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Lecture 6 Income Statement 2

Lecture 6 Income Statement 2 - Income Statement(II ACCT 410...

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1 Income Statement (II) ACCT 410 Accounting for Non-Business Majors Fall 2008 Professor Jieying Zhang Leventhal School of Accounting University of Southern California Sep. 11, 2008
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Income Statement (II) Learning objective Understand the relationship between income statement and balance sheet Understand adjusting and closing entries and their role in accrual accounting.
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Income Statement and Balance Sheet Balance Sheet At end of first year of operations Year-end Year-end Assets Liabilities Current Assets: Current Liabilities Cash $ Accounts payable $ Accounts receivable $ Total current liabilities $ Inventories $ $ Total current assets $ Owners' Equity Property, plant and equipment $ Paid in capital $ less accumulated depreciation $ Retained earnings $ Property, plant and equipment, net $ Total owners' equity $ Total assets $ Total equities $ Income Statement First year of operations Income from operations Revenues $ Cost of sales $ Depreciation $ Income from operations $ Non-operating income Interest income $ Net Income $
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Income Statement and Balance Sheet How is the income statement related to the balance sheet? Conceptually, the income statement is meant to measure wealth that the firm has created for shareholders over a period of time. Wealth created by firm or Net Income Distributed to Shareholders i.e., Paid out as dividends Reinvested or “saved” by the firm. i.e., Retained Earnings
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Income Statement and Balance Sheet
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