ECON 25000 Lecture Notes - Lecture 3: Net Income, Expense, Interest Expense

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Revenues or sales: a measure of the assets received in exchange for goods sold and services rendered. Cost of goods sold: the cost of the products sold. Selling, general and administrative: costs incurred to sell products and services as well as costs of administration. Research and development expense: costs incurred to create and develop new products, processes and services. Advertising expense: costs incurred with the goal of increasing sales by attracting more customers. Interest expense: the cost of using borrowed funds. Interest income: income earned on amounts lent to others or from investments in interest-yielding securities. Income tax expense: federal, state and local taxes levied on income. Dividends: a distribution of net assets generated by earnings. Income statement links beginning and ending balance sheets. Retained earnings (begin) + net income dividends = retained earnings (end) Assets = liabilities + contributed capital + retained earnings (begin) + (revenues for period expenses for period) dividends for period.

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