Review for AC202

Thetemporaryequity accounts close revenue accounts to

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Unformatted text preview: orrowing creates liabilities Bank loans Debt securities Goods on credit or payables Selling stock creates stockholders’ equity Investing Activities Investing Activities Obtaining resources or assets to operate the business Land Buildings Vehicles Computers Furniture Equipment Operating Activities Operating Activities Primary activity of business Selling goods Providing services Manufacturing Cost of Sales Advertising Paying employees Paying utilities Operating Activity Results Revenue Expenses Examples of Revenues Taxi Company - sells services Theatre - sells services & products Retail Store - sells products Examples of Expenses Taxi Company - gasoline, maintenance, insurance Theatre - salaries, supplies, film rental, concession items to sell Retail Store - utilities, taxes, rent, supplies, salaries, products to sell Operating Activities Operating Activities Revenues are the increases in assets resulting from the sale of a product or service Expenses are the cost of assets consumed or services used in generating revenue. If revenue > expense = Net Income If revenue < expense = Net Loss! REVENUE LESS EXPENSES equals INCOME Net Income „Net Income is the excess of revenues over expenses. Revenue Less Expenses Net income $10,000 3,000 $ 7,000 Net Loss „Net Loss is the result of more expenses than revenues. „ Revenue Less Expenses Net loss $10,000 13,000 $ 3,000 Basic Terms Assets - resources owned by a business Liabilities - debts and obligations of the business - represents claims of creditors on the assets of the business Equity – Common stock and earnings of the stockholders – represents claims of owners on the assets of the business Organization of Information What do we do with the information about the assets, the liabilities, the stockholders, the revenues, the expenses, the net income? Put them into reports called . . . . Financial Accounting Statements Balance Sheet Balance Sheet Income Statement IncomeStatement Retained Earnings Statement of Cash Flows Statement Statement of Cash Flows The primary financial statements for external users . Content and Purpose of Financial Statements Content and Purpose of Financial Statements Accountants communicate with users through these four financial statements And who are the users? Income Statement Income Statement Reports operating success or failure for a period. Summarizes revenues and expenses for period: month, quarter, year. If revenue > expense = Net Income. CSU CORPORATION Income Statement For the Year Ended December 31, 2004 1st- head up the statement •name of company •name of statement •period of time covered CSU CORPORATION Income Statement For the Year Ended December 31, 2004 Revenues Service revenue $17,000 2nd - List the revenues CSU CORPORATION Income Statement For the Year Ended December 31, 2004 Revenues Expenses Rent expense Insurance expense Supplies expense Total expenses Service revenue $17,000 $9,000 1,000 200 10,200 3rd - List and total the expenses CSU CORPORATION Income Statement For the Year Ended December 31, 2004 Revenues Service revenue $17,000 Expenses Rent expense Insurance expense Supplies expense Total expenses Net Income $9,000 1,000 20...
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This note was uploaded on 09/29/2013 for the course AC 202 taught by Professor Nancyeverett during the Fall '09 term at Park.

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