Accounting
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The Balance Sheet
The Income Statement
Break-Even Analysis
Transportation
The Balance Sheet
The Balance Sheet shows the financial position
of a company on a certain date (usually the
end of a month or year).
It consists of Assets (on the “debit side”),
Liabilities, and Stockholders’ Equity (both on
the “credit side”). Debit and credit side are
always in balance  Totals are equal.
Therefore:
Stockholders’ equity = Assets – Liabilities
 The Accounting Equation
The Balance Sheet
Check page 67 of Ahold’s annual report of 2014
on https://www.ahold.com/Financialinformation/Annual-reports.htm for an example.
At this link, click on the arrow pointing right to
find the 2014 annual report.
Assets
Assets are the economic resources that are
expected to benefit the company’s future
operations, including:
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Monetary items (cash and money that customers owe
the company)
Non-monetary physical items (inventories, land,
buildings, equipment)
Non-physical items or Intangible assets (patents,
trademarks, copyrights)
Liabilities
Liabilities are a company’s obligations to other
entities in the future, including:
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Amounts owed to suppliers for goods or services
bought on credit  accounts payable
Borrowed money (e.g. bank loans)
Taxes owed to the government
Services to be performed
Stockholders’ equity
Stockholders’ equity represents the claims by
the owners of a company to the assets of the
company.
The Income Statement
The Income Statement summarizes the
revenues earned and the expenses incurred
by a company over a certain period.
The Income Statement
Check page 65 of Ahold’s annual report of 2014
on https://www.ahold.com/Financialinformation/Annual-reports.htm for an
example.
Most important ratio based on these numbers:
Profit margin = Net Income / Net Revenue x 100%
Break-even Analysis
Break-even Point (BEP): The amount of
products a company has to produce in order
to ‘break even’  not make a loss, nor a profit.
At the BEP:
 Total Revenues = Total Costs
 BEP = FC / (p – vc)
 (p – vc) is called Contribution Margin
Transportation
Special terms designate whether the seller or
buyer of products/services pays for
transportation costs:
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FOB shipping point  Buyer pays for transportation
costs
FOB destination  Seller pays for transportation costs