4/5 notes
Investing Activities
Activities that increase or decrease long-term assets; a section of the statement of cash flows.
Net change in cash
OA + IA + FA
net income
is a company's total earnings. revenues and subtracting the costs of doing business such as depreciation, interest, taxes and other expenses
End cash balance
is the amount of cash a company has when adding the change in cash and beginning cash balance for the current fiscal period. It equals the cash and cash equivalents line on the balance sheet.
expenses
what you spend
What is the purpose of a statement of retained earnings
-Shows the changes in retained earnings over a period of time. -how much wealth a company has
Debit
An amount recorded on the left side
Revenue
An increase in owner's equity resulting from the operation of a business
What does ALICE stand for?
Assets Liabilities Income Capital Expenses
A statement of retained earnings shows
Beginning retained earnings +net income -dividends declared ➡️ ending retained earnings
What must end cash balance on statement of cash flows equal
Cash on balance sheet
What is the purpose of an income statement
Financial performance over a period of time
What is the flow of information in accounting
Income statement ➡️ statement of retained earnings ➡️ balance sheet ➡️ statement of cash flows
Beginning retained earnings
It is recorded under shareholders' equity on the balance sheet. formula: calculate retained earnings by adding net income to, or subtracting any net losses from, beginning retained earnings, and subtracting any dividends paid to shareholders.
What does a balance sheet show
Operating activities + investing activities + financing activities = net change in cash (can be ether inflows or outflows) +beginning balancing cash = end cash balance.
What is the purpose of statement of cash flows
Reports sources and uses of cash over a period of time
Assets
Resources owned by a business
An income statement shows
Revunes -expenses and net income
Credit
Right side
Liabilities
What a company owes
Dividend Declared
When a corporation declares a dividend on its common stock, it will credit a current liability account Dividends Payable and will debit either 1) Retained Earnings, or 2) Cash Dividends Declared.
operating activities
includes cash receipts and cash payments for transactions relating to revenue and expense activities
financing activities
includes cash transactions resulting from the external financing of a business
dividend
the portion of corporate profits paid out to stockholders
Equity
the value of the shares issued by a company. "he owns 62% of the group's equity" (Ownership control)