section 3the statement of retained earnings and the balance sheet what you’ll learn how to...
TRANSCRIPT
Section 3The Statement of Retained Earnings and the Balance Sheet
Section 3The Statement of Retained Earnings and the Balance Sheet
What You’ll Learn
How to prepare a statement of
retained earnings for a
merchandising corporation.
How to prepare a balance sheet for
a merchandising corporation.
How to analyze the balance sheet.
What You’ll Learn
How to prepare a statement of
retained earnings for a
merchandising corporation.
How to prepare a balance sheet for
a merchandising corporation.
How to analyze the balance sheet.
Why It’s ImportantThe statement of retained earnings
reports how the Retained Earnings stockholders’ equity account changes from the beginning to the end of the period. The balance sheet reports the financial position of the business on the last day of the period.
Why It’s ImportantThe statement of retained earnings
reports how the Retained Earnings stockholders’ equity account changes from the beginning to the end of the period. The balance sheet reports the financial position of the business on the last day of the period.
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Key Terms statement of retained earnings horizontal analysis base year working capital
Key Terms statement of retained earnings horizontal analysis base year working capital
The Statement of Retained Earnings
A statement of retained earnings
reports the changes that take place
in the Retained Earnings account
during the period. These changes
result from business operations and
the distribution of earnings to
stockholders through dividends.
The Statement of Retained Earnings
A statement of retained earnings
reports the changes that take place
in the Retained Earnings account
during the period. These changes
result from business operations and
the distribution of earnings to
stockholders through dividends.
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
The Statement of Retained Earnings (cont'd.)
The Statement of Retained Earnings (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
The Balance SheetThe Balance Sheet
The balance sheet reports
the balances of all asset,
liability, and stockholders’
equity accounts for a specific
date.
The balance sheet reports
the balances of all asset,
liability, and stockholders’
equity accounts for a specific
date.
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Analyzing Amounts on the Balance SheetAnalyzing Amounts on the Balance Sheet
Horizontal analysis is the
comparison of the same items on
financial statements for two or
more accounting periods or dates
and the determination of changes
from one period or date to the next.
Horizontal analysis is the
comparison of the same items on
financial statements for two or
more accounting periods or dates
and the determination of changes
from one period or date to the next.
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Working CapitalWorking Capital
The amount by which current assets exceed current liabilities is known as working capital. Because current liabilities are usually paid for out of current assets, working capital represents the excess assets available to continue operations.
The amount by which current assets exceed current liabilities is known as working capital. Because current liabilities are usually paid for out of current assets, working capital represents the excess assets available to continue operations.
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Current Assets – Current Liabilities = Working CapitalCurrent Assets – Current Liabilities = Working Capital
$110,182.00 – $17,592.09 = $92,589.91$110,182.00 – $17,592.09 = $92,589.91
Check Your UnderstandingCheck Your Understanding
What is reported on a
statement of retained
earnings?
What is reported on a
statement of retained
earnings?
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)
Section 3 The Statement of Retained Earnings and the Balance Sheet (cont'd.)