Busi 1004- test notes

Busi 1004- test notes - Financial Accounting Test 1 1...

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Financial Accounting Test 1 1. Statement of income: done first because net income is necessary for statement of changes in S/E 2. Statement of retained earning (statement of changes in S/E): Done second because S.E (capital stock and retained earning) is necessary to check if the statement of financial position balances 3. Statement of financial position: done third S.I S.R.E S.F.P Statement of Income: Name of Company Name of Statement Date (for the year ended: ) Revenue and Expenses ordered highest $ to Lowest $. Add a section for other incomes if necessary Revenue – COGS= Gross profit Gross profit – Expenses= Net income before taxes Net income before taxes – Taxes = Net Income or Loss (number is necessary for the Statement of R/E) Statement of changes in retained earnings: Name of Company Name of Statement Date (for the year ended: ) Beginning balance for all accounts Common stock issued (C.S) Net income (R.E) Less Dividends (R.E) Ending Balance for all accounts *Put as many columns as there are accounts, plus on column for the Total Different way of looking at S.R.E: Beginning Common Stock XX Plus: Common Stock Issued XX Ending Common Stock XX Beginning Retained Earnings XX Net income/(Loss) XX Less: Dividends (XX) Ending Retained Earnings XX Total Shareholders’ Equity XX
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Statement of Financial position: Name of Company Name of Statement Date (as at: ) Assets: current assets, non-current assets (L-T investments, property, plant and equipment, intangible assets, LESS accumulated depreciation for each) Liabilities: current liabilities, non-current liabilities Owner’s equity: share holder’s equity (capital stock, retained earnings) - Ordered By Liquidity: Current Assets, Noncurrent Assets, Current Liabilities, Noncurrent Liabilities - Assets=Liabilities + Owners’ Equity - Assets = things of value - Liabilities = debts owed - Equity= what you have left from assets after taking away your liabilities. Trial Balance: Name of Company Name of Statement Date (as at: ) List all assets (under Dr or Cr column) List all liabilities (under Dr or Cr column) List all equities (under DR or Cr column) List all revenues (under Dr or Cr column) List all expense accounts (under Dr or Cr column) Total for each column (check if Dr = Cr) - Trial Balance: all companies accounts with their debits and credits - Usually done before you do your statements - Order: assets, liabilities, equity, revenue and expense accounts - Key Equation: - Assets=Liabilities + Owners’ Equity - Owner’s Equity = Common shares + Retained Earnings - Retained Earnings = Net Income Dividends - Net income= revenue expenses - Final formula that can be derived: Assets = liabilities + common shares + revenues – expenses – dividends
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Duality: Every economic transaction has two sides It’s beautifully simple – every transaction has two sides. For every sale
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Busi 1004- test notes - Financial Accounting Test 1 1...

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