Summary Chapter 2 ~ Financial and managerial accounting 18th edition

Financing and Accountng Block 1 Chapter 2 Summery

Financial statements A financial statement is a representaton ifa the financial
situaton ofa an enterprise.
Primary fnancial statements  Balance sheet (or statement ofa financial positonn
 Income statement (or profitt loss statement
 Statement ofa cash fows
Balance sheet Balance sheet describes in financial terms where the
enterprise stands at a specific date


Balance sheet:
 Many profaessionals accountng shif to key positon in management or organisaton
 They are invaluable because works contnuously with issues defined and described I
accountng
A=L+ OE

Assets Are economic recourse that are owned by the Assets  activa
business and are expected to benefit it in the Liabilities  passiva
fauture Owner’s equity  eigen
Liabilites Are debts that need to be paid. They represent
vermogen
fauture negatve cash fows
Owners’ equity Is the owners’ original investment in a business
and accumulated profits over the years


Assets: Liabilites:
- Cash - accounts payable
- Accounts Receivable - notes payable
- Inventory - Salaries Payable
- Supplies - Interest Payable
- Prepaid Rent - Income Tax Payable
- Prepaid Insurance
- Equipment Owners’equity:
- Building - capital stock
- Land - retained earnings




Increases in owners’ equity Decrease in owners’ equity
Soleproprietorship eenmanszaak
Investments ofa cash by  Payments ofa cash to owners
Partnership Vennootschap (vof)
owners  losses
Corporation NV/BV
 profits