Accounting Exam Review Ii Gross Income Sales cost of goods sold Iii Retained Earnings Beginning Retained Earnings Net Income dividends Iii Operating activities day to day basis Salaries supplies rent interest inventory everything we need to run day to day business Cash from customers Investing activities sale or purchase of long term asset Land buildings equipment Financing activities cash flows to or from owners or creditors Common stock dividend pay owners loans outflow Issue common stock in exchange for building no cash transaction Ex 1 pay a vendor for supplies operating 2 Sell equipment investing 3 Pay dividends financing 4 5 Borrow money from bank financing 6 Pay interest on outstanding loan operating a Interest is always operating Income statement Order 1 2 Shareholders equity retained earnings 3 Balance sheet 4 Cash flows Accrual revenue action comes before cash Cash revenue how much money he received that day Deferral cash comes before action Plant asset Building equipment vehicles etc Annual Depreciation Expense cost salvage life est useful life Balance sheet is specific day not for month Interest expense note x interest x time passed