1ST QUARTER Flashcards
what are the 5 financial statements
income statement
statement of owner’s equity
balance sheet
statement of cash flows
notes to the financial statements
income statement is aka
statement of comprehensive income
statement of profit and loss
purpose of income statement
to show results of operations of a company (whether it had losses or gains at the end)
liabilites are…
economic obligations
assets are our….
economic resources
statement of owner’s equity is aka
changes in owner’s equity
purpose of owner’s equity
to show ale (assets = liabilities + equity)
to show company’s financial health and stability or actual value
balance sheet is aka
statement of financial position
purpose of balance sheet
to show the position of the company as of a specific period
all accounts seen in the income statement are what
temporary or nominal accounts
highly simplified as all revenues are simply added less all expenses with a net profit or loss at the end
single step income statement
single step is used for
service industry income statement
multi-step income statement is used for
merchandising ang manufacturing industry
considers costs of goods and gross profit
multi-step income statement
formula of net sales
gross sales minus sales discounts and sales returns
formula of net purchases
gross purchases plus freight in minus purchase discounts and purchase returns
formula of cost of goods available for sale
beginning inventory plus net purchases
formula of cost of goods sold aka cost of sales
cost of goods available for sale minus ending inventory
formula of gross profit
net sales minus cost of goods sold
once you have your -, that’s the only time you deduct all other expenses to come up with your net Income or loss
gross profit
