Chapter_3 - Review Income statement Prepared first Revenue...

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Review Income statement Prepared first Revenue less expenses Does NOT include owner investment activity Only look to the revenue and expenses for the period in which you are preparing the statement For instance, if you are preparing an income statement for 2009, you only look to revenues and expenses during 2009.
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Statement of Owner’s Equity Prepared after the income statement Always starts with the beginning balance of Owner’s Equity. Beginning OE is last year’s ending OE. Then shows the changes to OE that occurred during the period in which you are preparing the statement. This includes net income that you just calculated in this year’s income statement Will also include any additional investments by the owner during the period Will also include any withdrawals made by the owner during the period
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Balance Sheet Prepared third Shows assets, liabilities, and OE OE will tie to the ending OE balance just determined in the Statement of Owner’s Equity This is a snapshot in time This means that it shows the assets, liabilities, and owner’s equity as of the date prepared This is different from the other financial statements Example: December 31, 2009 is the appropriate label for BS. The other financial statements would have state “for the year ended December 31, 2009”.
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Cash Flow Statement Prepared last Shows the change in cash balance for the period in which you prepare the cash flow statement Ending of period cash balance on cash flow statement ties to the cash balance per the balance sheet.
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Must know these for the quiz over chapter 2 (assuming there is one….) Increases to assets are debits Increases to liabilities are credits Increases to OE are credits We now think of revenue and expenses are revenue and expense accounts. We understand that revenues and expenses ultimately impact OE and that they show up on the income statement. Increases to owner investments are credits
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This note was uploaded on 02/07/2011 for the course BUS 209 taught by Professor Z.gougoumanova during the Spring '11 term at American University in Bulgaria.

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Chapter_3 - Review Income statement Prepared first Revenue...

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