Financial Stmts
The 4 primary financial statements
income statement, balance sheet, stockholder's equity, cash flow statement
resources of the company
assets
distributions to stockholders, usually in the form of cash payments
dividends
3 types of business structure
sole proprietorship, partnership, corporation
Difference between financial and managerial accounting
Financial- External operations
Managerial- Internal operations
1. income statement
2. statement of stockholder's equity
3. balance sheet
4. cash flow statement
creditors’ claims to resources (amounts owed)
Liabilities
transactions involving the purchase and sale of resources that are expected to benefit the company for several years
investing
partnership
a business owned by two or more persons.
functions of financial accounting
to measure business activities and communicate those measurements for decision making purposes
Three parts of the cash flow statement
operating, financing, investing
owners’ claims to resources (investment)
Stockholder's equity
transactions that relate to the primary operations of the company
operating
sole proprietorship
a business owned by one person
purchasing equipment - operating, investing, or financing activity?
investing
Components of the balance sheet
Assets, liabilities, SE
the accounting equation
A=L+SE
costs of providing products and services
expenses
Advantage(s) of a Corporation
limited liability
difference between revenues and expenses
net income
NI= R-E
Income statement
Revenue, expenses, net income
two components of Stockholder's equity
common stock and retained earnings
transactions the company has with investors and creditors
financing
Disadvantage(s) of a corporation
double taxation
difference between salary expense and salary payable
expense- have been paid
payable- still need to be paid (liability)