Components of Financial Statements

Components of Financial Statements
Assets, Liabilities, Owner's Equity, Revenues, Expenses, Gains, Losses
Financial Statements Overview
Accounting Equation
Assets = Liabilities + Equity
Equity = Assets - Liabilities ---> Assets = Liabilities + Equity
[Example]
Company A has $800,000 liabilities and $1,200,000 equity.
How much assets does the Company A have?
Assets = Liabilities + Equity = $800,000 - $1,200,000 = $2,000,000

Liabilities = Assets - Equity
Equity = Assets - Liabilities
From any balance sheet,

--> it can be verified that
--> Total Assets = Total Liabilities + Total Stockholders' Equity.
Assets
Assets are
--> probable future economic benefits
--> obtained or controlled by an entity
--> as a result of past transactions or events.
[SFAC No. 6., Para. 25]
Essential characteristics of assets

Probable future economics benefits
Obtained or controlled by an entity
Result of past transactions or events.
Common characteristic of all assets

--> is service potential or future economic benefits
Liabilities
Liabilities are
--> probable future sacrifices of economic benefits
--> arising from present obligations of an entity
--> to transfer assets or provide services to other entities in the future
--> as a result of past transactions or events.
Essential characteristics of liabilities

Probable future sacrifices of economic benefits
Present obligations to transfer assets or provide services in the future
Result of past transactions or events.
Equity
Equity (or net assets) is
--> residual interests in the assets of an entity
--> that remains after deducting its liabilities.
Essential characteristics of equity

Equity is residual interests in the assets after deducting liabilities
[Example]
Company A has $2,000,000 assets and $800,000 liabilities.
How much equity does the Company A have?

= $2,000,000 - $800,000 = $1,200,000
Revenues
Revenues are
--> inflows of assets of an entity or
--> settlements of its liabilities (or a combination of both)
--> from delivering or producing goods, rendering services.
Essential characteristics of revenues

Inflows of assets or settlements of liabilities
From delivering goods or rendering services
Expenses
Expenses are
--> outflows or other using up of assets or
--> incurrences of liabilities (or a combination of both) |
--> from delivering or producing goods, rendering services.
Essential characteristics of expenses

Outflows of assets or incurrences of liabilities
from delivering goods or rendering services
Gains
Gains are
--> increases in equity (net assets)
--> except those from revenues or investments by owners.
Essential characteristics of gains

Increases in equity from transactions or events
Except those that result from revenues or investments by owners.
Losses
Losses are
--> decreases in equity (net assets)
--> except those from expenses or distributions to owners.
Essential characteristics of losses

Decreases in equity from transactions or events
Except those that result from expenses or distributions to owners.
Net Income and Owner's Equity

Assets = Liabilities + Equity + Revenues - Expenses
Assets = Liabilities + Equity + Revenues - Expenses + Gains - Losses
Ending Assets = Ending Liabilities + Ending Owner's Equity

Ending Owner's Equity
= Beginning Owner's Equity + Investment by Owner + Net Income
Net Income = Revenues - Expenses + Gains - Losses
Ending Owner's Equity

= Beginning Owner's Equity + Investment by Owner
+ Revenues - Expenses + Gains - Losses
Ending Assets
= Ending Liabilities + Ending Owner's Equity
= Ending Liabilities + Beginning Owner's Equity
+ Investment by Owner + Net Income
= Ending Liabilities + Beginning Owner's Equity

+ Investment by Owner + Revenues - Expenses + Gains - Losses
If Investment by Owner = 0, Gains = 0, Losses = 0, then
Ending Assets = Ending Liabilities + Beginning Owner's Equity

+ Revenues - Expenses
Ending Assets = Ending Liabilities + Ending Owner's Equity
Assets = Liabilities + Owner's Equity

Assets are reported on the balance sheet.
Asset accounts have normal balances on the debit side.
Increase in assets is reported on the debit side of a journal entry.
Decrease in assets is reported on the credit side of a journal entry.
Liabilities are reported on the balance sheet.

Liability accounts have normal balances on the credit side.
Increase in liabilities is reported on the credit side of a journal entry.
Decrease in liabilities is reported on the debit side of a journal entry.
Owner's Equity is reported on the balance sheet.

Owner's equity accounts have normal balances on the credit side.
Increase in owner's equity is reported on the credit side of a journal entry.
Decrease in owner's equity is reported on the debit side of a journal entry.
Revenues are reported on the income statement.

Revenue accounts have normal balances on the credit side.
Increase in revenues is reported on the credit side of a journal entry.
Decrease in revenues is reported on the debit side of a journal entry.
Expenses are reported on the income statement.

Expense accounts have normal balances on the debit side.
Increase in expenses is reported on the debit side of a journal entry.
Decrease in expenses is reported on the credit side of a journal entry.
Gains are reported on the income statement.

Gain accounts have normal balances on the credit side.
Increase in gains is reported on the credit side of a journal entry.
Decrease in gains is reported on the debit side of a journal entry.
Losses are reported on the income statement.

Loss accounts have normal balances on the debit side.
Increase in losses is reported on the debit side of a journal entry.
Decrease in losses is reported on the credit side of a journal entry.
An Example of Detailed Balance Sheet
Sample Technology Corporation

Balance Sheet
December 31, 2006
Assets
Current Assets
Cash
Marketable Securities
Accounts and Notes Receivable
Less: Allowance for Doubtful Accounts
Inventories
Other Current Assets
Total Current Assets
Investments
Long-Term Investments in Bonds

Property, Plant, and Equipment
Land
Buildings
Less: Accumulated Depreciation
Equipment
Total Property, Plant, and Equipment
Intangible Assets
Other Noncurrent Assets
Total Assets
Liabilities and Stockholders' Equity
Current Liabilities
Notes Payable
Accounts Payable
Income Taxes Payable
Accrued Expenses
Current Portion of Long-Term Debt
Total Current Liabilities
Long-Term Liabilities
Long-Term Notes Payable
Long-Term Borrowings
Bonds Payable
Deferred Income Tax Liabilities
Total Long-Term Liabilities
Total Liabilities
Contributed Capital
Preferred Stock, $5 par value (authorized 10,000 shares,

issued and outstanding 7,000 shares)
Common Stock, $2 par value (authorized 2,000,000 shares,
issued 1,200,000 shares, outstanding 1,150,000 shares)
Additional Paid-in Capital
Total Contributed Capital
Retained Earnings
Total Contributed Capital and Retained Earnings
Less: Treasury Stock, at cost (50,000 shares)
Total Stockholders' Equity

Total Liabilities and Stockholders' Equity
Example of Detailed Income Statement

Income Statement
For the Year Ended December 31, 2006
Net Sales
Sales
Less: Sales returns and allowances
Cost of Goods Sold
Gross Profit
Selling, General and Administrative Expenses
Salaries
Advertising expenses
Taxes and insurance
Depreciation and amortization expense
Bad debts expense
Other selling, general and administrative expenses
Operating Income (Loss)
Other Revenues and Gains
Interest income
Gain on sale of investment
Other Expenses and Losses
Interest expense
Loss on sale of equipment
Income (Loss) from Continuing Operations before Income Taxes
Income Taxes Expense
Income (Loss) from Continuing Operations
Discontinued Operations:
Gain (Loss) from operations of discontinued business segment
(Net of income tax effect of $ )
Gain (Loss) on disposal of business segment
(Net of income tax effect of $ )
Extraordinary Gain (Loss) from Early Extinguishment of Debts
(Net of income taxes effect of $ )
Net Income (Loss)
Earnings per Common Share:
Income from Continuing Operations
Discontinued Operations
Extraordinary Gain (Loss)
Net Income (Loss)
Revenue Recognition Principle
U.S. GAAP Codification, Accounting Standards ASC,
International Financial Reporting Standards (IFRS)
U.S. GAAP by Topic, Accounting by Topic
Revenue Recognition Principle
U.S. GAAP Codification Topic 600: Revenue
Revenues are recognized

when
(a) realized or realizable
and
(b) earned.
[SFAC No. 5, Para. 83]
Revenues
--> not recognized until realized or realizable.
--> not recognized until earned.
Revenues are realized

--> when products are exchanged for cash or claims to cash.
Revenues are realizable

--> when related assets received are readily convertible
to cash or claims to cash.
Revenues are earned

--> when the products are delivered
or
--> services are performed.
Recognition is the process of

--> recording an item in the financial statements.
Realization is the process of

--> converting non-cash resources into cash.
Revenues are
--> inflows of assets or settlements of liabilities (or both)
--> from activities of the entity's central operations.
Gains are
--> increases in net assets
--> from peripheral or incidental transactions of an entity.
ARB No. 43, Chapter 1A
Accounting Research Bulleting (ARB) No. 43

a. Chapter 1A
b. Issued in June 1953
Unrealized Profit
--> should not be credited to income.
Profit is deemed to be realized

--> when a sale (in the ordinary course of business) is effected.
--> unless the collection of sale price is not reasonably assured.
Profit is NOT deemed to be realized

--> if the collection of sale price is not reasonably assured.
Examples of Revenues and Gains

Operating Revenues
Operating revenues include
--> revenue accounts generated from the primary operations of the company.
Sales
Nonoperating Revenues and Gains

Nonoperating revenues and gains include
--> revenue and gain accounts generated from
--> 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
Examples of Expense and Loss Accounts
Expenses and Losses

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
Nonoperating Expenses and Losses

Nonoperating expenses 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
An Example of Detailed Statement of Cash Flows

Statement of Cash Flows
For the Year Ended December 31, 2006
Cash Flows from Operating Activities
Net Income
Adjustments
Depreciation Expense
Amortization Expense
Gain on Sale of Equipment
Increase in Accounts Receivable
Decrease in Unearned Rent Revenue
Decrease in Inventories
Increase in Accounts Payable
Increase in Prepaid Expenses
Increase in Income Taxes Payable
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 and Cash Equivalents, January 1, 2006
Cash and Cash Equivalents, December 31, 2006

Examples of Asset Accounts
Assets and Contra-Asset Accounts

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
Accumulated depreciation is a contra-asset account which is subtracted from asset accounts.
Land does not have accumulated depreciation, because land account is not depreciated.
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
Examples of Liability Accounts
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)
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
Stockholders' 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 (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 represents 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.)
Shareholders' Equity
SFAS No. 129

Statement of Financial Accounting Standards (SFAS) No. 129
a. Disclosure of Information about Capital Structure
b. Issued in February 1997
SFAS No. 129

--> Consolidates capital structure related disclosures
required by APB Opinion No. 10, 15 and SFAS No. 47.
Required Disclosures about Securities

a. Dividend and liquidation preferences
b. Participation rights
c. Call prices and dates
d. Conversion rates and dates
e. Exercise prices and dates
f. Sinking-fund requirements
g. Unusual voting rights
h. Contracts to issue additional shares
i. Number of shares issued on conversion or exercise
j. Changes in the number of shares of stock
k. Liquidation preference for preferred stock
l. Amounts at which preferred stock may be called
m. Amounts at which preferred stock is subject to redemption
n. Amounts of arrearages in cumulative preferred dividends
o. Amount of redemption requirements for redeemable stock
Preferred Stock
--> A security with preferential rights (compared to common stock)
Participation Rights
--> Rights to receive dividends or returns
APB Opinion No. 12
Disclosures of Changes in Capital Accounts

a. Changes in the accounts comprising stockholders' equity
b. Changes in the number of shares of stock
ARB No. 43, Chapter 1A
Stock Issued for Property

--> It is not permissible to treat
the par value of stock issued
as the cost of property acquired.
APB Opinion No. 14
Debt with stock detachable purchase warrants

--> Proceeds are allocated to the two components.
a. debt security
b. warrants
Allocation is based on
--> a. fair value of debt securities without warrants
b. fair value of warrants
Portion of proceeds allocated to debt security

--> recorded as liability.
Portion of proceeds allocated to warrants

--> recorded as additional paid-in capital.
APB Opinion No. 29
Cost of an asset acquired

= Fair value of the asset surrendered
+ Cash (boot) paid
- Cash (boot) received
Dividend-in-kind
--> recorded at the fair value of the asset transferred
--> gain or loss is recognized on the disposition of the asset.
ARB No. 43, Chapter 7B
Stock Dividend
--> Issuance of its own stock to shareholders
without consideration
--> to distribute retained earnings to shareholders.
Accounting for Stock Dividend

--> Retained earnings is transferred
to capital stock and additional paid-in capital
--> for the amount of
fair value of additional shares issued
Stock Split
--> Issuance of its own stock to shareholders
without consideration
--> to reduce per share price
by increasing number of outstanding shares.
Accounting for Stock Split

--> Retained earnings is not transferred to capital stock.
Issuance of additional shares of more than 25 percent

--> Recorded as stock splits.
APB Opinion No. 6
Treasury Stock
--> Capital stock acquired (and held)
by the entity that issued such stock.
Treasury stock is
--> reported separately
as a deduction from the total of
(capital stock, additional paid-in capital, and retained earnings.)
Gains on Sales of Treasury stock

--> credited to additional paid-in capital.
Losses on Sales of Treasury stock

--> charged to additional paid-in capital
(up to previous gains on sales of same class of stock)
--> remaining losses are
charged to retained earnings.
Retirement of Treasury Stock

An excess of purchase price over par (or stated) value
--> charged to
additional paid-in capital (limited to pro rata portion)
and retained earnings.
Alternatively,
--> may be charged (entirely)
to retained earnings.
Examples of Balance Sheet
Example 1
Balance sheet has three major components.
Assets = Liabilities + Stockholders' Equity
Precision Technology Corporation
Balance Sheet
December 31, 2006
Liabilities
Assets
Total Assets Total Liabilities and Stockholders' Equity
Example 2
Assets = Current Assets + Investments + Property, Plant, and Equipment + Intangible Assets
Liabilities = Current Liabilities + Long-term Liabilities
Stockholders' Equity = Common Stock + Preferred Stock + Retained Earnings
Balance Sheet
December 31, 2006
Current Liabilities
Current Assets Long-term Liabilities
Investments
Property, Plant, and Equipment Preferred Stock
Intangible Assets Common Stock
Retained Earnings
Example 3

Balance Sheet
December 31, 2006
Current Assets Current Liabilities

Cash Accounts Payable
Marketable Securities Notes Payable
Inventories Salaries Payable
Interest Payable
Investments in other companies Income Taxes Payable
Current Portion of Long-term Debt
Property, Plant, and Equipment
Land Long-term Liabilities
Buildings Long-term Notes Payable
Less: Accumulated Depreciation Long-term Borrowings
Equipment Bonds Payable
Intangible Assets
Preferred Stock
Patents
Common Stock
Trademarks
Additional Paid-in Capital, Preferred Stock
Goodwill
Additional Paid-in Capital, Common Stock
Retained Earnings
Accounting Ratios
for Financial Statement Analysis
U.S. GAAP Codification, Accounting Textbooks
Financial Accounting, Intermediate Accounting, Advanced Accounting
U.S. GAAP by Topic, Accounting by Topic
Liquidity Analysis Ratios
Current Ratio
Current Assets
Current Ratio = ------------------------
Current Liabilities
Quick Ratio
Quick Assets
Quick Ratio = ----------------------
Current Liabilities
Quick Assets = Current Assets - Inventories
Net Working Capital Ratio

Net Working Capital
Net Working Capital Ratio = --------------------------
Total Assets
Net Working Capital = Current Assets - Current Liabilities
Profitability Analysis Ratios
Return on Assets (ROA)

Net Income
Return on Assets (ROA) = ----------------------------------
Average Total Assets
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
Return on Equity (ROE)

Net Income
Return on Equity (ROE) = --------------------------------------------
Average Stockholders' Equity
Average Stockholders' Equity

= (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2
Return on Common Equity (ROCE)

Net Income
Return on Common Equity (ROCE) = --------------------------------------------
Average Common Stockholders' Equity
Average Common Stockholders' Equity

= (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity) / 2
Profit Margin
Net Income
Profit Margin = -----------------
Sales
Earnings Per Share (EPS)

Net Income
Earnings Per Share (EPS) = ---------------------------------------------
Number of Common Shares Outstanding
Activity Analysis Ratios
Assets Turnover Ratio

Sales
Assets Turnover Ratio = ----------------------------
Average Total Assets
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
Accounts Receivable Turnover Ratio

Sales
Accounts Receivable Turnover Ratio = -----------------------------------
Average Accounts Receivable
Average Accounts Receivable

= (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Inventory Turnover Ratio

Cost of Goods Sold
Inventory Turnover Ratio = ---------------------------
Average Inventories
Average Inventories = (Beginning Inventories + Ending Inventories) / 2
Capital Structure Analysis Ratios
Debt to Equity Ratio

Total Liabilities
Debt to Equity Ratio = ----------------------------------
Total Stockholders' Equity
Interest Coverage Ratio

Income Before Interest and Income Tax Expenses
Interest Coverage Ratio = -------------------------------------------------------
Interest Expense
Income Before Interest and Income Tax Expenses

= Income Before Income Taxes + Interest Expense
Capital Market Analysis Ratios
Price Earnings (PE) Ratio

Market Price of Common Stock Per Share
Price Earnings (PE) Ratio = ------------------------------------------------------
Earnings Per Share
Market to Book Ratio

Market to Book Ratio = -------------------------------------------------------
Book Value of Equity Per Common Share

= Book Value of Equity for Common Stock / Number of Common Shares
Dividend Yield
Annual Dividends Per Common Share
Dividend Yield = ------------------------------------------------

= Book Value of Equity for Common Stock / Number of Common Shares
Dividend Payout Ratio

Cash Dividends
Dividend Payout Ratio = --------------------
Net Income
ROA = Profit Margin X Assets Turnover Ratio
ROA = Profit Margin X Assets Turnover Ratio

Net Income Net Income Sales
ROA = ------------------------ = -------------- X ------------------------
Average Total Assets Sales Average Total Assets
Profit Margin = Net Income / Sales

Assets Turnover Ratio = Sales / Averages Total Assets

Components of Financial Statements

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Components of Financial Statements

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Components of Financial Statements

Assets, Liabilities, Owner's Equity, Revenues, Expenses, Gains, Losses

Financial Statements Overview

Equity = Assets - Liabilities ---> Assets = Liabilities + Equity

Assets = Liabilities + Equity = $800,000 - $1,200,000 = $2,000,000

Assets = Liabilities + Equity

From any balance sheet,

Essential characteristics of assets

Common characteristic of all assets

Essential characteristics of liabilities

Essential characteristics of equity

Equity = Assets - Liabilities

Essential characteristics of revenues

Essential characteristics of expenses

Essential characteristics of gains

Essential characteristics of losses

Net Income and Owner's Equity

Ending Assets = Ending Liabilities + Ending Owner's Equity

Net Income = Revenues - Expenses + Gains - Losses

Ending Owner's Equity

= Ending Liabilities + Beginning Owner's Equity

If Investment by Owner = 0, Gains = 0, Losses = 0, then

Ending Assets = Ending Liabilities + Beginning Owner's Equity

Ending Assets = Ending Liabilities + Ending Owner's Equity

Assets = Liabilities + Owner's Equity

Liabilities are reported on the balance sheet.

Owner's Equity is reported on the balance sheet.

Revenues are reported on the income statement.

Expenses are reported on the income statement.

Gains are reported on the income statement.

Losses are reported on the income statement.

An Example of Detailed Balance Sheet

Sample Technology Corporation

Accounts and Notes Receivable

Less: Allowance for Doubtful Accounts

Other Current Assets

Total Current Assets

Long-Term Investments in Bonds

Less: Accumulated Depreciation

Less: Accumulated Depreciation

Total Property, Plant, and Equipment

Other Noncurrent Assets

Liabilities and Stockholders' Equity

Income Taxes Payable

Current Portion of Long-Term Debt

Total Current Liabilities

Long-Term Notes Payable

Deferred Income Tax Liabilities

Total Long-Term Liabilities

Preferred Stock, $5 par value (authorized 10,000 shares,

Additional Paid-in Capital

Total Contributed Capital

Total Contributed Capital and Retained Earnings

Less: Treasury Stock, at cost (50,000 shares)

Total Stockholders' Equity

Example of Detailed Income Statement

Financial Statements Overview

Sample Technology Corporation

Less: Sales returns and allowances

Cost of Goods Sold

Selling, General and Administrative Expenses

Taxes and insurance

Depreciation and amortization expense

Bad debts expense