In what order should financial statements be prepared?
a. Income Statement
b. Statement of Stockholders’ Equity
c. Balance Sheet
What accounts have a normal debit balance? What accounts have a normal credit balance?
DEALOR
a. Debit: Dividends, Expense, Assets
b. Credit: Liabilities, Owners’ Equity, Revenue
Operating Activities
Day-to-day cash flows from running the business, like cash from customers and payments to suppliers.
Investing Activities
Cash flows from buying or selling long-term assets, such as equipment or investments
Financing Activities
Cash flows from raising or repaying capital, like issuing stock, borrowing money, or paying dividends.
What is accounting?
Accounting is the process of measuring and communicating financial information to users who rely on that information to make decisions.
- One major advantage of forming a corporation is
limited liability
Treasury Stock
is a corporation’s own stock that has been repurchased. It reduces stockholders’ equity and is not considered outstanding.
common stock
represents ownership in a corporation
What is the biggest advantage of offering extended credit to customers?
Increased sales
Additional Paid-In Capital
amounts received from shareholders above par or stated value
c. Retained Earnings
accumulated net income not distributed as dividends
What is the account type called that represents payments to stockholders?
dividends
The longer an account is outstanding, the more likely it will prove
uncollectable
Outstanding Stock
The shares currently held by shareholders (issued shares minus treasury shares).
Authorized Stock
The maximum number of shares a corporation is legally allowed to issue, as specified in its charter.
Do common stockholders participate in the day-to-day operations of a corporation?
no
- Deferred revenue
is money received by a company for goods or services not yet delivered or performed. It is recorded as a liability until the revenue is earned.
- Retained earnings
are the portion of a company’s net income that is kept (retained) in the business rather than distributed to shareholders as dividends.
Short-Term Liabilities (Current Liabilities)
Obligations that are due within one year or the company’s operating cycle, whichever is longer
Long-Term Liabilities
Obligations that are due after one year or beyond the company’s operating cycle.
Contingent liabilitie
potential obligations that may arise depending on the outcome of future events
