Finance and value at Karlsruher Institut für Technologie

Provide useful financial information to outside decision makers

• Stewardship role - Accountability of management
• Decision usefulness role - Valuation purposes

Incoming/Outgoing transactions booked independent of time of cash flow

WCR = Operating assets - operating liabilities
= Accounts receivable + Inventories + Prepaid expenses - Accounts payable - Accrued expenses

• Current assets
  • Cash
  • Inventory
  • Account receivable
  • Prepaid expenses
• Noncurrent assets
  • PPE
  • Intangible assets
• Liabilities
  • Accounts payable
  • Deferred revenue

Assets = Liabilities + Owner‘s equity

Assets = Liabilities + Contributed capital + Beginning retained earnings + Revenue - Expenses - Dividends

Every transaction affects at least two accounts to keep the balance (double entry accounting)

Deferred revenue ➔ Liability

Accrued revenue ➔ Asset

Deferred (Prepaid) expense ➔ Asset

Accrued expense ➔ Libaility

Record transactions by date