Financial Statements
Reports Assets, Liabilities, and Stockholder's Equity
Balance Sheet
What is the equation for the Balance Sheet
Assets=Liabilities+Stockholder's Equity
The measurement rules used to develop the information in the financial statements in the US
What is GAAP (Generally Accepted Accounting Principles)
Record issuance of $ 2,000 of Common Stock for Cash
Debit Cash
Credit Common Stock
Is the accounting equation balanced:A=L+SE
What is the impact on the equation if you purchased supplies for 400 on account.
Record the transaction
Yes
Assets (type of asset Supplies) and Account Payable both go up
Supplies debited
Accounts Payable credited
What item/s would not appear in an income statement"
a Rent Expense
b. Supplies
c. Cash
d. Service Revenue
What is b and c
Reports revenues and expenses for the accounting period
What is an Income Statement?
What is the Income Statement Equation
Net Income=Revenues-Expenses
The US has the same reporting standards as the rest of the world-True or False
False (IFRS: International Financial Reporting Standards)
When a company sales a product to a customer on account what accounts are debited and credited
Debit Accounts Receivable and Credit Revenue
Bought office equipment for $400,000. Paid half in cash and put the other half on account. Record the transaction
Debit Credit
Equipment 400,000
Cash 200,000
Account/Notes Payable 200,000
Record the following transaction:
Paid 2,500 in salaries for the month of September
Debit Credit
Salaries Expense 2,500
Cash 2,500
Financial statement that includes Dividends, Common Stock, and Net Incoome
What is Statement of Stockholders Equity
Beginning Retained Earnings+Net Income-Dividends=Ending Retained Earnings is the equation for what financial statement
Statement of Retained Earnings
The body that writes the rules
FASB (Financial Accounting Standards Board)
The balance sheet is different in that it reports at ____________
a point in time ex December 31, 2025
When Revenues increase what happens to NI,RE, and SE
What is Increase?
Determine net income with the following info:
Deferred Revenue 1,000
Service Revenue 3,000
Miscellaneous Expense 500
Common Stock 500
Salaries Expense 1,000
SR 3,000 - ME 500 and SE 1,000 = 1,500
Reports inflows and outflows of cash during the accounting period
Cash transactions involving normal operations such paying rent expense
What is Statement of Cash Flows?
What is operating activity
What is the equation for the Statement of Cash Flows
Cash from Operations(Income Statement)+Cash from Investing ( Balance Sheet)+Cash from Financing ( Statement of Owners Equity= Change in Cash
The body that approves the rules and evaluates an organization's internal controls
What is a way to remember the rules for debiting and crediting types of accounts
Explain what the method means
PCAOB (Public Company Accounting Oversight Board)
After Eating Dinner, Let's Read Comics.
Define Cost Principle
Record assets at their original cost on the transaction date
Net income is what amount; Service Revenue 3,000 Deferred Revenue 1,000, Rent Expense 500, Utilities Expense 240, Miscellaneous Expense 150, Cash 300 Accounts Receivable -800, Accounts Payable 850
What is 2,110? 3,000-500-340-150
Paying utilties is what type of business activity
What is operating activity
Statements used to report Accounts Receivables and Utilities Expenses
What is the Balance Sheet and Income Statement
In the first year of operations, Assets=10,000, Liabilities=2,000, Revenues is 8,000 and Expenses are Capital/SE of 3,000 and Dividends 1,000. What much is Capital/Stockholders Equity
What is $8,000? 8,000-2,000 +3,000 -1,000
Accounts on the Trial Balance
Examples of these categories
Assets, Liabilities, Capital (SE), Expenses
Assets-Cash, Accounts Receivables, Supplies, Liabilities-Accounts Payable, Notes Payable,
Expenses-Rent Ex, Utilities Ex, Salaries Ex
Accounts Payable is what type of account
What is a Liability?
Name the Four Financial Statements in order.
Then describe what is included in each FS
Income Statement, Stockholder's Equity, Balance Sheet, and Cash Flows
IS (Revenue - Expenses), SE (CS+NI +RE-Dividends).
BS (Assets =Liabilities plus SE)
CF Cash Flows from operations+ CFs from Investing + CFs from Financial Activities = Cash Balance
A company pays dividends of 1,000 to its stockholders. What is the impact on the accounting equation?
How do you record the transactions?
Assets decrease by 1,000 and SH equity decrease by 1,000
debit credit
Dividend 1,000
Cash 1,000