BSM 100 Lecture Notes - Lecture 10: Retained Earnings, Income Statement, Cash Flow

• School: Ryerson University
• Department: Business Essentials
• Course: BSM 100
• Professor: Ranjita Singh

Document Summary

Week 10: financial accounting: the branch of accounting that addresses the needs of external stakeholders; includes financial statements to provide broad information. Financial accounting includes three basic financial statements. Shows the financial position of the company at a point in time. What it owes (liabilities) and what is owns (assets) Subtract: cost of goods sold (acquiring or producing the product) Equals:gross profit (the profit on the product) Subtract: operating expenses (day to day expenses, they don"t change with sales volume) Equals: operating income (ebit=earnings before interest and taxes) Equals: net income (the holy grail of business) Day to day what the cash flow is. Only the end amount goes to the balance sheet. Assets: (left side of balance sheet) short term assets. Accounts receivable: people owe you money and will pay it back within the year long term assets. Must reduce it by accumulated depreciation (value goes down over time)