Income Statement
True or False: The income statement is a snapshot of a company's Assets, Liabilities, and Owners Equity
False, that is describing the balance sheet
True or false?
The balance sheet must be balanced, if it is out of balance you HAVE messed up.
True!
Accounts Payable is what type of account?
Liability
T/F:
The statement of cash flows:
Reports how cash is generated and used through operating, investing, and financing activities during a period
True!
A company has:
Assets: $200,000
Liabilities: $125,000
Calculate stockholders’ equity.
200,000 − $125,000 = $75,000
What is the equation for gross profit?
revenue-cogs=gross profit
Assets=$100
Liabilities=$65
Equity=?
What is $35?
Accounts receivable, cash, and inventory are all examples of ____ assets
current
Cash received from customers: $45,000
Cash paid to suppliers: $28,000
Cash paid for rent: $7,000
Required:
Calculate net cash flow from operating activities.
State whether operating cash flow is positive or negative.
Net cash flow from operating activities:
$45,000 − $28,000 − $7,000 = $10,000
Positive
Which financial statement would you use to find each item?
a. Total assets
b. Net income
c. Ending cash balance
d. Changes in retained earnings
A Balance Sheet
b. Income Statement
c. Statement of Cash Flows
d. Statement of Stockholders’ Equity
A company records revenue of $100, incurs expenses of $50, issues common stock for $150, and purchases supplies with cash for $40.
What is net income?
$50
Unearned revenue is recognized as what on the balance sheet?
For bonus points, when can you recognize deferred revenue?
A liability.
when the agreed-upon item or service is provided.
notes payable is usually a ____ term liability
Long
For each transaction below, indicate whether it is an Operating (O), Investing (I), or Financing (F) cash flow.
a. Cash received from customers
b. Cash paid to employees
c. Cash paid to purchase equipment
d. Cash received from issuing common stock
a. O
b. O
c. I
d. F
Cash: $150,000
Beginning retained earnings: $25,000
Net income: $12,000
Dividends: $4,000
Assets: $800,000
Required:
Calculate ending retained earnings.
$25,000 + $12,000 − $4,000 = $33,000
If a company provides $5000 worth of services on credit, collects $4000 of cash receipts from customers (A/R), Issues $10,000 common stock, Pays out $500 dividends, incurs $4000 of operating expenses, and agrees to provide $250 of services for a client, what is net income for the quarter?
What is, $1,000 net income
What is the expanded accounting equation?
Assets= liabilities + common stock + Revenues - expenses-dividends
A patent is amortized instead of depreciated and it is a ____ asset
intangible
During the year, a company had the following cash flows:
Cash received from customers: $120,000
Cash paid for wages: $55,000
Cash paid to buy equipment: $30,000
Cash received from issuing stock: $40,000
Required:
Calculate cash flows from:
Operating activities
Investing activities
Financing activities
Calculate the net change in cash for the year.
Operating cash flow:
$120,000 − $55,000 = $65,000
Investing cash flow: $(30,000)
Financing cash flow: $40,000
Net change in cash:
$65,000 − $30,000 + $40,000 = $75,000
Is the following item Current (C) or Long-Term (LT)?
a. Accounts receivable
b. Buildings
c. Inventory
d. Long-term notes payable
a. Current (C)
b. Long-Term (LT)
c. Current (C)
d. Long-Term (LT)
A company provides $10000 of services, incurs $2000 of salary expense, incurs $1000 of depreciation expense, pays $100 dividends, sold machinery for $300, bought $1500 of supplies, and incurred a $350 supplies expense.
What is operating income and what is Net Income?
What is operating income of $6650, and net income of $6950
Assets = ?
Liabilities=$140
Retained earnings= $35
Revenue=$125
Expenses=$30
Dividends=$10
What is $260?
Cost of goods sold is what type of account?
Expense/retained earnings
A company reports the following information for the year:
Beginning cash balance: $15,000
Net income: $32,000
Cash paid to suppliers and employees: $18,000
Cash paid to purchase equipment: $20,000
Cash received from borrowing from a bank: $10,000
Required:
Determine cash flows from:
Operating activities
Investing activities
Financing activities
Calculate the ending cash balance.
Operating cash flow:
$32,000 − $18,000 = $14,000
Investing cash flow: $(20,000)
Financing cash flow: $10,000
Ending cash balance:
Beginning cash $15,000 + net change ($14,000 − $20,000 + $10,000)
= $15,000 + $4,000 = $19,000
At the beginning of the year, a company reported:
Common stock: $90,000
Retained earnings: $35,000
During the year, the company:
Issued additional common stock for $25,000
Earned net income of $40,000
Paid dividends of $12,000
Required:
Calculate ending retained earnings.
Calculate ending total stockholders’ equity.
Ending retained earnings:
$35,000 + $40,000 − $12,000 = $63,000
Ending stockholders’ equity:
Common stock: $90,000 + $25,000 = $115,000
Total equity: $115,000 + $63,000 = $178,000