Chapter 1: Financial Statements

Sarbanes-Oxley Act (SOA)

Top Manager Must Certify Accuracy

More Penalties

Independence of the outside auditors

Financing

It takes money to make money

Stock

Once creditors are paid

You get paid

Dividends

Borrow

Creditors

Liabilities

Note payables

Banks

Securities

Bonds payables

Investing

Buy resources

Assests

Cash

Other companies

Operating

Revenue

Money the co makes

Interest revenue

Short

Account receivable

Long

Securities

Sales revenue

Sale activity

Expenses

Costs of goods sold

Producer cost

Selling expenses

Sellers, managers...

Marketing expenses

Advertising

Administrative expenses

administrative wage

telephone...

Interest expenses

Interest on loans

Income taxes

Government

Liabilities

account payables

Balance Sheet

Assets vs Liabilities

Assets=Liabilities+Stockholders' equity

Monthly Income Statement

Revenues vs expenses

Net income

Monthly Retained Earnings Statement

Net income - Dividends

Statement of Cash Flows

Total for business activities

Cash!

Equity

Claim of Stockholders

Common Stock + Retained earnings

Liability

Claim of creditor