CLASS_1_CLASSIFYING

CLASS_1_CLASSIFYING - Assets Assets are economic resources...

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Assets are economic resources with future benefits. There are 2 ways to acquire assets: Borrow money to buy them (Liabilities) Use invested money to buy them (Stockholders’ Equity) From external sources Common & Preferred stock; APIC From internal sources Reinvested profit ( Retained Earnings ) Balance Sheet equation: Assets = Liabilities + Equity Revenues are earned within the accounting period. Gains are not the primary source of revenues Expenses are assets that are used up during the accounting period. Losses are not operating expenses. Income Statement equation: Revenue – Expenses = Net Income Assets Liabilities Equity (RE) Investments by owners Distributions to owners Comprehensive income If they are Income Statement accounts Revenues Gains Expenses Losses TOOLS Balance Sheet GBW SS’09 Page 1
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Balance Sheet Classification Current assets : Are cash; or Will become cash; or Will be used up within 1 year or operating cycle. Current assets are listed in order of liquidity Long term assets will used to provide economic benefits over a period longer than 1 year Long term assets are listed in order of: Investments PPE Intangible assets Other assets Current liabilities will be paid by using current assets within 1 year or the operating cycle. Current liabilities are listed in order of maturity.
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CLASS_1_CLASSIFYING - Assets Assets are economic resources...

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