Financial Puzzle FINANCIAL STATEMENTS By PresenterMedia.com PresenterMedia.com.
Post on 30-Dec-2015
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STATEMENT OF CASH FLOWS - Indicates cash inflows and outflows from operating, investing, and financing activities for a period of time (Cash basis).
How are Financial Statements prepared?
INCOME STATEMENT - Indicates revenues less expenses = net income for a period of time
STATEMENT OF RETAINED EARNINGS - Indicates changes in Owner’s Equity for a period of time
BALANCE SHEET - Indicates the ending balances of assets, liabilities, and owners’ equity at a point in time
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• Examples of accounts:• Revenues:• Sales, Fees• Expenses:• Cost of Goods Sold,• Salaries, Rent, Utilities,
• Depreciation, Interest
Income Statement- Indicates revenues less expenses = net income for a period of time
• Beginning Balance: (if any)
• Add: Net income or
• Subtract : Net loss
• Add: Owner Contributions
• Less: Dividends
• = Ending Balance
Statement of Retained Earnings- Indicates changes in Owner’s Equity for a period of time
3 Categories:
• Operating
• Investing
• Financing
Statement of Cash flowsIndicates cash inflows and outflows from operating, investing, and
financing activities for a period of time (Cash basis).
• Operating – Cash in and out from operating activities
• Cash received from customers• Cash paid to employees• Cash paid to suppliers• Cash paid for rent• Cash paid for utilities
Statement of Cash flowsIndicates cash inflows and outflows from operating, investing, and
financing activities for a period of time (Cash basis).
INVESTING ACTIVITIES
. Purchase and sale of long-term assets
• Examples:• Cash paid for Car• Cash paid for Computer• Cash received for Car• Cash received for Computer
Obtaining cash or other resources to pay for investments in long term assets.
• Examples: • Cash received from
borrowing a loan• Cash paid to payoff loan• Cash paid to owners
(shareholders) dividends• Cash received from owners
(investing in the business)
FINANCING ACTIVITIES
Statement of Cash flowsIndicates cash inflows and outflows from operating, investing, and financing activities
for a period of time (Cash basis).
• Assets = Liabilities + Owner’s EquityAssets:• Cash, Accounts Receivable, Supplies,• Prepaid Assets (Insurance), Inventory,• Car, Accumulated Depreciation – Car
Liabilities:• Accounts Payable, Interest Payable, Utilities Payable,• Notes PayableOwner’s Equity:• Capital, Withdrawals/Drawing
Indicates the ending balances of assets, liabilities, and owners’ equity at a point in time
Balance Sheet
YOU OWE
YOU HAVE
YOU OWN
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