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Financial Statements Exercises - and multi step formats In...

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What I learned from the Financial Statements Exercise. There are four different balance statements. They are the balance sheet, income statement, retained earnings statement, and the statement of cash flows. The two statements that you can find the ending balance on are the statement of cash flows, and the balance sheet. The Retained earnings statement is the one that shows things like expenses and dividends. The thing that I did not know was that the balance sheet provides a quick financial snapshot of assets and claims against those assets at a specific moment in time. I also did not know that the payment of dividends are subtracted from the cash balance on the statement of cash flows. What I learned from the Income Statements Exercise. There are two different styles to preparing an income statement. They are single
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Unformatted text preview: and multi- step formats. In the single step approach, there are three pieces of information to consider. These include revenues, expenses, and net income. The only step that this format includes is that expenses are subtracted from revenues. The multi- step format separates operating and non-operating activities as well as classifying expenses by functions. The main differences in single and multi-step are that the single is easy to prepare and focuses on the bottom line, and the multi-step is more detailed and the common financial roles can be easily calculated. One thing I did not know was that gross profit percentage ratio can not be determined by using the single step method.I also did not know that income before taxes can only be found on the multi-step income statement....
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