Financial Act Chpt 4 Notes

Capital if sole proprietorship or partnership

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Unformatted text preview: s) in the assets of a corporation. • Capital: If sole proprietorship or partnership • Contributed Capital (Stock and Additional paid in capital), and Retained Earnings if a corporation Working Capital: Excess of a company's current assets over its current liabilities. Measures short term liquidity of a company. The Classified Income Statement: Revenues - Expenses = Net Income Revenues or Sales: Inflows or increases in assets of a company during a certain period from rendering services (a service firm), selling a product (a merchandiser) or producing and selling a product (a manufacturer), or any other activities that are part of the company's central and ongoing operations. Expenses: Outflows or decreases in assets of a company during a certain period from rendering services (a service firm), selling a product (a merchandiser) or producing and selling a product (a manufacturer), or any other activities that are part of the company's central and ongoing operations. 30 from peripheral orincic!e Gains: Increas sin equityofacom vnd ongoing operations and NOT ir.. :r,ents by owners) — ionS of central Losses: Decreases in equity of a company from peripheral or incidental transactions (NOT part of central and ongoing operations and NOT withdrawals by owners) Non-recurring items that can affect the income statement: Discontinued Operations: Occurs when a component of a business is discontinued or sold. Gains or losses with the discontinued component are reported on the income statement, after income from continuing operations. Extraordinary items: An event that occurs that is unusual and infrequent, that...
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