Accounting 153 Quiz 1 Chapters 1 and 2

Income Statement

• SIERRA CORPORATION
•      Income Statement
• For the Month Ended October 31,2012

You take all Revenues and apply them under the Revenues tab.

Then you take all expenses and place them under the expenses tab.

Finally you subtract total revenue from total expenses.

Which will give either give you a Net Income or Net Loss.



Header

• Revenues
•   Service Revenues                      $ 10,000

• Expenses
•   Salaries Expense        $ 4,000
•   Supplies Expense          2,000
•   Rent Expense               1,000
•       Total expense                        7,000
• Net Income                                 $3,000
•                                                   _____

Balance sheets report assets and claims to assets at a specific point in time

A financial statement that reports the assets and claims to those assets at a specific point in time.

A balance sheet describes all of a companies assets and liabilities at a certain point in time.

• In the balance sheet the users see's 
• all of a companies assets (accounts receivable, cash,inventories, supplies,buildings and non tangible assets).

The balance sheet also has the claims to those assets under the section 

Liabilities and Stockholders' Equity

In this section of the balance sheet the user see's Liabilities (which are basically bills that a company must pay to its creditors (Bank).

Examples of this include: Notes Payable and Accounts Payable.


Don't worry about how these two are different.

the second section of the Liabilities and Stock holder's of a balance sheet is the

Stockholders' Equity Section

In this section the users see Common Stock and Retained Earnings.

Common stock is the total amount of money brought into the company by investors (stockholders)

While the Retained earnings represents the amount of Net income that the company has kept for itself. 

An Income Statement is used to describe how much money or how much money has been lost by a company within a certain time period either a calender year or fiscal year

An income statement shows how much money a company has earned minus total expenses

Payments of cash from a corporation to its stockholders.

Dividends are not payouts to employees

Expenses are the cost of assets consumed in the processes of generating revenue.

I.e; the cost of supplies,the cost of employees, the cost of rent, the cost of insurance, 

retained earnings is the amount of money that is reinvested into the corporation

• Sole
• -owned by one person
• -get tax breaks

• Partnership
• -owned by more then one person
• -get tax breaks

• Corporation
• -seprate legal entity owners not liable
• -pay high taxes

Internal users: managers for the corporation use this information to plan ,organize and run business operations.

External Users: include investors and creditors. Investors (stockholders), Creditors (banks and suppliers) use this information to decide whether they want to grant credit or loan money to a business.

Financing

-collecting the necessary funds to support the business.

Investing activities

-acquiring the resources necessary to run the business.

Operating activities:

-putting the resources of the business into action in order to generate a profit (day to day activities)

Income Statement:

- Presents the revenues and expenses of a company for a specific period of time. 

Retained Earnings

-Summarizes the changes in retained earnings that have occurred for a specific period of time; either a calender year or a fiscal year

Balance Sheet

-Reports the assets,liabilities, and stockholders' equity of a business at a specific date.

Assets = Liabilities + Stock holders Equity

Liabilities - Assets = Stockholders' Equity

An owners claim to the company.

A term to represent the total amount paid in by stockholders