Content
From the http://www.angrybirds.su/gbook/guestbook.php?currpage=184 equation, we see that the amount of assets must equal the combined amount of liabilities plus owner’s (or stockholders’) equity. This definition is true in the sense that this statement is a historical report. It only shows the items that were present on the day of the report. This is in contrast with other financial reports like the income statement that presents company activities over a period of time. The statement of financial position only records the company account information on the last day of an accounting period. The income statement and balance sheet play a pivotal role when it comes to formulating the accounting equation.
First, it can sell shares of its http://articlesss.com/the-attraction-of-the-pharmaceutical-industry/ to the public to raise money to purchase the assets, or it can use profits earned by the business to finance its activities. Second, it can borrow the money from a lender such as a financial institution.
Double Entry & T Accounts
Throughout this book, we will discuss many note disclosures because understanding their content is critical to understanding the company. Companies earn revenues from the sale of goods or services to customers (in Maxidrive’s case, from the sale of disk drives). Revenues normally are reported for goods or services that have been sold to a customer whether or not they have yet been paid for. Retail stores such as Wal-Mart and McDonald’s often receive cash at the time of sale. However, when Maxidrive sells its disk drives to Dell and Apple, it receives a promise of future payment called an account receivable, which later is collected in cash. In either case, the business recognizes total sales as revenue for the period.
