\/tr>\n
Supplied Expense<\/td>\n1,450<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n
Totals<\/td>\nSingle line<\/span> $263,350\nDouble line<\/span><\/td>\nSingle line<\/span> $263,350\nDouble line<\/span><\/td>\n<\/tr>\n<\/tfoot>\n<\/table>\n\u201cCash\u201d is at the top of the list, right where it should be, but this is not a very good representation of what a real trial balance looks like.\n\nIn accounting, what we call cash<\/em> includes coins; currency; undeposited negotiable instruments such as checks, bank drafts, and money orders; amounts in checking and savings accounts; and demand certificates of deposit. A certificate of deposit (CD) is an interest-bearing deposit that can be withdrawn from a bank at will (demand CD) or at a fixed maturity date (time CD). Only demand CDs that may be withdrawn at any time without prior notice or penalty are included in cash. Cash does not include postage stamps, IOUs, time CDs, or notes receivable.\n\nIn addition, the correct terminology is \u201ccash and cash equivalents\u201d because actual currency and coin is usually a tiny, tiny portion of what we call cash.\n\nFor instance, in most businesses, every account that can be reconciled has its own GL account. For example, here is a portion of an adjusted trial balance for My Company that only shows the cash accounts:\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
My Company\nAdjusted Trial Balance\nFor the month ended September 30, 20XX<\/caption>\n
Reference No.<\/span><\/th>\nAccounts<\/span><\/th>\nAdjusted trial balance<\/th>\n<\/tr>\n
Debits<\/th>\nCredits<\/th>\n<\/tr>\n<\/thead>\n
1010<\/td>\nPetty Cash<\/td>\n100.00<\/td>\n<\/td>\n<\/tr>\n
1011<\/td>\nFirst Bank Checking<\/td>\n26,745.00<\/td>\n<\/td>\n<\/tr>\n
1012<\/td>\nFirst Bank Payroll (Imprest)<\/td>\n-<\/td>\n<\/td>\n<\/tr>\n
1025<\/td>\nWestern Credit Union Savings<\/td>\n16,489.55<\/td>\n<\/td>\n<\/tr>\n
1030<\/td>\nFirst Bank CDs<\/td>\n43,896.66<\/td>\n<\/td>\n<\/tr>\n
1045<\/td>\nTIAA Money Market<\/td>\n87,355.40<\/td>\n<\/td>\n<\/tr>\n
1050<\/td>\nBaker Bank U.S. Govt. Securities<\/td>\n198,200.00<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\nNotice there\u2019s really only $100 in what we think of normally as cash. Generally Accepted Accounting Principles (GAAP) prescribes what we consider to be cash and cash equivalents on the financial statements. It also gives us guidance on how to report those amounts, including disclosures we are required to include. That\u2019s what we\u2019ll cover in this section as we finish up accounting for cash.\n","rendered":"

What you’ll learn to do: Present cash and cash equivalents on the financial statements<\/h2>\n

In most textbooks and examples on the web, you\u2019ll see a simple trial balance listed as follows:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Adjusted Trial Balance<\/caption>\n
Accounts<\/span><\/th>\nDebits<\/th>\nCredits<\/th>\n<\/tr>\n<\/thead>\n
Cash<\/td>\n$22,900<\/td>\n<\/td>\n<\/tr>\n
Prepaid Insurance<\/td>\n4,000<\/td>\n<\/td>\n<\/tr>\n
Fixed Assets<\/td>\n44,000<\/td>\n<\/td>\n<\/tr>\n
Notes Payable<\/td>\n<\/td>\n$ 40,000<\/td>\n<\/tr>\n
Common Stock<\/td>\n<\/td>\n25,000<\/td>\n<\/tr>\n
Retained Earnings<\/td>\n<\/td>\n48,350<\/td>\n<\/tr>\n
Dividends<\/td>\n22,000<\/td>\n<\/td>\n<\/tr>\n
Sales Revenue<\/td>\n<\/td>\n150,000<\/td>\n<\/tr>\n
Automobile Expense<\/td>\n26,500<\/td>\n<\/td>\n<\/tr>\n
Insurance Expense<\/td>\n20,000<\/td>\n<\/td>\n<\/tr>\n
Salaries Expense<\/td>\n122,500<\/td>\n<\/td>\n<\/tr>\n
Supplied Expense<\/td>\n1,450<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n
Totals<\/td>\nSingle line<\/span> $263,350
\nDouble line<\/span><\/td>\n		Single line<\/span> $263,350
\nDouble line<\/span><\/td>\n<\/tr>\n<\/tfoot>\n<\/table>\n

\u201cCash\u201d is at the top of the list, right where it should be, but this is not a very good representation of what a real trial balance looks like.<\/p>\n

In accounting, what we call cash<\/em> includes coins; currency; undeposited negotiable instruments such as checks, bank drafts, and money orders; amounts in checking and savings accounts; and demand certificates of deposit. A certificate of deposit (CD) is an interest-bearing deposit that can be withdrawn from a bank at will (demand CD) or at a fixed maturity date (time CD). Only demand CDs that may be withdrawn at any time without prior notice or penalty are included in cash. Cash does not include postage stamps, IOUs, time CDs, or notes receivable.<\/p>\n

In addition, the correct terminology is \u201ccash and cash equivalents\u201d because actual currency and coin is usually a tiny, tiny portion of what we call cash.<\/p>\n

For instance, in most businesses, every account that can be reconciled has its own GL account. For example, here is a portion of an adjusted trial balance for My Company that only shows the cash accounts:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
My Company
\nAdjusted Trial Balance
\nFor the month ended September 30, 20XX<\/caption>\n
Reference No.<\/span><\/th>\nAccounts<\/span><\/th>\nAdjusted trial balance<\/th>\n<\/tr>\n
Debits<\/th>\nCredits<\/th>\n<\/tr>\n<\/thead>\n
1010<\/td>\nPetty Cash<\/td>\n100.00<\/td>\n<\/td>\n<\/tr>\n
1011<\/td>\nFirst Bank Checking<\/td>\n26,745.00<\/td>\n<\/td>\n<\/tr>\n
1012<\/td>\nFirst Bank Payroll (Imprest)<\/td>\n–<\/td>\n<\/td>\n<\/tr>\n
1025<\/td>\nWestern Credit Union Savings<\/td>\n16,489.55<\/td>\n<\/td>\n<\/tr>\n
1030<\/td>\nFirst Bank CDs<\/td>\n43,896.66<\/td>\n<\/td>\n<\/tr>\n
1045<\/td>\nTIAA Money Market<\/td>\n87,355.40<\/td>\n<\/td>\n<\/tr>\n
1050<\/td>\nBaker Bank U.S. Govt. Securities<\/td>\n198,200.00<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n
<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Notice there\u2019s really only $100 in what we think of normally as cash. Generally Accepted Accounting Principles (GAAP) prescribes what we consider to be cash and cash equivalents on the financial statements. It also gives us guidance on how to report those amounts, including disclosures we are required to include. That\u2019s what we\u2019ll cover in this section as we finish up accounting for cash.<\/p>\n","protected":false},"author":6,"menu_order":18,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Introduction to Financial Statement Presentation\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"\",\"author\":\"\",\"organization\":\"\",\"url\":\"https:\/\/investor.fb.com\/financials\/sec-filings-details\/default.aspx?FilingId=13872030\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":139,"module-header":"","content_attributions":[{"type":"original","description":"Introduction to Financial Statement Presentation","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""},{"type":"copyrighted_video","description":"","author":"","organization":"","url":"https:\/\/investor.fb.com\/financials\/sec-filings-details\/default.aspx?FilingId=13872030","project":"","license":"arr","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/157"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":0,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/157\/revisions"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/139"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/157\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=157"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=157"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=157"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=157"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}