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Austin Community College. Accounting Department Presents Math for Accounting: Basic Concepts. Examples. Basic math concepts Used in accounting applications. Actual Accounting Examples. Some of the concepts may be new you. . Don’t worry – you will cover these in detail.

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Presentation Transcript
austin community college
Austin Community College

Accounting Department

Presents

Math for Accounting:

Basic Concepts

examples
Examples
  • Basic math concepts
  • Used in accounting applications
actual accounting examples
Actual Accounting Examples

Some of the concepts may be new you.

Don’t worry –

you will cover these in detail.

For now –

let’s focus on the math concepts.

tools
Tools

Use your calculator

Print the narrative

vertical analysis
Vertical Analysis

Course Syllabus

percentages
Percentages

56.25%

450/800 X 100

12.50%

100/800 X 100

6.25%

50/800 X 100

25.00%

200/800 X 100

100%

56.25 +12.5 +6.25 +25 = 100

horizontal analysis
Horizontal Analysis
  • Inflation Rate: 5%
  • Current Salary: $40,000
  • New Salary: $42,500

Did the salary increase keep up with the inflation rate?

horizontal analysis8
Horizontal Analysis

Ending Amount - Beginning Amount

Beginning Amount

X 100

$42,500 - $40,000

$40,000

$2,500

$40,000

6.25%

=

X 100 =

horizontal analysis9
Horizontal Analysis

Percent of Increase:

6.25%

Inflation Rate:

5.00%

take home pay
Take Home Pay

Monthly Salary Information:

take home pay11
Take Home Pay

(400)

4,000 X .10

(248)

4,000 X .062

(58)

4,000 X .0145

$3,294

4,000 – 400 – 248 – 58 = 3,294

allocation
Allocation

Two friends contribute to an investment:

Friend A – $100,000

Friend B – $200,000

  • Agreement:
  • after 2 years
  • allocate the value $500,000
  • based on the original contributions
step 1
Step 1

Determine the percentage that each originally invested:

33.33

100,000/300,000 X 100 ≈

33.33%

66.67

200,000/300,000 X 100 ≈

66.67%

100 %

Rounding Issue

step 2
Step 2

Allocate the $500,000 based on the %:

$ 166,650

500,000 X .3333

$ 333,350

500,000 X .6667

$ 500,000

average
Average

Balance Sheet Amounts

The actual amounts are

$1,360,000,000 and $1,840,000,000

Add 3 zeros

average16
Average

Beginning Amount + Ending Amount

2

$1,360,000 + $1,840,000

2

= $1,600,000

(in thousands)

summary
Summary
  • Proper Tools
    • Calculator, Excel, Pencil and Paper
  • Reasonable answer
  • Practice
  • Help
    • Instructor/Tutor
    • Classmates, friends, family