Also reported after income from continuing operations

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Unformatted text preview: causes a gain or loss for the company. Also reported after income from continuing operations. Common Size Income Statement: Shows all income statement lines as a percentage of net sales. Analysts use this calculation when evaluating a company from year to year. (See Exhibit 5.6, p. 246) Statement of Owners (Stockholders) Equity: Beginning balance + Net Income - Withdrawals = Ending balance. Covered more in chapter 11. Statement of Cash Flows: Illustrates net change in cash for the period Includes three sections: • Cash flows from operating activities: Cash flows associated with earning income • Cash flows from investing activities: Cash flows associated with purchase or sale of productive assets and investments • Cash flows from financing activities: Cash flows associated with the financing of debt and equity transactions Two methods can be used to determine cash flows: Direct vs. indirect. Covered in Chapter 13. Notes to the financial statements: Required by GAAP to provide important information, additional details, or explanations to help clarify the financial statements. Includes things such as: • Descriptions of key accounting rules followed by the company • Additional detail to support reported numbers in the financial statements • Relevant financial information not disclosed within the financial statements 31 Closing Entries At the end of an accounting period (typically one year) a company will "close" its books. The purpose of this is to: 1. Transfer net income or loss (revenues and expenses) into the equity account. 2. Establish a zero balance for revenue and expense accounts, to start accumulating information for the next accounting period Note: Income statement account balances (called nominal accounts) are t...
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This note was uploaded on 01/22/2014 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida - Tampa.

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