The Income Statement: A Summary

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来自 University of Virginia 的课程

Financial Accounting Fundamentals

284 个评分

University of Virginia

Financial Accounting Fundamentals

284 个评分

This course will teach you the tools you'll need to understand the fundamentals of financial accounting. Concise videos, the financial records of a small business, and "your turn" activities guide you through the three most commonly used financial statements: the Balance Sheet, the Income Statement, and the Statement of Cash Flows. Beyond recording transactions, you'll learn how to prepare these financial statements, and read and analyze them to draw basic conclusions about a company's financial health. By the end of this course, you will be able to: - Use journal entries to record transactions; - Prepare and use t-accounts to summarize transactions recorded during an accounting period; - Describe the three most commonly used financial statements and how they fit together; - Prepare these financial statements based on transactions recorded during an accounting period; and - Draw basic conclusions about a company's financial health.

从本节课中

The Income Statement, Revenue and Expense Transactions, and Adjusting Entries

Now that we’ve learned the fundamentals of recording transactions, we’re ready to dive into another financial statement: the Income Statement (IS). After learning about the Income Statement, we’ll record revenue and expense transactions, and summarize these transactions in a special account. Finally, we'll record adjusting entries in accordance with accrual accounting, prior to the preparation of the financial statements.

Introduction to the Income Statement3:04

The Income Statement: A Summary2:49

与讲师见面

Luann J. Lynch
Almand R. Coleman Professor of Business Administration
Darden School of Business

So we've just finished talking about the income statement.

Again, it can look a little bit complex when we pick one up, but,

actually, it's quite simple.

It helps us understand revenues.

It helps us understand what costs were incurred to generate those revenues.

And it helps us understand what's left over, or net income, or net earnings.

And the company looks at its net income or its net earnings.

And says, I've generated an increase in owner's equity

by operating my businesses this period.

I can choose to keep that income or earnings.

In which case it deposits it in the retained earnings account on

the balance sheet.

Or it can choose to give some back to the owners or

investors in the form of dividends.

Recall our financial statement framework that we've previously talked about.

We have a balance sheet at the beginning of the period that shows a financial

position at that specific point in time.

It's like taking a snapshot.

We have a balance sheet at the end of the period.

Again, at that specific point in time, just like taking a snapshot.

And now we've introduced the income statement.

Which helps us understand what happened during the period between

the beginning of the period and the end of the period.

That income statement helps us understand the change in a very important balance

sheet account, Retained earnings.

So the company starts the year with a certain balance in retained earnings

on its beginning balance sheet.

It operates its business for a year and

generates some additional earnings.

It can decide to keep those earnings, put them in retained earnings account and

retain them there.

In which case, we would better understand the ending retained earnings balance.

Or alternatively,

it could pay those earning out in dividends to its shareholders.

So our beginning retained earnings, Plus our net income,

NI, our net earnings, minus our dividends.

Would be equal to our ending retained earnings on the ending balance sheet.

So the income statement gives us a video clip of

how we got from beginning retained earnings.

To the ending retained earnings balance.

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