Chapter 1 FinAcc

What question does the Statement of Shareholders’ Equity answer?

How much did retained earnings change during the year and how did it affect the overall equity of the shareholders?

Formula for Statement of Shareholders’ Equity?

Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings

What question does the Income Statement answer?

It answers how much revenue was generated and the expenses incurred over a specific period, resulting in net income or loss.

Formula for Income Statement?

Revenues – Expenses = Net Income

What question does the Balance Sheet answer?

What is the company’s financial position at a specific point in time?

Formula for Balance Sheet?

Assets = Liabilities + Owners’ Equity.

What question does the Statement of Cash Flows answer?

How much cash did the company generate and use during the year?

Formula for Statement of Cash Flows?

Operating Cash Flows ± Investing Cash Flows ± Financing Cash Flows = Change in Cash

What are examples of Revenues?

Sales revenue, consulting revenue, interest revenue, rent revenue.

What are examples of Expenses?

Utilities, salaries, rent, maintenance, supplies, advertising, insurance, repairs, income taxes.

What are the two main elements of Owner’s Equity?

Common Stock and Retained Earnings.

Examples of Assets?

Cash, short-term investments, accounts receivable, notes receivable, inventory, supplies, land, buildings, equipment, long-term investments, intangibles.

Examples of Liabilities?

Accounts payable, salaries payable, loans payable, income taxes payable, utilities payable, bonds payable.