Assignment 1: Excel Tutorial
Overview
Using spreadsheets is one of the most valuable skills to have when understanding accounting. Spreadsheets create organization of data and mathematical efficiencies in finance. For this assignment, you learn how to use spreadsheets in this free online Excel Tutorial.
Please complete lessons 1, 2, and 3. The skills you learn in these lessons are used throughout this course.
When you are done, give me the results of your tutorial to this assignment.
Other Excel Tutorials:
2016, 2013, 2007, 2003, 1997
Microsoft Excel 2007 Tutorial — Free & Online
By Denise Etheridge
You can use this free online tutorial to learn Microsoft Excel 2007. Click here to start the tutorial. If you are using an older version of Excel, click here for our Excel 2003/2002 tutorial or click here for our Excel 97 tutorial.
Assignment 2: Basic Concepts in Accounting
Overview
Please complete the following tasks to prepare for your assignment:
- Read Chapters 1 and 2 in the Breitner textbook.
- Complete the post to review
chapter highlights.
- Breitner workbook PT 1 and PT 2 for Chapter 1
- Breitner workbook PT 6 for Chapter 2
- Check your answers in the “Answers for Post Test” section
- Watch the video for Chapters 1 and 2 on the Week 1: Learning Materials page.
After you have completed the preceding tasks, complete the following:
- Complete Vito’s Bikes 1 and 2 in Excel. You can find these assignments in the textbook on pages PT5 and PT9.
- Be aware, an error exists in Vito’s Bikes 1. Use $15.00 for the cost of the locks and $25.00 for the cost of the helmet.
- When you have finished this assignment, post your Excel spreadsheet with results to this assignment.
- After you submit your assignment, watch the solution video(s). The solutions video page becomes available after you have submitted your assignment. The solution video explains how to do the problem as well as review accounting concepts and the accounting cycle.
Management Accounting in Health Care
Chapters 1 and 2 Video Transcript
Hello, students. And welcome to class 1, Management Accounting in Health Care. We will cover chapters 1 and 2 in your Breitner book. So here you are. This is your first accounting class for many of you. And so you are officially accountants in training.
So the goal for this session is really to give a basic accounting overview. We’ll be focusing on the balance sheet and talking about transactions and what those are. So first, what is economics and finance versus accounting? So economics is really how we choose to allocate resources. Finance is how people or companies make decisions about investing or managing resources. And accounting really is about how we make decisions, both internal and external, and how we measure and communicate information about an entity.
There are various bodies that govern how accounting is done. Most people talk about GAAP or FASB or International. Let’s talk about different types of organizations. So most of you are familiar with maybe for-profit entities and not-for-profit entities. So for profit, we have small companies, medium and large companies, and some companies are public companies where they have stockholders.
In the not-for-profit world, at least in the Northeast, most of our hospitals are not for profit. They’re exempt under the IRS Code 501(c)(3). And so they don’t have stockholders. They operate for the benefit of the community. It’s important to note the last item here. Not-for-profit entities still need to make a profit. And we’ll talk more about that as we get into the semester.
As you saw in your book, there are lots of accounting concepts that are important. And we will go over some of those in this session. Accounting is a new language. And for many of you, you’re going to need to learn the terminology. And the information, how we present accounting, is through financial statements. And those financial statements are done on an entity.
So what is an entity? It’s simply an organization for which financial statements are prepared. It is not done for an individual. So it is only done for an organization. Any type of financial statement is, again, only for an entity. If we’re preparing numbers for an individual, that would be called something different.
We’re going to focus this semester on accrual-based accounting versus cash basis. So cash basis is simply the money dollars in and dollars out. What an accrual basis doesn’t it looks at recognizing revenue when we earn it– not necessarily when we receive the cash but when we earn the revenue. And expenses when we’ve incurred the expense, not when we’ve paid them.
And the two accounts that really get to the nature of this are accounts receivable. That’s when we provide a service or we sell a good but we haven’t yet received the cash for that. And accounts payable– when we’ve purchased a good or purchased a service but we haven’t yet paid for it.
So the first statement in a set of financial statements is the balance sheet. And we’re going to focus a good part of our time today on the balance sheet. The elements of the balance sheet are assets, liabilities, and equity. And the balance sheet is always done as of a particular date. So here, you can see Example Company balance sheet, December 31, 2017.
The elements of the balance sheet are assets, liabilities, and equity. Here, you can see different types of assets. So under current assets, which are assets that will be used up within a year. Or our short term, we have investments, plan, property, and equipment, tangible assets, other assets, and then we’d have a total.
Under liabilities, there are current liabilities, long-term liabilities. And then under our equity section, we would have either paid in capital, retained earnings– and that would be your total equity. And so here, the left side always has to equal the right side. Assets equals liabilities plus equity.
So let’s get into what exactly are assets. So assets are things that we own, things that the entity owns. Examples are cash, buildings, land, equipment– referred to as PP&E, plant, property, and equipment– inventory. Inventory, if we are an automobile manufacturer, how many automobiles do we have? That would be in our inventory. Accounts receivable. That’s money that we’re due from our customers. And assets are always on the left-hand side of the balance sheet. So going back, you can see assets here are always on the left-hand side.
Liabilities are things that the entity owes. So they could have loans. They could have accounts payable, which are, again, expenses we’ve incurred but haven’t yet paid. We could owe our employees. So generally, when we get paid as an employee, we aren’t paid on the end of the month exactly for that month. We may get paid a few days afterwards. So the entity needs to record that liability. And liabilities are on the right side of the balance sheet.
Equity. So that’s the difference between assets and liabilities. So assets minus liabilities equals equity. And that generally is referred to as either retained earnings or paid-in capital. So retained earnings. At the end of each period, we have retained earnings. So if we had $1,000 of income, our expenses were $800, we would have $200 of retained earnings.
And our equity would be increased by any money that was put in. So if you’re a small company and you put in $10,000, you would have paid-in capital of $10,000. We’re not going to spend a lot of time talking about public companies, but that’s where you would have stock. And so equity is on the right-hand side of the balance sheet along with liabilities. So again, very important the dual-aspect concept, which is that components of the balance sheet is assets equals liabilities plus equity. Assets equals liabilities plus equity.
So these two must always be in balance. So assets must always equal liabilities plus equity. And that is that dual aspect concept. So here, if Joan’s company has assets of $10,000 and they have liabilities of $6,000, what must the equity be? So very simple, $4,000– $10,000 minus $6,000.
The only way we can do accounting is if we can measure, in monetary value, what items are. So we can’t get a dozen apples and two dozen oranges and put those on the balance sheet. We need to know what is the value of those. And so when we’re looking at the balance sheet, assets equals liabilities plus equity, would we know how much cash and investments the company has? Yes, that would be in the asset section.
Would we know how many automobiles the company has? The answer to that would be, no. We would know maybe what the value is under PP&E– Plant, Property, and Equipment. But it wouldn’t say, they have 102 automobiles. Would we know how much money the company owes?
So that would be a liability. And so the answer to that is, yes, we would know what the liabilities are. Would we know how many people work at the company? No. So we would know what the salaries expense was by looking at the profit-and-loss statement. But we wouldn’t know how many people work there.
So we talked about what an entity is. And so we do accounting for entities. And so an entity may be just a single person. And so here if Jones opens a chiropractic office and they take $100 out, what effect does this have on the entity?
Well, since Jones owns the entity, it doesn’t have no expense to the entity. It just reduces the amount of equity Jones has in the entity. And is Jones better off or worse? There’s really no effect on Jones, because Jones had $100 more equity in the company. And now, Jones has $100 more in their personal bank account or personal in their pocket.
Another way to think about this if we were to create our own personal balance sheet, which we would actually not call balance sheet, because, remember, that’s for an entity. We would call it, really, a statement of net worth. So let’s think about what are some of the assets, liabilities, and retained earnings, or equity, things that we would have.
So here, if I were to do that, I would think about, I have a checking account. I have a savings account. I may have a house. I may have a car. I may have other personal items. I may have liabilities. I may owe money on a credit card. I may have a mortgage. And so that net of that– so our assets minus our liabilities would really be how much equity I have. Or in this case, it’s net worth.
Let’s talk about the asset-measurement concept. And that is, how do we determine the value of an asset? So for cash that’s pretty easy. We look at our bank account, or we go online. And it says, we have $122. And that’s the value of our cash. But how do we measure if we owned and bought a building five years ago? So we measure that at its cost.
And in order for us to count an asset on our balance sheet, we must meet certain criteria. We must own it or control it. It must have value. So if we have 10 computers that were from the 1980s, how much value do they have? Well, they have no value at this point, right?
So we would not want those on the balance sheet. And it had to have been acquired at a measurable cost. So we bought the building five years ago. We put the cash in. And assets can be current or non-current. Current is things like cash that can be used within 12 months. Non-current would be our plant, property, and equipment and other long-term items.
So some of the things we’ve talked about. So marketable securities would be investments that we’re going to use up within a year. Accounts receivable, monies that we are due from our customers that should be paid within a year. Inventories are items for sale that we should sell within a year. And prepaid expenses could be things like, we pay insurance for the whole year and we want to expense that over each month.
Liabilities. So these are claims against the assets or sources for the assets when purchased. Examples. We may buy things on credit. We may have a payable to one of our vendors, so forth. So we’ve talked about the balance sheet– assets equals liability plus equity. And we’ve talked about accounts. But I didn’t tell you what those are called.
So the chart of accounts are all those different accounts that we’ve talked about– cash, inventory, accounts payable, accounts receivable. Each of those are called an account. And when we have transactions– so each of the things we’ve described as a transaction. For example, if we pay salaries, that’s a transaction. And each transaction has to have at least two sides to it. And that’s what double entry is.
So let’s go through an example of that. So if we were to invest $5,000 to start a business, we would get $5,000 in cash. Because we can’t value apples, oranges, or a piece of jewelry. So we got $5,000 in cash. And in return, what we get is equity. So here, we would see an increase in our cash and an increase in an account called paid-in capital.
If we purchased supplies and pay cash– assuming we’re not going to use those supplies in the near future, so they’re going to go into Inventory. So here, we would increase our supplies inventory. And because we paid cash, cash would decrease. Let’s say we have a receptionist. We pay him $800. And so what happens to cash? When we pay cash, it goes down. And salaries expense, or wages expense, would go up.
A couple of other transactions. Let’s say we provided services to our client and we decided we’ll build their insurance for $1,000. So here, our revenue goes up by $1,000. And we have accounts receivable which increases by $1,000. Now, let’s say that we collect $600 on that accounts receivable. So here, they pay the $600 with cash. And our accounts receivable decreases by $600.
So let’s look at what happened. So we added $5,000. We collected $600. But we paid out $800 and $500. So our cash is $5,600 minus $1,300 is $4,300. Our accounts receivable. We billed $1,000, but we collected $600. It will be $400. We have wages expense of $800. Supplies inventory, $500. And so we earned $1,000. And our expenses for that period were $800. So our net income was $200.
Now, let’s look at the balance sheet. Remember, the balance sheet is assets equal liabilities plus equity. So we talked about the cash was $4,300. Our accounts receivable, we still were owed $400– the $1,000 minus $600. And we had supplies inventory of $500.
So if we add those up, we have $5,200 in total assets. We had no liabilities. We put in $5,000 and our retained earnings– remember, our $1,000 minus $800 was $200 profit. So we have $5,200 of equity. So we’re going to go through many examples of these in the next couple of classes. This is really just an introduction so that you can see some of the numbers, the accounts, and the statement.
So the way we do accounting really is by using T accounts and debits and credits. And you’re going to read about that in the next session. And we’ll go through that in a little bit more detail. But I just wanted you to get a little introductory that the way we actually record the transactions is using a T account. We don’t do it in our head. Because that would just be too difficult.
And each transaction, as I mentioned, has two sides. There’s a debit and a credit. So the left is a debit, and the right is a credit. And we’re going to go into that in further detail coming up in the next session. Now, the way accounting is done today isn’t always this way. A lot of time, it’s done electronically. And we use a program like
