2011 Midterm Exam Aid

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Department
Accounting & Financial Management
Course
AFM 101
Professor
Duane Kennedy
Semester
Fall

Description
AFM 101 Midterm Exam Aid Chapter 1: Financial Statements and Business Decisions Four Major Financial Statements 1) The Balance Sheet The companys financial position at a point in time ABC Co. Balance Sheet December 31, 2009 Assets (list all assets) $XX Total Assets XX Liabilities (list all liabilities) $XX Owners Equity/Shareholders Equity (list owners equity components) XX Total Liabilities and Owners Equity XX Assets Economic resources of the company, listed in order of liquidity i.e. what the company owns Liabilities The companys obligations, listed in order of when the liabilities come due i.e. what the company owes Owners Equity/Shareholders Equity Two parts: o The amount of financing provided by the owners of the company t hrough share capital o The earnings from the business operations from retained earnings 2) Income Statement How the company operated during the accounting period ABC Co. Income Statement For the Period Ended December 31, 2009 Revenue (List all sources of revenue) $XX Total Revenue XX Expenses (List all Expenses) $XX Total Expenses XX Net Income XX AFM 101 Midterm Exam Aid Revenue Money received from sale of goods, or providing a service Expenses Resources used up by the entity to run the business and generate revenue 3) Statement of Retained Earnings (Statement of Shareholders Equity) Used to calculate the ending retained earnings number for the balance sheet ABC Co. Statement of Retained Earnings For the Period Ended December 31, 2009 Beginning Retained Earnings $XX Add Net Income for period XX Subtract Dividends paid to owners XX Ending Retained Earnings XX 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 business Retained Earnings: the accumulation of all net income NOT distributed as dividends since the first year of business 4) Statement of Cash Flows Used to show all inflows and outflows of company cash during the year Used to calculate the cash balance on the balance sheet ABC Co. Statement of Cash Flow For the Period Ended December 31, 2009 Cash flows from Operating Activities (List details) $XX Cash flows from Investing Activities (List details) $XX Cash flows from Financing Activities (List details) $XX Net Increase/Decrease in Cash XX Cash balance beginning of period (Jan 1, 2009) XX Cash Balance end of period (Dec 31, 2009) XX
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