explain change in financial position over a period of time © dale r. geiger 20111

Explain Change in Financial Explain Change in Financial Position Over a Period of TimePosition Over a Period of Time

© Dale R. Geiger 2011 1

Terminal Learning ObjectiveTerminal Learning Objective• Action: Explain Change in Financial Position Over

a Period of Time• Condition: Given access to all regulations/course

handouts, and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors.

• Standard: With 80% accuracy: • Classify revenues and expenses (cash basis)• Calculate net income (cash basis) for a period of time• Enter relevant report data to solve financial position

equation (using macros provided in Excel template)


What if Gomer inherits $1,000,000?What if Gomer inherits $1,000,000?


Changes in Financial PositionChanges in Financial Position• The Statement of Financial Position (Balance

Sheet) reflects the Assets, Liabilities and Net Assets as of a SINGLE DATE. (Like a snapshot)

BeginningFinancial Position

EndingFinancial PositionStatement of Activities


Changes in Financial PositionChanges in Financial Position• The Statement of Activities, or Income

Statement, reflects activity for a PERIOD OF TIME. (Like a video)

BeginningFinancial Position

EndingFinancial PositionStatement of Activities


Changes in Financial PositionChanges in Financial Position• Under the Cash Basis of Accounting:• Revenues:

• Represent earnings received in cash• Increase Assets and Increase Financial Position

• Costs:• Represent cash payments for goods and services

received• Decrease Assets and Decrease Financial Position

Revenues – Costs = Net Change in Financial Position


The Simmons: The Simmons: Statement of Financial PositionStatement of Financial Position

1/1/111/1/11Assets:House $230,000Car 6,000Furniture 3,000Clothing 750Cash 327

Total $240,077

Liabilities:Mortgage $225,000Credit Card 2,300Property Tax 2,500Hospital 950Total Liabilities $230,750Net Assets: 9,327Total $240,077


Check on LearningCheck on Learning

• What is the equation for the change in financial position?

• What is the name of the statement that describes changes in financial position?


The Simmons: The Simmons: Financial Activity for JanuaryFinancial Activity for January

Date Activity Cash Amount

2-Jan Madge puts gasoline in the car 120

4-Jan Gomer buys doughnuts 35

7-Jan Gomer’s paycheck 925

8-Jan Madge buys groceries 600

12-Jan Lacy has a dentist appointment 100

14-Jan Bert breaks a window 50

15-Jan Madge babysits the neighbor kids 25

21-Jan Gomer’s paycheck 925

22-Jan Madge pays interest on mortgage 938

Task: Calculate the Net Change in Financial Position for January. © Dale R. Geiger 2011 12

The Simmons:The Simmons:Changes in Financial PositionChanges in Financial Position

• What are the Revenues?• Gomer’s gross pay and Madge’s babysitting

• What are the Costs?• Tax withholding , gasoline, doughnuts, groceries,

dentist, window, and mortgage interest

• What is the Net Change in Financial Position?• Revenues $2,025 – Costs $1,993 = 2 Increase

• What is the Ending Financial Position?• Beginning $9,327 + Increase $32 = Ending $9,359



• What are the Revenues?• Gomer’s gross pay and Madge’s babysitting $1875

• What are the Costs?• Tax withholding , gasoline, doughnuts, groceries,

dentist, window, and mortgage interest

• What is the Net Change in Financial Position?• Revenues $2,025 – Costs $1,993 = Increase





$1875

• What are the Costs?• Gasoline, doughnuts, groceries, dentist, window,

and mortgage interest = $1843

• What is the Net Change in Financial Position?• Revenues $2,025 – Costs $1,993 = 32 Increase

• What is the Ending Financial Position?• Beginning $9,327 + Increase $32 = Ending $9,359© Dale R. Geiger 2011 17


• What are the Revenues?• Gomer’s gross pay and Madge’s babysitting $1875


and mortgage interest = $1843

• What is the Net Change in Financial Position?• Revenues $1875 – Costs $1843 = $32 Increase






and mortgage interest

• What is the Net Change in Financial Position?• Revenues $1875 – Costs $1843 = $32 Increase




• Revenues are counted when they are

• Costs are counted when they are

© Dale R. Geiger 2011

The Simmons: The Simmons: Statement of ActivitiesStatement of Activities

for month of January 2011for month of January 2011Revenues:Gomer’s Salary (Gross) $1,850Madge’s babysitting 25

Total Revenues $1,875Costs:Interest $938Groceries 600Gasoline 120Dentist 100Broken Window 50Doughnuts 35

Total Costs 1,843Net Change in Financial Position 32Add: Financial Position January 1, 2011 9,327Financial Position January 31, 2011 $9,359


Graphic Representation of Net ChangeGraphic Representation of Net Change

$32

$2025

$1993


Graphic Representation of Net ChangeGraphic Representation of Net Change

$32

$9359

$9327


The Simmons: The Simmons: Statement of Financial PositionStatement of Financial Position

1/31/111/31/11Assets:House $230,000Car 6,000Furniture 3,000Clothing 750Cash (327+32) 359

Total $240,109

Liabilities:Mortgage $225,000Credit Card 2,300Property Tax 2,500Hospital 950Total Liabilities $230,750Net Assets: 9,359Total $240,109



• What activities will cause financial position to increase?

• What activities will cause financial position to decrease?


Practical ExercisePractical Exercise


Statement of Activities SpreadsheetStatement of Activities SpreadsheetEnter Transaction Data into the register


Statement of Activities SpreadsheetStatement of Activities Spreadsheet

After entering Data, Press button to

Create StatementOf Activities


Statement of Activities SpreadsheetStatement of Activities Spreadsheet

Statement of Activities shows:Total Revenues,

Total Costs ,Change in Financial

Position, and Ending Financial Position

© Dale R. Geiger 201129

Practical ExercisePractical Exercise


explain change in financial position over a period of time © dale r. geiger 20111

Documents

financial position dale

financial position costs

ending financial position

financial position equation

financial activity

cash increase assets

net assets

net change