Concept Introduction:
Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and
Balance Sheet: The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
To calculate:
The missing amounts.
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Chapter 1 Solutions
Cornerstones of Financial Accounting
- Identify the financial statement on which each of the following account categories would appear: the balance sheet (BS), the income statement (IS), or the retained earnings statement (RE). Table 3.21arrow_forwardClassification of Financial Statement Items Classify each of the following items according to (1) whether it belongs on the income statement (IS) or balance sheet (BS) and (2) whether it is a revenue (R), expense (E), asset (A), liability (L), or stockholders equity (SE) item.arrow_forwardIdentify the financial statement on which each of the following accounts would appear: the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS). A. Insurance Expense B. Accounts Receivable C. Office Supplies D. Sales Revenue E. Common Stock F. Notes Payablearrow_forward
- Multiple-step income statement Identify the enurs in the following income statement and prepare a corrected income statement:arrow_forwardClassify each of the accounts listed below as assets (A), liabilities (L), owners equity (OE), revenue (R), or expenses (E). Indicate the normal debit or credit balance of each account. Indicate whether each account will appear in the Income Statement columns (IS) or the Balance Sheet columns (BS) of the work sheet. Item 0 is given as an example.arrow_forwardIdentify how each of the following separate transactions through 10 affects financial statements. For increases, place a "+" and the dollar amount in the column or columns. For decreases, place a "-" and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (-) along with dollar amounts. The first transaction is completed as an example. Required a. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total cq- A1 P1 uity. For the income statement, identify how each transaction affects net income. b. For the statement of cash flows, identify how each transaction affects cash flows from operating ac- tivities, cash flows from investing activities, and cash flows from financing activities. 2 3 4 5 6 7 8 9 10 Transaction Owner invests $800 cash in business in exchange for stock Purchases $100 of supplies on credit Buys equipment for $400 cash Provides services for $900 cash Pays $400 cash for rent…arrow_forward
- Identifying items on financial statements Indicate in which financial statement each item would most likely appear: income statement (IS) or balance sheet (BS) or neither (N). 1 a. Assets b. Equipment c. Salaries expense d. Dividends 3 4 e. Cash f. Liabilities g. Rent expense h. Revenues Accounting equation a. Use the accounting equation to compute the missing financial statement amounts (a), (b), and (c). i. Accounts payable j. Total liabilities and equity Company 1 2 1234 3 A Company 1 2 b. Use the expanded accounting equation to compute the missing financial statement amounts (a) and (b). B B Assets $75,000 (b) 85,000 Assets $40,000 $80,000 Liabilities $ (0) Liabilities $ 16,000 $32,000 25,000 20,000 D Common Stock $ 20,000 $44,000 E Equity $40,000 70,000 (c) Dividends $0 (b) F Revenues (0) $24,000 1 G Expenses $8,000 $18,000arrow_forward3 Identify the type of account, its normal balance and on which financial statement each of the following accounts would appear: Solution Account Asset, Liability or Equity Debit or Credit Financial Statement Income Statement, Statement of retained Earnings, or Balance Sheet Normal Balance 1 Accounts Receivable Common Stock 3. Notes Payable 4 Sales Revenue Office Supplies Unearned Revenue Inventory Equipment 6. 7. 8. 9. Dividends 10 Accounts Payable 2arrow_forwardRequirement: Prepare a Horizontal and Vertical Analysis for the Statement of Financial Position and Statement of Comprehensive Income. Write it on any piece of paper in good form (report form). Please write your name at the top of each piece of paper.arrow_forward
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