MGMT 30A Lecture Notes - Lecture 99: Retained Earnings, Income Statement, Financial Statement
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MGMT 30A Full Course Notes
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Net income from the income statement flows into (or is closed to ) retained earnings on the statement of retained earnings. Ending retained earnings flows to the balance sheet under the equity section. Net income flows to the statement of cash flows and the ending balance of cash ties to the balance of cash as stated in the balance sheet. Order of preparation (typically): prepare income statement, statement of retained earnings, balance sheet, statement of cash flows. Balance sheet: shows the company"s financial position at a given point in time. Why balance both sides must be equal, or balance each other out. Equation: assets = liabilities = owner"s equity. Assets: current assets, long-term investments, property, plant, & equipment, intangible assets. Sales or revenues the top line (often with a contra account of returns and. Other expenses items as well as interest expense / income and other special above the line items.
