Cardinal Excel Model: Entries and Financial-Statement Effects

Topics:

  • Cardinal entries using BSE mini-matrix and journal entries
  • Financial statement effects for each entry: Balance sheet, Income statement, Indirect cash-flow statement

Cardinal is a fictitious start-up retail company that has financial statements similar to The Gap, Inc. The Cardinal model is a pro-forma financial model. Similar models are used by start-up companies and by financial analysts. The Cardinal model will help you understand some key business and accounting decisions, as well as entries, behind  financial statements.

Each of the model’s assumptions can easily be changed to assess the consequences on Cardinal’s projected financial results. Thus, the assumptions are the model’s inputs and the financial projections its outputs.

How can you use the Cardinal Model? You can check your record keeping entries and determine how each entry affects the balance sheet, income statement, and the cash-flow statement. In addition, you can easily identify the entries that affect an account, which is an essential skill for reverse engineering these entries for real companies. Moreover, you can change several business and accounting assumptions that drive the pro-forma statements and then analyze the consequences of changing these assumptions.

Prior to using the Cardinal Model, students often have the misconception that they record entries into the Excel file. Instead, you record entries manually on paper and check your answers against entries recorded in the model. To record entries, use the chart of accounts and descriptions of Cardinals' entries.  Then check your answers in the model as described in the Excel Model Reference document below.

Model:

Cardinal Model [xls]    You must enable macros.


Additional Materials:

Excel Model Reference [pdf]

Accounts: Chart of accounts [pdf]               EntryInputs: Event descriptions [pdf]  

Balance sheet [pdf]

Income statement [pdf]

Indirect cash-flow statement [pdf]


 

  Mac Workarounds:

Recently, the Mac version of Microsoft Excel no longer supports Visual Basic macros. Unfortunately, the Cardinal Excel model requires macros. If you don’t have access to a PC, we have developed a few workarounds:

  • “Account Selection” button alternative: This button reveals the effects of all entries on the selected account. As an alternative, see the Entries’ Affects on Accounts [pdf] document with screen shots, as if you were checking your answers in the model. You may also use this to check T-Accounts.
  • “Focus on Event” and “Journal Entry” buttons alternative: These buttons reveal the entry behind an event and highlight the direct financial-statement consequences of the entry. As an alternative, see the video below that walks through the model using these buttons as if you were checking your answers in the model. This is mostly a silent movie with menus to go directly to the entry you want to check. 

     

Mac Workaround Cardinal Model Entries and Financial-Statement Effects Video: [18 min]

Connection Speed: High   Medium   Low

            [Only above video formats have menus; requires Flash]

  iPod [mp4]      iPhone/Android/iPad [mp4]

 

Also see:

Eagle Excel Model

MMS Excel Model

 

Excel ® is a registered trademark of Microsoft Corporation. www.microsoft.com Microsoft ® Office Excel ® is part of the Microsoft Office system. All brands and product names are trademarks of their respective owners.


 

 

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