Chapter 1 Notes - (receipts) and outflows (payments) for a...

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Chapter 1 Notes Assets = Liabilities + Stockholders’ Equity Stockholders’ Equity=Assets-Liabilities Transactions 1. Decrease in another asset, or 2. Increase in a specific liability, or 3. Increase in stockholders’ equity. 1. An income statement presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time. 2. A retained earnings statement summarizes the changes in retained earnings for a specific period of time. 3. A balance sheet reports the assets, liabilities, and stockholders’ equity of a company at a specific date. 4. A statement of cash flows summarizes information concerning the cash inflows
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Unformatted text preview: (receipts) and outflows (payments) for a specific period of time. The four financial statements are prepared in the sequence shown, for the following reasons: Net income is computed first and is needed to determine the ending balance in retained earnings. The ending balance in retained earnings is needed in preparing the balance sheet. The cash shown on the balance sheet is needed in preparing the statement of cash flows. five subdivisions of stockholders equity: common stock, retained earnings, dividends, revenues, and expenses...
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This note was uploaded on 06/19/2011 for the course FIN 402 taught by Professor Sandymcdonald during the Spring '11 term at University of Phoenix.

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