Financial Statement

Exercise: Financial Statements

XACC/280

January 15, 2013

Financial Statements

Over the weeks, I studied various accounting concepts via PhxKips, concepts such as the accounting equations, debits and credits, financial statements and the income statement. PhxKips, made it simple for me to grasp the concepts of each topic. In addition to what I have already learned from previous accounting courses, I also learned from the accounting equations that even though accounting principles have “rules, regulations, and requirements” there is only one fundamental principle (University Of Phoenix, 2006). That fundamental principle is Asset equals to Liabilities plus Owner’s Equity. Either way an accountant record the transaction, it will be placed into one of three categories.

PhxKlips concepts on Debits and Credits introduced the “T” account format. Here I learned that the debits are on the left side and the credits are on the right side of the “T” account. In addition, when there is an increase of assets it will “always be recorded on the debit side” (University Of Phoenix, 2006). When accountants or bookkeepers use “T” accounts, they are able to see how the periodic revenue and expenses are related. Finally, for the normal balance of revenue account would be a credit balance, which is on the right side of the “T” account, whereas the expenses normal balance will be a debit located on the left side.

The four basic financial statements are “the balance sheet, income statement, retained earnings statement, and the statement of cash flows” (University Of Phoenix, 2006). This section was very informative. I learned that the Balance Sheet is snap shot of the business showing exactly how the assets, liabilities, and owner’s equity are distributed at that particular time. On the Balance Sheet, an accountant or investor can see where the assets are equal to the combined totals for the liabilities and stockholder’s equity. The Income Statement is reported for a...