SMG SM 131 Lecture Notes - Lecture 9: Net Income, Financial Statement, Income Statement

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An entity that creates value and trades that value with a customer: financial reports show that traded value. First thing to start business, need money: go to your bank. Buy bikes and start delivering packages to make money (value you bring: a lot of money spent out to run business, left over money used to expand business. Equity = money that owners themselves put into business: own business and become shareholders profit belongs to them. Liability = money that non-owners put into business. Two are combined to have assets: resources we buy using equity and liability, have assets so can deliver value to customer. Revenue = money you receive from customers because provided value to them: spend most of revenue to create value. Called expenses portion of revenue used to create value. Profit = pile of money leftover from revenue after expenses subtracted: dividend = profit given to owners, most companies leave money in businesses (equity)

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