basics-of-accounting-information-processing

Basics-of-accounting-information-processing

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: al assets $900,000 Download free eBooks at bookboon.com 23 Basics of Accounting & Information Processing The Core Financial Statements Liabilities S alaries payable A ccounts payable Total liabilities $ 34,000 166,000 $200,000 Stockholders’ equity C apital stock R etained earnings Total stockholders’ equity Total liabilities and equity $220,000 480,000 700,000 $900,000 5.5 Statement of Cash Flows The statement of cash flows details the enterprise’s cash flows. This operating statement reveals how cash is generated and expended during a specific period of time. It consists of three unique sections that isolate the cash inflows and outflows attributable to (a) operating activities, (b) investing activities, and (c) financing activities. Notice that the cash provided by operations is not the same thing as net income found in the income statement. This result occurs because some items hit income and cash flows in different periods. For instance, remember how Edelweiss (from the earlier illustration) generated income from a service provided on account. That transaction increased income without a similar effect on cash. These differences tend to even out over time. Q UARTZ CORPORATION Statement of Cash Flows For the Year Ending December 31, 20X9 Operating activities * C ash C ash C ash C ash C ash received from customers received for interest paid for salaries paid for rent paid for other items $ 720,000 15,000 (240,000) (115,000) (300,000) C ash provided by operating activities $ 80,000 Investing activities P urchase of land (250,000) Financing activities P ayment of dividends (35,000) Decrease in cash $(205,000) Cash, January 1 397,000 Cash, December 31 $ 192,000 Suffice it to say that the underpinnings of the statement cash flows require a fairly complete knowledge of basic accounting. Do not be concerned if you feel like you lack a complete comprehension at this juncture. A future chapter is devoted to the statement. Download free eBooks at bookboon.com 24 Basics of Accounting & Information Processing The Core Financial Statements 5.6 Articulation It is important for you to take note of the fact that the income statement, statement of retained 5.6 Articulation earnings, and balance sheet articulate. This means they mesh together in a self-balancing fashion. The It is important for you to take note of the fact that the income statement, statement of retained income for the period ties into to the statement of retained earnings, and the ending retained earnings earnings, and balance sheet articulate. This means they mesh together in a self-balancing fashion. The ties into the balance sheet. This final tie-in causes the balance sheet to balance. These relationships are income for the period ties into to the statement of retained earnings, and the ending retained earnings illustrated in the following diagram. ties into the balance sheet. This final tie-in causes the balance sheet to balance. These relationships are illustrated in the follow...
View Full Document

This document was uploaded on 09/24/2013.

Ask a homework question - tutors are online