Professional Documents
Culture Documents
Equation The Balance Sheet The Income Statement The Cash Flow Statement The statement of Stockholders Equity Statement of Retain Earnings
Foot notes and supplement information to financial statement
Balance Sheet
Mirrors
Assets
To be reported on a balance sheet, an asset must
Current assets comprise assets that can be converted to cash within a year Noncurrent assets (long-term assets) cannot be easily converted to cash within a year.
Liabilities
Liabilities
maturity
Current Liabilities come due in less than a year. Noncurrent liabilities come due after a year.
Companies
desire more current assets than current liabilities this difference is called net working capital
Equity
Equity consists of:
Contributed Capital (cash raised from the issuance of shares) Earned Capital (retained earnings). Retained Earnings is updated each period as follows:
Income Statement
Income Statement
Revenues
are increases in net assets as a result of business activities. Expenses are the outflow or use of assets to generate revenues, including costs of products and services sold, operating costs like wages and advertising, and nonoperating costs like interest on debt.
expenses are the usual and routine costs that a company incurs to support its main business activities Non-operating expenses relate to the companys financing and investing activities
of Equity is a reconciliation of the beginning and ending balances of stockholders equity accounts. Main equity categories are:
Contributed capital Retained earnings Treasury stock
Statement of cash flows (SCF) reports cash inflows and outflows Cash flows are reported based on the three business activities of a company:
1. Operating activities: transactions related to the operations of the business. 2. Investing activities: acquisitions and divestitures of long-term assets 3. Financing activities: issuances and payments toward equity,