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Business Accounting Horngren's Financial & Managerial Accounting

(1) To compute : Expenses of the company. Introduction: The financial statements of a company include the balance sheet , income statement, and cash flow statement. All these statements help the internal and external users of financial statements help in analyzing and concluding the financial position of the respective company. Accounting equation has been stated below: Total assets = Total liabilities + Total shareholders’ equity Now, rearranging the equation, equity can be computed as: Total shareholders’ equity = Total assets − Total liabilities Substituting the values, Total shareholders’ equity = $45,800 - $17,220 Total shareholders’ equity = $28,580 Shareholders’ equity can further be written as, Total shareholders’ equity = Common Stock + Revenue − Expenses − Dividend Now, rearranging the equation, expenses can be computed as: Expenses = Common Stock + Revenue − Dividend - Total shareholders’ equity Substituting the values, Expenses = $27,460 + 8,850 − 6,500 - $28,580 Expenses = $14,230 (2) To interpret : If the company is in profit. Introduction: The financial statements of a company include the balance sheet, income statement, and cash flow statement. All these statements help the internal and external users of financial statements help in analyzing and concluding the financial position of the respective company. The profitability of a firm can be computed as: Profit = Revenue − Expenses Substituting the values, Profit = $8,850 - $14,230 Profit = -$5,380 Since the amount is negative, thus, the company was in a loss for the respective period.

(1) To compute : Expenses of the company. Introduction: The financial statements of a company include the balance sheet , income statement, and cash flow statement. All these statements help the internal and external users of financial statements help in analyzing and concluding the financial position of the respective company. Accounting equation has been stated below: Total assets = Total liabilities + Total shareholders’ equity Now, rearranging the equation, equity can be computed as: Total shareholders’ equity = Total assets − Total liabilities Substituting the values, Total shareholders’ equity = $45,800 - $17,220 Total shareholders’ equity = $28,580 Shareholders’ equity can further be written as, Total shareholders’ equity = Common Stock + Revenue − Expenses − Dividend Now, rearranging the equation, expenses can be computed as: Expenses = Common Stock + Revenue − Dividend - Total shareholders’ equity Substituting the values, Expenses = $27,460 + 8,850 − 6,500 - $28,580 Expenses = $14,230 (2) To interpret : If the company is in profit. Introduction: The financial statements of a company include the balance sheet, income statement, and cash flow statement. All these statements help the internal and external users of financial statements help in analyzing and concluding the financial position of the respective company. The profitability of a firm can be computed as: Profit = Revenue − Expenses Substituting the values, Profit = $8,850 - $14,230 Profit = -$5,380 Since the amount is negative, thus, the company was in a loss for the respective period.

Solution Summary: The author explains that the financial statements of a company include the balance sheet, income statement, and cash flow statement.

Horngren's Financial & Managerial Accounting

Horngren's Financial & Managerial Accounting

7th Edition

ISBN: 9780136503743

Author: MILLER-NOBLES

Publisher: RENT PEARS

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Horngren's Financial & Managerial Accounting

Ch. 1 - Prob. 1QC Ch. 1 - Prob. 2QC Ch. 1 - Prob. 3QC Ch. 1 - Prob. 4QC Ch. 1 - Prob. 5QC Ch. 1 - Which of the following requires accounting...Ch. 1 - At the end of a recent year, Global Cleaning...Ch. 1 - Consider the overall effects on Global Cleaning...Ch. 1 - Assume that Global Cleaning Service performed...Ch. 1 - The balance sheet reports the a. financial...

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