ACCT Final
Receipt from dividend revenue
Operating activity
Receipt of interest revenue
Operating activity
Received cash interest on a note
Operating activity
Recorded depreciation expense
Operating activity
cash paid for inventory purchases
Operating activity
income tax
Operating activity
interest
Operating activity
wage expense
Operating activity
Service Company Income Statements
Revenue - expenses = net income
Order of financial statements
1. Trial balance 2. Income statement 3. Statement of retained earnings 4. Balance sheet 5. Statement of cash flows
Accounting equation 2
Assets = liabilities + common stock - dividends + revenues - expenses
Accounting equation 1
Assets = liabilities + contributed capital + retained earnings
Paying loans
Financing
Issuing common and preferred stock
Financing activity
Issuing short and long-term debt
Financing activity
Issuing stocks or bonds
Financing activity
Notes and bonds payable
Financing activity
Pay dividends
Financing activity
Pay off short term or long term debt
Financing activity
Purchase treasury stock
Financing activity
Reissuing treasury stock
Financing activity
How to prepare statement of cash flows for investing/financing activities
Good things are added, bad things are subtracted
Paid cash interest on outstanding notes
Operating activity
Pay interest owed
Operating activity
Pay operating expenses
Operating activity
Investing activities
Include those transactions and events that affect long-term assets
Financing activities
Include those transactions and events that affect long-term liabilities, equity, and debt
Operating activites
Include transactions and events that determine net income, also impacted by changes in current assets and liabilities
Things on financial statements
Income statement: merchandiser and service companies Statement of retained earnings: dividends Balance sheet: accounting equation Statement of cash flows: operating, investing, financing activites, net change in cash
How to prepare the statement of cash flows for operating activities
Indirect method: 1. Adjustments for income statement NOT affecting cash: Bad things are added; Expenses and losses are ADDED to net income. (depreciation, amortization, loss on sale of asset) Good things are subtracted; Revenues and gains are SUBTRACTED from net income. 2. Adjustments for changes in current assets and current liabilities: Bad things are added; Decreases in current assets and increases in current liabilities are ADDED to net income. Good things are subtracted; Increases in current assets and decreases in liabilities are SUBTRACTED from net income. (Doing the opposite of what we originally did, making them as if they never happened)
Pay salaries and wages
Operating activity
Buy intangible assets
Investing activity
Buy long-term investments
Investing activity
Buy property, plant, and equipment
Investing activity
Buy short-term investments, except trading
Investing activity
Buying stocks or bonds
Investing activity
Collecting principal on notes receivable
Investing activity
Received cash from sales of land at a loss
Investing activity
Selling intangible goods
Investing activity
Selling long-term investments
Investing activity
Selling property, plant, and equipment
Investing activity
Selling short-term investments, except trading
Investing activity
sale or purchase investment securities
Investing activity
sale or purchase of principal of loans
Investing activity
sale or purchase of property and equipment
Investing activity
Pay suppliers for goods and services
Operating activity
Pay taxes and fines
Operating activity
Prepaid expenses increased in the year
Operating activity
Cash receipts from customers
Operating activity
Cash sales to customers
Operating activity
Collections on credit sales
Operating activity
Paid cash for property taxes on building
Operating activity
Purchased inventories for cash
Operating activity
Merchandiser Income Statement
Sales - COGS = gross profit - expenses = net income
