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Unformatted text preview: -Retained earnings income that is retained and then reinvested into company. Reflects all money earned retained and reinvested. Nothing you can do with retained earnings. Simply a record recognizing a claim the owners of the business have for money invested. Liabilities = claims of creditors. When the firm has losses your retained earnings go down. II. INCOME STATEMENT -Net sales- Cost of Goods sold cost of inventory sold- Gross Operating profit sales minus cost- Depreciation non cash expense. Is deductable on taxes, the reason why we show it on cash flow. - Miscellaneous- Net income before Taxes minus Taxes = Net income. CASH FLOW STATEMENT (most important) OPERATIONS-operating activities (Net income before Dividends) SOURCES OF CASH-Depreciation-increase in accounts payable-Increase in accruals USES OF CASH-Increase in accounts receivable-Increase in inventories FINANCING ACTIVITIES-Increase in notes payable-Mortgage reduction...
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