INTRODUCTION TO FINANCIAL ACCOUNTING

question

Types of Business Activities
answer

*Financing -sources of outside funds used to operate the business *Investing -purchase of resources (assets) the business needs to operate *Operating -the daily activities of the business
question

Accounting Equation and components
answer

*Assets = Liabilities + Stockholder’s Equity *Assets, Liabilities, Stockholders Equity *Revenue, Expense, Dividends, Stock, Retained Earnings *The accounting equation must always balance
question

Basic Financial Statements
answer

*Income Statement-revenue accounts and expense accounts, net income *Statement of Retained Earnings-retained earnings account, net income and the dividends account *Balance Sheet-asset accounts, liability accounts and owners’ equity accounts -capital stock and retained earnings *Statement of Cash Flows-explains how the changes in account balances during an accounting period affect the balance in the cash account *Interrelationship among the financial statements
question

Income Statement
answer

*Revenues -Expenses = Net Income *Net Income vs. Net Loss *Prepare an Income Statement
question

Retained Earnings Statement
answer

*Beginning balance in Retained Earnings + Net Income -Dividends = ending balance in Retained Earnings *Retained Earnings Statement links the income statement and dividends to the Balance Sheet *Prepare a retained earnings statement
question

Balance Sheet
answer

*Assets = Liabilities + Owners’ Equity *Owners’ Equity = Common Stock + Retained Earnings *Prepare a balance sheet

Get instant access to
all materials

Become a Member