Course Hero Logo

Review Slides for Prelim 1 - Chapter 1: Financial...

  • Cornell University
  • AEM 2225
  • Notes
  • studyCornell
  • 26
  • 100% (1) 1 out of 1 people found this document helpful

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 12 out of 26 pages.

Chapter 1: Financial Statementsand Business Decisions
4 Financial StatementsBalance Sheet =Reports the economic resources thefirm owns and the sources of financing for thoseresources at a point in time.Income Statement =Reports the firm’s ability to sellgoods or services for more than their cost to produceand sell.Statement of Stockholders’ Equity =Reports additionalcontributions or payments to investors and the amountof income the company reinvested for future growth.Statement of Cash Flows =Reports the firm’s ability togenerate cash and how it was used for a period of time.
Balance SheetASSETS = LIABILITIES + STOCKHOLDERS’ EQUITYLeft side = Right sideDebits = Credits
Income StatementREVENUES – EXPENSES = NET INCOME**Net Income is an after-tax amount
Statement of Stockholder’s EquityBeginning Retained Earnings + Net Income* –Dividends = Ending Retained Earnings*Net Income comes from the Income Statement
Statement of Cash FlowsOperating Activities =Cash flows that aredirectly related to earning income.Investing Activities =Includes activities relatedto the acquisition or sale of the company’s plantand equipment and investments.Financing Activities =Includes activities that aredirectly related to the financing of the enterpriseitself. They involve the receipt or payment ofmoney to investors and creditors.
Chapter 2Investing and financing decisions and the Accounting System
Accounting EquationA=L+SE(Assets)(Liabilities)(Stockholders’ Equity)Economicresources withprobable futurebenefits owned orcontrolled by theentity. Measuredby the historicalcost principle.Probable debts orobligations (claimsto a company’sresources) thatresult from acompany’s pasttransactions andwill be paid withassets or services.Entities that acompany owesmoney to arecalled creditors.The financingprovided by theowners and bybusinessoperations.
Account Classifications
Adjusting Accounts
Main TakeawaysThe accounting equation should always balance(Assets=Liabilities + SE)In order to increase an asset account, you must debitit

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 26 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
JLittle
Tags
Balance Sheet, Generally Accepted Accounting Principles, stockholder s equity, credit sales revenue, debit prepaid insurance

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture