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BSAD 221 Problem Worked Answers.docx - Chapter #1 Homework...

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Chapter #1 Homework Problems and NotesThere are three categories to business activities which are used within the financial statementsand are specifically used to categorize the type of cash outflow/inflow that is occurring.A company’s financing comes from two sources,(1) Investors, through the issuance of sales.(2) Creditors, through taking out loans or making purchases on credit.Typical Financing ActivitiesInflows:Borrowing MoneyIssuing SharesOutflows:Repaying Loan PrinciplePaying DividendsA company’s investing activities are related to two things:(1) Buying and Selling Property, Plant and Equipment(2) Buying and Selling the Shares of other CompaniesTypical Investing ActivitiesInflows:Proceeds from the Sale of Property, Plant, and EquipmentProceeds from the Shares of other CompaniesOutflows:Purchase of Property, Plant, and EquipmentPurchase of Share of other CompaniesA company’s operating activities are related to the company’s revenues and expenses, which fallinto two basic categories:Inflows from sales to and collections from customersOutflows related to payment of the expenses of the businessTypical Operating ActivitiesInflows:Sales to customersCollection of amounts owed by customersOutflows:Purchase of InventoryPayments of amounts owed to suppliersPayments of expenses such as wages, rent and interestPayments of taxes owed to the governmentComponents of the Financial Statements:Statement of Income
Statement of Changes in EquityStatement of Financial PositionStatement of Cash FlowsNotes to the Financial StatementStatement of IncomeIts purpose is to measure the company’s performance within the specified period by theresults of its operating activities. The sum of these operating activities is known as thecompany’s Profit. (aka. Net Income, Net Earnings, Earnings)AP1-6Ba.Goodwill arising from the acquisition of anothercompany. (NCA)b.Payment of a Utility Bill (SI)c.Cash collectibles from loan receivable (SCF)d.Short-term Investment (CA)e.Dividends Declared (SCE)f.Cost of Renting Equipment (SI)g.Amount owed to customers for advance payments (CL)h.Insurance costs for the period (SI)i.Inventory sold during the year (SI)
j.Dividends declared by the BOD but not yet paid (CL)k.Revenue from software licencing (SI)AP1-8Ba.Current Portion of Long-Term Debt (SFP)b.Gain on Disposal of Assets (SI)c.Repayment of Long-Term Debt (N)d.Unearned Revenue (SFP)e.Amortization of an intangible asset (SI)f.Rent Paid in Advance (SPF)g.Wages owed to Employees (SFP)h.Dividend Payable (SFP)i.Income Tax Expense (SI)j.Retained Earnings (SFP)AP1-12B1.Slip and Slide Ltd.Statement of IncomeFor the Month of July 2020Parking Revenue$6,000Service Revenue$200,650Total Revenue$206,650Wage Expense$25,000Advertising Expense$5,430Supplies Expense$15,469Utilities Expense$14,909Total Expense$60,808Net Income$145,8422.Other costs that may have occurred are that aren’t listed may be,-Rent Expense-Property/Equipment Depreciation-Interest ExpenseAP1-14Ba.

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Term
Summer
Professor
NoProfessor
Tags
Balance Sheet, Revenue, Generally Accepted Accounting Principles, Total Shareholder s Equity

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