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UNR / Acct, Fin, Ins & Risk Mgt Department / ACC 201 / How are the four financial statements linked?

How are the four financial statements linked?

How are the four financial statements linked?

Description

School: University of Nevada Reno
Department: Acct, Fin, Ins & Risk Mgt Department
Course: Financial Accounting
Professor: Marcus brooks
Term: Spring 2017
Tags: Accounting, acc, 201, ACC201, Midterm Study Guide, midterm, Midterm 1, and overview
Cost: 50
Name: Accounting 201 Test 1 Study Guide (Chapters 1-4)
Description: Chapter 1: Overview (Types of businesses, Four financial statements) Chapter 2: Balance Sheet (Sources of Financing, Debit/Credit Framework, Classified Balance Sheet) Chapter 3: Income Statement (Operating Activities, Accrual Basis Accounting, Revenue/Expense Recognition Principle, Net Profit Margin) Chapter 4: Adjustments, Financial Statements (Deferral vs. Accrual, Depre
Uploaded: 02/20/2018
4 Pages 49 Views 2 Unlocks
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[CHI


How the four financial statements are linked?



I Longevity |

Taxes

Type of I Number of liabilitu

I Liability Business

owners Sole Proprietorship

High

TP

very

Limited

Low

Partners

2

+

stue

shared

Limited

با ما

Corporation

I unlimited

I Low

Unlimited I High


What are the main sources of finance?



If you want to learn more check out How much of a diet normally consists of carbohydrates?

Accounting Equation Assets = Liabilities + Stockholder's

Equity

Net Income Revenues - Expenses = net

Income sale of goods cost of or services to doing a customer business

NOTE

common E

stock

retained

earnings


What is the difference between a balance sheet and a classified balance sheet?



Financial Reports only include results of business activity NOT STOCKHOLDER

Note

Dividends Distribution of a company's earnings

to stockholders as a return on their investment

Dividends are If you want to learn more check out What role did entrepreneurs think technology played in generating wealth?

NOT an expense

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Four Financial Statements

O income statement - → NI = R-E 2) Statement of Retained → Beg. RIEB

Earnings

+ Net Income (Dividends)

Ending RIE © Balance sheet

A = LASE

4 Statement of Cash 1. operating Activities

Flows We also discuss several other topics like When were viruses first seen under a microscope?

P (current assets & liabilities) Rev. & EXP 2. Investing Activities

purchase, sale of noncurrent assets

3. Financing Activities

Header

honcurrent liabilities & SE

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Company Name Title of Report Date I period oup

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Сң 2 BALANCE SHEET

Acc Ean A = L + SE

emua

2 Sources of Financing

1 Debt Fin.

• Not Giving company

away BUT company pays interest

2 Equity Fin. Don't forget about the age old question of What does chelicerata mean?

• Giving part of the

company away BUT no interest paid

• If company is profitable,

DIVIDENDS are paid

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Duality of Effects

Debit/Credit

Framework

"left and right"

L

SE

• every transaction has at

least 2 effects on the basic accounting equation

cr

NB

NB

Normal

Balance

Classified Balance sheet

• For ONE SPECIFIC DAY Cnot a period ) Current Assets : will be used up within Current Liabilities: are debts Don't forget about the age old question of What is science/social science?

the next 12 months

that will be paid within (ex: cash, acc.rec.)

the next 12 months

(ex: acc. payable) Long Term: anything not paid or used up

within 12 months

(ex: equipment, notes payable)

current assets

NOTE

Current Ratio =

current liabilities

A higher current ratio means a better ability We also discuss several other topics like What is the meaning of computer literacy?

to paycgreater than 1)

NOTE!!!

There will be a classified Balance sheet problem

ON THE TEST! know how to make

one!

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CH 3 INCOME STATEMENT

Operating Activities include buying goods/ services from suppliers and employees

and selling them to customers and collecting cash from

them

Cash Basis Acc

vs.

Accrual Basis ACC

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• records revenues when CASH IS RECEIVED and exp. when cash is paid

e soup

• records revenues when they

are EARNED and exp. to the same period as the revs. to which

they relate

(when & is

received

when work

I is done

Revenue Recognition Principle vs. Exp. Recog. Principle (Matching)

• Revenues recognized when they

are EARNED

•Expenses recorded in the same

period as the revs which they can be associated

Expanded Acc. Ean

" DEALOR"

Assets = Liabilities + cs +RevExpenses - Dividends

normal

normal debit

credit Dividends

Liabilities Expense

Owner's / stockholder's Equity

Revenues Assets

Net Profit Margin

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Net Income

Net Profit Margin

Revenue

ex:

=

258

or

25.8%.

$3100 $ 12000

If Net Profit Margin is 25.8%.

then it costs the company

74.

2 ¢ for every dollar

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CH4

ADJUSTMENTS

NOTES

• Made on a monthly basis (NOT daily)

• NEVER involve cash!

• ALWAYS include one balance sheet and

one income statement account

VS.

Deferral

• an exp. or rev. that has been postponed for reporting it on the Income statement (ex:prepaid rent)

• Asseta Exprense Liability Revenue

Accrual

• when a company earned a rev.or exp. but has not yet recorded it because cash will not be received/paid until later (ex: income taxes)

• AssetRevenue

Liability Expense

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Depreciation

VS.

Amortization

• intangible goods

Cex: logos, software)

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• ltem always usted at what you paid for Contra asset account: account that is an offset or reduction to another account

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• reduces assets

• tangible goods

closing Accounts

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• All Income statement and Dividend account will have a ZERO

balance

(This

is on

the

quiz but not

the

test)

Stud

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