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Financial Accounting Summary

In: Business and Management

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lOMoARcPSD

Exam 28 March 2013

FINANCIAL ACCOUNTING FOR INTERNATIONAL BUSINESS
Income Statement = Total revenues of a company minus the company’s total expenses during a certain so-called accounting period.
NET INCOME = REVENUES – EXPENSES
Income Statement
Revenues
-Expenses
=Net Income
Revenues = increases in stockholder’s equity resulting from selling goods, rendering services, or performing other business activities.
Expenses = decreases in stockholders’ equity resulting from the cost of selling goods or rendering services and the cost of the activities necessary to carry on business.
Statement of Retained Earnings = this statement shows any changes in the ‘retained earnings.
Statement of Retained Earnings
Opening Balance
+Net Income
-Dividends
=Retained Earnings
Retained earnings = the profits of previous years’ which were not paid to the shareholders but stayed in the company.
Balance sheet = shows the financial position of a company on a certain day.
Balance Sheet
Assets Liabilities
Equity
A=L+E
ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY
Statement of Cash Flows = the in- and outflows of cash in a company.
Statement of Cash Flows
Opening Balance
+Investing Activities
+Financial Activities
=Change in Cash
+Starting Balance
=Ending Cash Balance
Profitability = can you hold and attract investment capital?
Liquidity = do you have enough cash to pay your debts when they are due?

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lOMoARcPSD

Exam 28 March 2013
Relationships between the statements:
Result from income statement entered in the statement for retained earnings.
The total retained earnings entered into the balance sheet under stockholders’ equity.
The amount of cash from the balance sheet result of the cash flow statement under “cash at end of month”.
T-Account =
Title…...

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