Accumulated depreciation, buildings Accumulated depreciation, machinery Accumulated depreciation, equipment Accumulated depreciation, vehicles Intangible Assets Intangible

assets include assets that do not have physical substance, but provide future economic benefits. Trademark Copyright Patent Goodwill The amortization of intangible assets is directly subtracted from the balance of related intangible assets. Accounts such as "accumulated amortization" are not used. Other Assets Other assets include noncurrent assets that are not classified as one of the above accounts. Long-term notes receivable (due after a year from the balance sheet date) Long-term loans related companies LIABILITIES Current Liabilities Current liabilities include liabilities that are expected to be paid within a year from the balance sheet date. Accounts payable (due within a year from the balance sheet date) Notes payable (due within a year from the balance sheet date) Short-term borrowings Salaries payable Income taxes payable Sales taxes payable Current maturities of long-term debt (due within a year from the balance sheet date) Accrued Liabilities – recognition of an expense in the accounting periods prior to the actual payment of cash Accrued Warranty Liability Unearned/Deferred Revenue Other current liabilities Long-Term Liabilities Long-term liabilities include liabilities that are expected to be paid after a year from the balance sheet date. Bonds payable

Long-term notes payable (due after a year from the balance sheet date) Long-term borrowings The amortization of intangible assets is directly subtracted from the balance of related intangible assets. Accounts such as "accumulated amortization" are not used. OWNERS EQUITY Contributed Capital Contributed capital includes the amounts that are transferred from stockholders to the company. Preferred stock (par value x number of preferred shares issued) Common stock (par value x number of common shares issued) Additional paid in capital, preferred stock ( [issue price - par value] x number of preferred shares issued ) Additional paid in capital, common stock ( [issue price - par value] x number of common shares issued ) Additional paid in capital is also called as "Paid-in capital in excess of par value". Retained Earnings Retained earnings represent the amount of the company's past net income retained inside the company, i.e., not paid as dividend to stockholders. Retained earnings Accumulated deficit (if the amount of retained earnings is negative, it is called as "accumulated deficit".) Treasury Stock Treasury stock represent the company's common or preferred stock currently owned by the company it self, as a result of stock repurchase in the past. The amount of treasury stock is subtracted from stockholders' equity. Treasury stock (the amount of treasury stock is determined by either cost method or par value method.)

BALANCE SHEET
ASSETS Current Assets Current Assets include assets that are expected to be converted into cash within a year from the balance sheet date. Cash Bank deposits Accounts receivable (due within a year from the balance sheet date) Notes receivable (due within a year from the balance sheet date) Marketable securities Short-term loans Prepaid expenses Other current assets Inventories Inventories include merchandise or goods that are ready to be sold, and other assets that are in the process of producing goods. Merchandise Raw materials Work-in-process (WIP) Finished goods Property, Plant, and Equipment (PP&E) PP&E include tangible fixed assets that are used for the primary business operations. Land Buildings Machinery Equipment Vehicles Leasehold improvements Accumulated depreciation is a contraasset account which is subtracted from asset accounts. Land does not have accumulated depreciation, because land account is not depreciated.

INCOME STATEMENT
Revenue and Gain Accounts Operating Revenues Operating revenues include revenue accounts that are generated from the primary operations of the company.

Sales Nonoperating Revenues and Gains Nonoperating revenues and gains include revenue and gain accounts that are generated from the transactions other than the primary operations of the company. Interest revenue (or interest income) Gain on sale of securities Gain on sale of buildings Gain on sale of machinery Gain on sale of equipment Interest revenue (or interest income) account may be classified as operating revenues for banks and other financial corporations, whose primary operations are lending money to earn interest income. Gains from Discontinued Operations Gains from discontinued operations are due to the disposal of business segment. Gain from operations of discontinued business segment Gain on disposal of business segment Extraordinary Gains Extraordinary gains include gains that unusual and infrequent. Gain on early extinguishment of debt Gains due to Changes in Accounting Method Cumulative effect of changes in accounting method is reported as either gain or loss in the income statement of the current period. Cumulative effect of changes in depreciation method Expense and Loss Accounts Operating Expenses Operating expenses include expense accounts that are necessary to earn operating revenues. Cost of sales (or cost of goods sold) Selling, General and Administrative Expenses (SG&A Expenses) Selling, General and Administrative Expenses include the following accounts. Salaries expense Sales salaries expense (Salaries expense for sales personnel) Insurance expense Property tax expense

Rent expense Utilities expense Warranty Expense Depreciation and amortization expense Repairs and maintenance Nonoperating Expenses and Losses Nonoperating expense and losses include expense and loss accounts that are due to the transactions other than the primary operations of the company. Interest expense Loss on sale of securities Loss on sale of buildings Loss on sale of machinery Loss on sale of equipment Interest expense account may be classified as operating expenses for banks and other financial corporations, whose primary operations are lending money to earn interest income. Losses from Discontinued Operations Losses from discontinued operations are due to the disposal of business segment. Loss from operations of discontinued business segment Loss on disposal of business segment Extraordinary Losses Extraordinary losses include losses that unusual and infrequent. Loss on early extinguishment of debt Loss from fire Loss from flood Loss from earthquake Losses due to Changes in Accounting Method Cumulative effect of changes in accounting method is reported as either gain or loss in the income statement of the current period. Cumulative effect of changes in depreciation method

Increase in Deferred Tax Asset Increase in investment account from equity income Gain on Sale of Equipment (not operating) Gain on Sale of Assets (not operating) Increase in Accounts Receivable Decrease in Unearned Rent Revenue Increase in Inventories Decrease in Deferred Revenue Decrease in Accounts Payable Increase in Prepaid Expenses Increase in Income Taxes Payable Increase in interest receivable Decrease in accrued liabilities Decrease in accrued warranty liability Net Cash Provided by Operating Activities Cash Flows from Investing Activities Purchase of Available-for-sale Securities Sale of Equipment Purchase of Buildings Net Cash Used in Investing Activities Cash Flows from Financing Activities Borrowings from Banks Issuance of Common Stock Payment of Cash Dividends Net Cash Used in Financing Activities Net Increase/Decrease in Cash and Cash Equivalents

Cash Flow - Direct Method
Operating Activities Receipts from customers Payments to suppliers and employees Taxes Paid Interest paid Interest received Cash from Operating Activities Investing Activities Capital expenditures for PP&E Purchase of marketable securities Proceeds - sales and maturities of securities Acquisition of businesses, net of cash Investments Cash Used for Investing Activities Financing Activities Issuance of Senior Notes and other debt Payment of Senior Notes and other debt Commercial paper Issuance of common stock Payment of dividends on common stock Purchase of treasury stock Cash from Financing Activities Net Increase (decrease) in cash

CASH FLOW STATEMENT (Indirect Method)
Cash Flows from Operating Activities Net Income Adjustments (add the following) Depreciation Expense Amortization Expense Depletion Expense Adjustments (subtract the following)

Cash at the beginning of year Cash at the end of year

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