Chapter 1, Problem 1.7P

To determine

Financial Statements: financial accounting is the branch of accounting concerned with communicating financial information to outsiders through financial statements.

Financial statements: It consists of four major statements: balance sheet, income statement, statement of retained earnings, and statement of cash flows.

• Balance sheet summarizes assets, liabilities and owners’ equity of a company, used to assess financial position of a company.
• An income statement summarizes the revenue and expenses of a company for a period and used to calculate profit or loss.
• Statement of retained earning shows the portion of earnings retained in the business and
• Statement of cash flows shows how the cash company got cash and where it is used during a period.

To prepare: The correct income statement for December 31 2016.

b.

To determine

Financial Statements: financial accounting is the branch of accounting concerned with communicating financial information to outsiders through financial statements.

Financial statements: It consists of four major statements: balance sheet, income statement, statement of retained earnings, and statement of cash flows.

• Balance sheet summarizes assets, liabilities and owners’ equity of a company, used to assess financial position of a company.
• An income statement summarizes the revenue and expenses of a company for a period and used to calculate profit or loss.
• Statement of retained earning shows the portion of earnings retained in the business and
• Statement of cash flows shows how the cash company got cash and where it is used during a period.

To prepare: The correct retained earnings.

c

To determine

Financial Statements: financial accounting is the branch of accounting concerned with communicating financial information to outsiders through financial statements.

Financial statements: It consists of four major statements: balance sheet, income statement, statement of retained earnings, and statement of cash flows.

• Balance sheet summarizes assets, liabilities and owners’ equity of a company, used to assess financial position of a company.
• An income statement summarizes the revenue and expenses of a company for a period and used to calculate profit or loss.
• Statement of retained earning shows the portion of earnings retained in the business and
• Statement of cash flows shows how the cash company got cash and where it is used during a period.

To prepare: The balance sheet for the year ended December 31 2016

d.

To determine

Financial Statements: financial accounting is the branch of accounting concerned with communicating financial information to outsiders through financial statements.

Financial statements: It consists of four major statements: balance sheet, income statement, statement of retained earnings, and statement of cash flows.

• Balance sheet summarizes assets, liabilities and owners’ equity of a company, used to assess financial position of a company.
• An income statement summarizes the revenue and expenses of a company for a period and used to calculate profit or loss.
• Statement of retained earning shows the portion of earnings retained in the business and
• Statement of cash flows shows how the cash company got cash and where it is used during a period.

To draft: A memo to president explaining difference between the income statements provided and corrected statement.