ENG M401 Lecture Notes - Lecture 2: Financial Statement, Retained Earnings, Cash Flow

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Income statements (shows how much revenue a company earned over a specific period of time, the costs and expenses associated with earning that revenue, the earnings per share and the company"s net earning and losses); Balance sheets (shows detailed info about the company"s assets, liabilities and equities); Cash flow statements (report company"s inflows and outflows, it tells whether a company generated cash); Financial statements are like a circuit drawing for an electrical engineer. Financial statements are part of a chain that turns data into information into action: Bookkeeping: collecting classifying and recording raw information transactions in journals (books of first entries). Asset sales, salaries, loans, payments, etc. , are transactions. Journal types: cash receipts, sales account payables, general, purchases, etc. Accounting is about the past (when transactions are consolidated and displayed in a standard format). This includes: analysis of revenues, expenses, cash flows, assets, liabilities, etc. Liabilities are sums of money that a business owes to individuals or organizations.

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