Create an account
provide useful info to internal management, investors, and creditors regarding cash flows, resources, and obligations
4 required reports are...
2. income statement (statement of operations)
3. statement of stockholders equity (statement of owner's equity)
4. cash flow statement
shows what business owns (assets) and owes (liabilities) on a specific date. cumulative. initially reported at historical cost. listed in order of liquidity.
shows how much a business earned during a period of time. revenues (providing goods and services to customers) less expenses (what it costs to provide the goods and services to the same customers). earned - incurred
statement of owner's equity
shows the activity related to owners (stockholders) during a period of time. shows receipt of funds from the owners and payments back to the owners (dividends)
statement of cash flows
where the company's cash comes from and what the cash was used for in specific period. selling assets, borrowing from banks or investors, or from owners.
part of owner's equity. amount of cumulative profits and losses kept by the company since the first day of operations
provided goods or services in exchange for an asset. when goods/services are provided to the customer, NOT when cash is collected
balance sheet: assets
=total current assets
with PPE and Intangible Assets
balance sheet: Property/Plant equipment
furniture and fixtures
-less accum depreciation
with assets and intangible assets
balance sheet: intangible assets
with assets and PPE
balance sheet: liabilities
income taxes payable
short term notes payable
Additional paid in capital
other comprehensive income
-less treasury stock
with current and LT liabilities
amounts customers owe the company for goods or services provided. received by the company in 30-90 days
multi-step income statement
sales- cogs = gross profit
+- other revenues and expenses
=income before taxes-income tax expense
+- discontinued operations
+- extraordinary items
Operating Expenses on multi-step income statement
services, general, administrative, bad debt, utilities, supplies, wages, salaries, insurance, rent, depreciation, advertising, research and development
earned - incurred. revenue when good/service is provided. report expenses when asset is used or service provided to the company
1. record the revenues earned for the period,
2. record ALL expenses that were incurred to produce the revenues during the period
accrual basis: when cash is received
BEFORE revenue is earned: cash increases and unearned revenue increases.
SAME PERIOD the revenue is earned: cash increases and sales revenue increases
AFTER the period the revenue is earned: accounts receivable increases and revenue increases in the period earned
accrual basis: when cash is paid
BEFORE the expense is incurred: cash decreases and prepaid expenses increase
SAME PERIOD the expense is incurred: cash decreases and the expense increased
AFTER the period the expense is incurred: expense increases and ____ payable increases in the period incurred
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