Formulas
What is the Accounting Equation?
Assets= Liabilities+Stockholders Equity
What does the income statement report?
Revenues and expenses for the period.
Baker Company purchased a building for $2 million in 2016. In 2018 the building is worth $2.5 million. The seller purchased the building for $1 million. Per the historical cost principle, for how much should Baker Company record the building?
$2 million
Which of the following is the correct Accounting Equation?
A. Assets= Liabilities - Stockholders Equity
B. Assets=Liabilities + Stockholders Equity
C. Assets + Liabilities= Stockholders Equity
D. Assets+ Stockholders Equity = Liabilities
B. Assets=Liabilities + Stockholders Equity
Which financial statement shows a firm's financial position at a point in time?
Balance Sheet
Reef Corp has $9 million of assets and $4 million in liabilities. How much equity does Reef have?
$ 5 million
How do you find Net Income?
Total Revenue - Total Expenses
What is the order of the financial statements?
1. Income statement
2. Statement of RE
3. Balance sheet
4. Statement of Cash Flows
Hayes corporation have $22 million stockholders' equity and $57 million in assets. How much liabilities does Hayes have?
$35 million
The accounting equation can be rewritten as:
Assets - Liabilities= Stockholders' Equity
Where does Net income (net loss) flows from and to?
NI flows from the income statement and into the statement of retained earnings.
Reef Corp has $100 of revenues and $70 of expenses for 2018. What is Reef Corps net income for 2018?
$30
What is the equation for the statement of retained earnings?
Beginning Retained Earnings
+ Net Income
- Dividends Declared
= Ending Retained Earnings
What are the three types of activities?
Operating activities
Investing activities
Financing activities
Retained Earnings in 2017 at Acres Corp was $20 million, Net Income during 2018 was $50 million and during the year Acres paid out $10 million in dividends. What is Acres Ending Retained Earnings in 2018?
$60 million