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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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