Chapter 13 Summary
Know the three types of accounting:
Managerial
Tax
Financial
The accounting equation:
Assets = liabilities + OE
Costs and expenses
Costs are the value given to obtain something you want
Expenses are a decrease in OE caused by consuming your product or service
5 common financial statements
Income statement
Statement of retained earning
Statement of owners equity
Balance sheet
Cash flow statement
What goes on the income statement:
Revenues less expenses plus gains less losses: net income
Net income equation:
Revenues – expenses = net income
2 Difficulties that arise:
Liquidity:
A measure of how quickly a company can raise money through internal sources by converting assets to
cash
