Financial Statements Exercise

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Financial Statements
Jeff Gribbins
XACC 280
November 9, 2010
Thomas Ruth

In the University of Phoenix Phx Klips Financial Statement and the Income Statement I learned many interesting things. On the balance sheet it gives an overview of how the business assets, liabilities, and equity are distributed at that time. It is an overview but it does not go into great detail, just general information. The income statement reports a company’s net income or net losses for a specific period of time. This is a good way to find out if the company made more revenues or expenses for that period of time. The retained earnings statement shows the amount of net income the company decides to retain; if the company decides to pay out to shareholders (which is called dividends) it is also listed in this. The statement of cash flows shows an overview of cash receipts and payments for a specific period of time. This statement is good for seeing how much cash is available at the end of a period. On the Income Statement I learned about the single step and the multi-step. The single step is composed of three pieces of information: revenues, expenses, and net income. This is the easiest way to set up an income statement and this process focuses on the bottom line. The multi-step approach separates operating and non-operating activities as well as classifying expenses by function. This process provides more information and can calculate common financial ratios.
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