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Acct. 221 1st Edition Lecture 3Outline of Last Lecture I. Outline of TransactionsII. Financial Statements Current Lecture II. Review of the Financial StatementsCurrent Lecture- During this lecture Professor Lowry went into a deeper discussion on the financial statements taking you through step by step. The steps are as followed:- Note that all accounts should appear in the order shown. First form the income statement: You’ll need: Revenue Expenses- Revenue – Expenses = Net Income (if income positive) or Net loss (if income is negative) Net Income or Net Loss (just calculated above) Next comes the Statement of Changes in Stockholder’s Equity: You’ll need: Beginning common stock Stock issued during the year- Beginning common stock + stock issued = ending common stock Ending common stock (just calculated above) Beginning retained earnings Net Income or Loss (take the number directly from the income statement which we calculated above) Dividends- Beginning RE+ Net Income or Net Loss – Dividends = Ending Retained Earnings Ending Retained Earnings (just calculated above)- Ending common stock + ending retained earnings = Total Stockholders’ Equity Total Stockholders’ Equity (just calculated above) Next is the Balance Sheet:These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. You’ll need: Assets- List all assets in your company in order from most liquid (cash) to least underneath the asset title Total assets Liabilities- List all liabilities underneath the liability title Stockholders’ Equity- Common stock- Retained Earnings (take from statement of changes in stockholder’s equity) Total Stockholder’s Equity Total Liabilities and Stockholder’s Equity  Statement of Cash Flows You’ll need: Cash flows from Operating Activities- Cash Receipts from revenue- Cash Payments from expenses Net Cash flow from Operating Activities  Cash Flows from Investing Activities - Cash Payments for land  Net Cash flow from Investing Activities  Cash Flow from Financing Activities- Cash Receipts from borrowing money- Cash Receipts for issuing common stock - Cash Payments for dividends  Net Cash Flow from Financing Activities  Net Increase in Cash (Net Cash flows from Operating, Financing, and Investing Activities summed together) Plus: beginning cash balance (if there is one) Ending Cash Balance (Net Increase in Cash + Beginning Cash Balance)****To see a complete list of the four financial statements refer to page 21 in your textbook or to the previous lecture notes posted (Lecture


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