Lect2_08 - The Three Principal Financial Statements...

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The Three Principal Financial Statements Raises Capital Invests Capital Earns Return Reinvests Pays Dividend { { External Financing Liabilities and Contributed Capital Internal Financing Retained Earnings Investing Assets Operating Revenues Expenses Statement of Cash Flows Operating Investing Financing
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Articulation of the Balance Sheet and Income Statement In Time B/S 0 B/S 2 B/S 3 B/S 4 B/S 1 I/S 1 I/S 2 I/S 3 I/S 4 In Content Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
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The Balance Sheet I. Definition of Asset and Liability II. Valuation Rules Under GAAP (of Assets, Liabilities and Owners’ Equity) III. What is Par Value? IV. The Dual Effect of an Accounting Transaction V. Bookeeping and T-Accounts
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Definition of Asset An Asset is something the firm owns which gives future economic benefit and 1. ownership results from a past transaction and 2. the future benefits are objectively measurable. Definition of Liability A Liability is an obligation to make payments of cash or to provide goods or services 1. for which benefit has been received and 2. the obligation is reasonably definite in timing and amount. Definition of Owners’ Equity
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Lect2_08 - The Three Principal Financial Statements...

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