Chapters 1-3 Review - Chapter 1 Types of Businesses: For...

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Chapter 1Types of Businesses:For Profit & Not For ProfitOur focus will be on the Corporation.Business Activities of a Corporation - 3 Types:Financing: Obtain funds (dollars) to start, maintain, and grow the business.Investing: Invest funds in productive resources.Operating: Conduct the activities that are expected to yield profit for thecompany’s owners.The Accounting Equation:ASSETS =LIABILITIES+OWNERS’ EQUITYOther Important Equations to Know:Net Income = Revenue – ExpensesEnding Retained Earnings = Beginning Retained Earnings + Net Income -Dividends
Pictorial View of Expanded Accounting EquationASSETS=LIABILITIES+STOCKHOLDERS’EQUITY(items of value)(creditors’ claims to assets)(stockholders’ claimsto assets)* Cash* Accounts Payable* Accounts* Wages PayableReceivable* Unearned Revenue* Inventory* Debt, etc* Property* Equipment, etc.Owners’ InvestmentRetainedEarnings(Contributed Capital)Beginning Retained Earnings+Net Income-DividendRevenues-ExpensesFinancial Statements:1.Income Statement: shows how well a company performed during a period.2.Statement of Retained Earnings: shows why the retained earningsbalance changed during the period.3.Balance Sheet:shows the financial position of a company at the end of aperiod.

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Term
Spring
Professor
AlyssaGonnerman
Tags
Financial Accounting, Revenue, Generally Accepted Accounting Principles, View of Expanded Accounting Equation

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