Financial Statements: Basic Formats, Accounting Equations
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What is the basic format of the four basic financial statements: income statement, balance sheet, statement of cash flows and the statement of retained earnings? Explain the accounting equation with a table showing five accounts that belong to each part of the equation.
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Solution Summary
Your tutorial is 392 words and includes a table for the accounting equation.
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FORMATS
Income Statement: Sales less expenses show profits. This also contains earnings per share data. A typical one would show:
Sales
-Cost of goods sold
=Gross profit
-Operating expense
=Operating Income
-Interest Expense
=Income before taxes
-Tax expense
=Net Income
Balance Sheet: Assets, liabilities and equity are listed. Assets and liabilities are usually separated into current and noncurrent. A typical one would show:
Cash
Accounts receivable
Inventory
Prepaids
Total current assets
Property, plant and equipment
Less: accumulated depreciation
Intangibles
Total assets
Accounts payable
Income taxes payable
Total current liabilities
Notes payable
Other long term ...
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