Week 1/2 important

Question 1

4 Basic Financial Statements, and what do they represent and what is their formula?

Answer 1

Balance Sheet (B/S)
– Reports dollar amounts for assets, liabilities, and shareholders’ equity at a specific point in time (snapshot)
Assets = Liabilities + Stockholders’

Equity Income Statement (I/S)
– Reports revenues, expenses, and net income over a period of time (flow)
Revenues – Expenses = Net Income

Statement of Stockholders’ Equity (Statement of Retained Earnings)
– Reports cumulative earnings of a company reinvested in the business (snapshot)
– Beginning RE + Net Income – Dividends = Ending RE

Statement of Cash Flows (SCF)
– Reports cash flows (changes in cash) resulting from operating, investing, and financing activities, over a period of time (flow)
– Reconciles change in cash (detailed in SCF) to the balance of cash in B/S
– Beginning Cash Balance + Net Cash Flows = Ending Cash Balance
– Net Cash Flows = Operating Cash Flows + Investing Cash Flows + Financing Cash Flows

Question 2

Difference in accounts between balance sheet and income statement?

Answer 2

Balance sheet consists of assets, libailites and stockholder’s equity

while income statement consists of revenues, expenses

Question 3

What does stockholder’ equity consist of and what is the definition of stokcholder’s equity and the things that make up the stockholders equity

Answer 3

Retained earning and contirubted capital

Stockholders’ Equity
– The residual interest in the assets of an entity that remain
after deducting its liabilities

Question 4

Common accounts of revnues and expenses

Answer 4

Common Accounts of Revenues: – Sales Revenue

Common Accounts of Expenses:
– Cost of Goods Sold (COGS):
– Depreciation Expense
– Interest Expense
– Income Tax Expense

Question 5

Structure of balance sheet / income statment:

Answer 5

Structure of baalnce sheet:

Assets

Libailites

Stockholder’s equity

Strucutre of income statement:

Revnues (or gains)

Expenses ( or losses)

Net income

Question 6

Each transaction must maintain:

Answer 6

Each transaction must maintain: Debits = Credits

Question 7

Ending retained Earning =
Net income =

Answer 7

Ending retained earning = beginning retained earning + net income - dividends paid

Net income = revenues - expenses

Question 8

what is retained earnning dividends

Answer 8

Retained Earnings (RE)
– Cumulative past earnings not distributed to shareholders

Dividends
– Distributions of income to shareholders

Question 9

When should a company recongize revenue and expenses. And what happens when you record revnue

Answer 9

Record revenue when service is provided,

recording revenue must either increase assets or decrease liabilites

record expense when revenue is recognized

Recongizing expenses must either decrease liabilities or increase liabilites

Question 10

Stockholdre equity what is it and what does it consist of and formula

Answer 10

Stockholder equity consists of contriubted capital and retained earning

Contributed capital is provided by the stockholders of a company. Retained earnings are any earnings not distributed to stockholders from a period of time

ERE = BRE+Net income - Dividends