ADM 1340 Lecture Notes - Lecture 2: Gross Profit, Income Statement, Net Income

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11 Feb 2019

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ADM 1340 Lecture 1: ADM 1340 Lecture : ADM 1340 Lecture : 1

ADM 1340 Lecture Notes - Lecture 2: Gross Profit, Income Statement, Net Income

ADM 1340 Lecture Notes - Lecture 3: General Ledger, Trial Balance, Retained Earnings

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Income statement: shows the operation performance of a company over a specific period of time. (monthly, quarterly, yearly, but typically the fiscal year. ) Revenues: sales made from the sale of goods or services for a specific period of time. Does not necessarily correspond to the cash received during that period. Revenues from other businesses: rent revenue, interest revenue. Expenses: the dollar amount of resources used up by the entity to earn revenues for a specific period of time. Does not necessarily correspond to the cash paid in the period. Outflow of assets (pay cash for insurance, costs of goods sold) Expenses from principal businesses: cost of goods sold (cogs), operating expenses (ie. salary, advertisement expense) Income tax expense: petax profit x corporate income tax rate. Statement of changes in shareholder equity: presents a reconciliation of each account in shareholders" equity from the beginning of the year balance to the end of year balance.

Related Questions

Financial Accounting.â¨1. Answer T (true) or F (false) for each of the following statements

1. Revenue is a measure of expected inflow cash from selling goods and providing services.

2. Expenses are a measure of expected outflow of cash consumed, in the process of generating revenues.

3. Dividends represent distributions of earnings and decrease ownersâ equity.

4. Depreciation expense reflects used/consumption of fixed assets.

5. Depreciation associated with land is dependent on the life and eventual use of the land

6. Assets = Liabilities + Contributed Capital + Retained Earnings

7. Under the accrual basis of accounting, revenue is recognized in the period when the cash is received as opposed to when the patient service is made.

Textbook healthcare finance 6th edition L Gapenski & K Reiter (2016)

raspberrybeaver682

1. Which statement is normally prepared first? (Points : 3) Income statement Balance sheet Statement of cash flows Retained earnings statement2. When a business borrows money, it incurs a(n) (Points : 3) tax. liability. cash payment. all of these.3. More than 70% of businesses are organized as what type of business? (Points : 3) Not-for-profit Corporation Partnership Sole proprietorship4. Brennan, Inc. had revenues of $234,000, expenses of $175,000, and dividends of $40,000 during 2009. Which of the following statements is correct? (Points : 3) Net income for 2009 totaled $19,000. Net income for 2009 totaled $59,000. Total retained earnings increased by $59,000 during 2009. Total retained earnings decreased by $40,000 during 2009.5. The statement of cash flows is integrated with the balance sheet because (Points : 3) the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet. the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet.6. The basic financial statements do NOT include the (Points : 3) income statement. tax return balance sheet. statement of cash flows.7. A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded. (Points : 3) framework control set of rules transaction8. The payment of a liability (Points : 3) decreases assets and stockholders' equity. increases assets and decreases liabilities. decreases assets and increases liabilities. decreases assets and decreases liabilities. 9. Co. received $1,000 from Newbie as rent for the use of a building owned by UNI. How does this transaction affect UNI's accounts if UNI recognizes a liability? (Points : 3) Cash is increased and revenue is increased. Cash is increased and revenue is decreased. Cash is increased and unearned revenue is increased. It is not recorded.10. Depreciation Expense and Accumulated Depreciation are classified, respectively, as (Points : 3) expense and contra asset. asset and contra liability. revenue and asset. contra asset and expense.11. Deferred expenses (prepaid expenses) are items initially recorded as assets but are expected to become __________ over time. (Points : 3) Liabilities Assets stockholders%u2019 equity Expenses12. A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M%u2019s accounts? (Points : 3) Increase accounts receivable and cash by $1,000,000 each Increase accounts receivable and revenues by $1,000,000 each Increase accounts receivable and unearned revenues by $1,000,000 each No effect at this time13. Multiple-step income statements show: (Points : 3) gross profit but not income from operations. neither gross profit nor income from operations. both gross profit and income from operations. income from operations but not gross profit.14. Since merchandise inventory is normally sold within a year, how is it reported on the balance sheet? (Points : 3) As a revenue As the cost of merchandise sold It does not appear on the Balance Sheet As a current asset15. The credit terms of a sale are normally indicated on a(n) (Points : 3) purchase order. invoice. bill of lading. account receivable.16. Inventory shortage is recorded when (Points : 3) merchandise is returned by a buyer. merchandise purchased from a seller is incomplete or short. merchandise is returned to a seller. there is a difference between a physical count of inventory and inventory records. 17. The bank reconciliation (Points : 3) should be prepared by an employee who records cash transactions. is part of the internal control system. is for information purposes only. is sent to the bank for verification.18. A special cash fund used to make small payments that occur frequently is called a(n) (Points : 3) operating expenses fund. change fund. market fund. petty cash fund.19. The objectives of internal control are to (Points : 3) control the internal organization of the accounting department personnel and equipment. provide reasonable assurance that assets are safeguarded, information is processed accurately, and laws and regulations are complied with. prevent fraud and promote the social interest of the company. provide control over %u201Cinternal-use only%u201D reports and employee internal conduct.20. When a firm uses internal auditors, it is adhering to which of the following internal control elements? (Points : 3) Risk assessment Proofs and security measures Monitoring Separating responsibilities for related operations21. What type of account is Allowance for Doubtful Accounts? (Points : 3) Contra asset Asset Revenue Expense22. Merchandise inventory is reported on the balance sheet in the section entitled (Points : 3) current assets. fixed assets. current liabilities. stockholders' equity.23. Receivables are usually a significant portion of (Points : 3) total current liabilities. total liabilities. total current assets. total assets.24. The inventory data for an item for November are: Nov.1 Inventory 25 units at $20 10 Purchased 30 units at $21 30 Purchased 10 units at $22 Sold 35 unitsUsing the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30? (Points : 3) $640 $605 $623 $66025. All amounts paid to get an asset in place and ready for use are referred to as (Points : 3) capital expenditures. revenue expenditures. residual value. cost of an asset.26. Fixed assets are ordinarily presented in the balance sheet (Points : 3) at current market values. at replacement costs. at cost less accumulated depreciation. in a separate section along with intangible assets.27. Goodwill is (Points : 3) amortized similar to other intangibles. only written down if an impairment in value occurs. charged to expense immediately. amortized over 40 years or its economic life, whichever is shorter.28. If a capital expenditure is treated as a revenue expenditure, then (Points : 3) expenses are overstated and owners' equity is understated. expenses are overstated and assets are overstated. expenses are understated and owners' equity is overstated. net income is overstated and owners' equity is understated.29. A bond indenture is (Points : 3) a contract between the corporation issuing the bonds and the underwriters selling the bonds. the amount due at the maturity date of the bonds. a contract between the corporation issuing the bonds and the bondholders. the amount for which the corporation can buy back the bonds prior to the maturity date.30. Gross earnings for a payroll period less payroll deductions are referred to as (Points : 3) overtime pay. bonus pay. gross pay. net pay.31. How is treasury stock shown on the balance sheet? (Points : 3) As an asset As a decrease in stockholders' equity As an increase in stockholders' equity Treasury stock is not shown on the balance sheet.32. Current liabilities are (Points : 3) due but not receivable for more than one year. due but not payable for more than one year. due and receivable within one year. due and payable within one year.33. The total earnings of an employee for a payroll period are referred to as (Points : 3) take-home pay. pay net of taxes. net pay. gross pay.34. Where is interest expense listed on the income statement? (Points : 3) Other expense section Cost of merchandise sold Operating expenses Interest expense is on the balance sheet, not the income statement.35. A corporation has 50,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be (Points : 3) 200,000 shares. 50,000 shares. 250,000 shares. 12,500 shares.

sangriaporpoise636

Sorry about these values, this thing is kind of messed up. Ihope this can be understood.

The following is the Choco Companyâs balance sheet and incomestatement as of 12/31/2016.

Balance Sheet	2015	2016
Cash Accounts receivable Inventory Long-term investments Total assets Liabilities and stockholdersâ equity: (no value) Accounts payable Salary payable Bonds payable Common stock Retained earnings Total liabilities and stockholdersâ equity	$ 120,000 105,000 225,000 60,000 510,000 120,000 15,000 100,000 125,000 150,000 510,000	21,500 195,000 180,000 -0- 396,500 75,000 24,000 70,000 125,000 102,500 396,500
Income statement
Revenue:(no value) Sales Loss on sales of long-term investment Expenses: (no value) Cost of goods sold Salary expense Net income (loss)		560,000 (7,500) (375,000) (180,000) (2,500)

During 2016, following transactions were made:

Sold long-term investment for a loss of $7,500 (sold for$52,500).

$30,000 of bonds payable matured in 2016.

Paid cash dividends of $45,000.

What is the amount of cash inflow/outflow/ from their customers?(assume Sales are all credit sales)

What is the amount of cash inflow/outflow from the loss on thesales of long-term investment?

What is the amount of cash inflow/outflow from theirsuppliers?

What is the amount of cash inflow/outflow from theiremployees?

What is the amount of cash inflow/outflow from their long-terminvestment?

What is the amount of cash inflow/outflow regarding the maturityof their bonds payable?

What is the amount of cash inflow/outflow regarding the cashdividends?

Using the above balance sheet, income statement and informationfrom a to g, prepare the entire cash flow statement using thedirect method.

Choco Company Statement of Cash Flows For the year ended December 31, 2016
Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities
Cash flows from investing activities: Net cash flows from investing activities
Cash flows from financing activities: Net cash flows from financing activities
Cash balance, 12/31/2016

browncamel370

ADM 1340 Lecture Notes - Lecture 2: Gross Profit, Income Statement, Net Income

ADM 1340 Lecture 1: ADM 1340 Lecture : ADM 1340 Lecture : 1

ADM 1340 Lecture Notes - Lecture 2: Gross Profit, Income Statement, Net Income

ADM 1340 Lecture Notes - Lecture 3: General Ledger, Trial Balance, Retained Earnings

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