5.26.10 - same as earnings tells about profits Statement of...

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5.26.2010 Income statement In order to know the income statement, you need to know the time-frame Balance sheet => moment, income statement => always moving Only time you know if it was profitable => when the business ends Can’t wait till end to see Fiscal year Revenues When should be recognized? => depends ‘earned’ => doesn’t matter when you get paid, but when you did the job Payment that you received is not yet left to keep Increase in asset + increase in sales Expenses Cost incurred in the production of revenue What did we spend to make the sale? If it does not produce revenues, it’s not an expense Pre-paid expense => all assets Buy stuff to make $ Net income = revenues – expenses tells about operations Retained earnings => optional statement Time-frame of statement of retained earnings => period of time
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Unformatted text preview: same as earnings tells about profits Statement of cash flow Operating activities => best source collect from customers payments for expenses investing purchase PPE sale PPE financing sell stock borrow money pay loan buy back stock pay dividends helps predict future more debt => higher interest rates predict financial flexibility the ability to meet unexpected needs tells about cash full accounting employment act LLC => limited liability company Corporation => cant sue owners but pays own taxes (double taxation) Remainder => to owner (dividends) Choice: taxed like corporation or like partnership? Cost of goods sold => cost of merchandise sold => expense (only expense without expense)...
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5.26.10 - same as earnings tells about profits Statement of...

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