Accounting, Week 2
Accounting, Week 2 MGMT 200
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This 2 page Class Notes was uploaded by Rachel Rozow on Friday September 2, 2016. The Class Notes belongs to MGMT 200 at Purdue University taught by Frank T. Kane in Fall 2016. Since its upload, it has received 5 views. For similar materials see Introductory Accounting in Business at Purdue University.
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Date Created: 09/02/16
Accounting In a business entity, the cash (assets) = owner’s equity + creditor’s liabilities Financing activities: transactions the company has with investors and creditors Investing activities: transactions involving the purchase and sale of resources that provide benefit for several years Operating activities: transactions that relate to the primary operations of the company Financial statements: income statements reports revenues and expenses over a period of time *I would suggest looking in the textbook or online for an actual model* all things that have “expense” or “revenue” at the end should appear in an income statement Statement of stockholders’ equity summarizes the changes in stockholders’ equity over a period of time *I would suggest looking in the textbook or online for an actual model* change in retained earnings = Net income – Dividends change in retained earnings + Dividends = Net income Statement of stockholders’ equity = Statement of changes of stockholders’ equity Balance Sheet a point in time of the income statement the only statement that provides information for a point in time as opposed to a period *I would suggest looking in the textbook or online for an actual model* “Assets” and “resources” are interchangeable Recall business activities… Statement of cash flows: measures activities involving cash receipts and cash payments over an interval of time Operating cash flows: cash transactions involving revenues and expenses Investing cash flows: cash transactions involving longterm assets Financing cash flows: cash transactions involving lenders and stockholders Total change in cash = operating cash flows + investing cash flows + financing cash flows *I would suggest looking in the textbook or online for an actual model* From the income statement, we can take “net income” to be included in the statement of stockholders’ equity. The “ending balance” is sent to the balance sheet… “Interval” and “period” are interchangeable Order of preparation of the statements is income statement, statement of stockholders’ equity, balance sheet Investors and creditors are generally interested in the balance sheet
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