Accounting (Acc100) Essay

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ACC100 Final EXAM NOTES 1. Income Statement * Reports the results of operations for a specific period of time * Revenues, expenses, profit (loss) 2. Balance Sheet * Reports the financial position at a specific date * Assets, liabilities, shareholders’ equity 3. Cash Flow Statement * Reports the cash consequences of transactions by type of activity for a specific period of time * Cash receipts and disbursements (payments) 4. Statement of Retained Earnings * Reports the changes in retained earnings for a specific period of time * e.g. net income, dividend Revenue: inflows of assets in exchange for sale of goods or provision of services, EARNED when goods delivered or service provided Expenses: the costs of assets consumed or the costs of services used, must be MATCHED to the revenue they help to generate. Retained Earnings: the profit that is “retained” or kept within the business to help ‘fund’ or finance future growth. Formula: Total earnings – earnings paid out/distributed Assets = liabilities+ owner’s equity Assets: Owned / controlled by the entity, Physical good or legal right, Has future economic benefit for the entity Liabilities: Owed to third (external) parties, due at a future date, Settled (paid) in cash, goods or services Owner’s equity: “Owed” to shareholder, Made up of: common shares and retained earnings, Paid out as dividends Cash Flow: Shows the cash receipts and cash payments for a period of time. Divided into three parts (operating, investing, financing). Sole Proprietorship: 1 owner, unlimited liability Partnership: 2 or more owners, unlimited liability Corporation: many owners, ownership based on shares, organized under province or federal government, limited liability Financing –

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