Business 1220 ch2 financal statements.doc

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Business Administration
Business Administration 1220E

Business 1220 – Financial Statements Ch. 2 3 FINANCIAL 1. SOE – Statement of Earnings: over period of time STATEMENTS Financial 2. B/S – Balance Sheet: at a specific time information… 3. SRE – Statement of Retained Earnings: over the lifetime Components of a SOE 0. Gross Sales 1. Net Sales: Gross income – Sales returns & allowances – Sales SALES 2. Cost of Goods Sold (COGS): Beg. Inv. + Purchases – Ending Inv. COGS - COGAFS: Beg. Inv + Purchases equation Gross Income (Margin, Profit): Net Sales – COGS 3. Operating Expenses: a. General & admin Exp. EXPENSES 3 b. Selling Exp. types of OE c. Amortization Exp. Earnings from Operations: Gross income – Operating expenses 4. Other Incomes & Other Expenses: interest earned, sale of land, money borrowed 5. Net earnings before tax EARNINGS 6. Estimated income tax expense (%) Components of a B/S 7. Net Earnings after tax ASSETS (@ lower cost) Current Assets 1. Current Assets: Cash, Marketable Securities, A/R (– AFDA=NAR) , (liquidity) Inventory , Prepaid 2. Investment in subsidiaries: controlling interest (owns 50%), not short-term, NFS Other investments: no controlling interest, @ mkt value Property
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