AFM101 Midterm review.pdf

26 Pages
269 Views

Department
Accounting & Financial Management
Course Code
AFM 101
Professor
Grace Loney

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Description
AFM 101 Midterm Exam AidChapter 1 Financial Statements and Business DecisionsFour Major Financial Statements 1 The Balance SheetThe companys financial position at a point in timeABC CoBalance Sheet December 31 2009 Assetslist all assetsXX Total AssetsXXLiabilitieslist all liabilities XX Owners EquityShareholders Equity list owners equity componentsXX Total Liabilities and Owners EquityXX AssetsEconomic resources of the company listed in order of liquidity ie what the company owns LiabilitiesThe companys obligations listed in order of when the liabilities come due ie what the company owesOwners EquityShareholders EquityTwo parts o The amount of financing provided by the owners of the company through share capital o The earnings from the business operations from retained earnings 2 Income StatementHow the company operated during the accounting periodABC CoIncome Statement For the Period Ended December 31 2009 Revenue List all sources of revenue XX Total RevenueXXExpenses List all Expenses XX Total Expenses XX Net IncomeXX AFM 101 Midterm Exam AidRevenueMoney received from sale of goods or providing a serviceExpensesResources used up by the entity to run the business and generate revenue 3 Statement of Retained Earnings Statement of Shareholders EquityUsed to calculate the ending retained earnings number for the balance sheet ABC Co Statement of Retained Earnings For the Period Ended December 31 2009Beginning Retained Earnings XXAdd Net Income for period XX Subtract Dividends paid to owners XX Ending Retained EarningsXX When net income is earned every year the company can choose to o Distribute all or a portion to shareholders in the form of dividends o Retain all or a portion to continue to run the day to day businessRetained Earnings the accumulation of all net income NOT distributed as dividends since the first year of business 4 Statement of Cash FlowsUsed to show all inflows and outflows of company cash during the yearUsed to calculate the cash balance on the balance sheet ABC CoStatement of Cash FlowFor the Period Ended December 31 2009 Cash flows from Operating Activities List detailsXX Cash flows from Investing Activities List detailsXX Cash flows from Financing Activities List detailsXX Net IncreaseDecrease in Cash XXCash balance beginning of period Jan 1 2009 XX Cash Balance end of period Dec 31 2009XX 5 Notes to the Financial StatementsRequired by accounting standards GAAPFurther explain the numbers in the financial statementsExplain accounting policies used by the management of the company Contain supporting schedules and calculationsAdditional important nonquantitative disclosures
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