Online Business Accounting

Need HELP bad!! In accounting class and need help with Chapter two of principles of accoutning 1?

Chapter two of Principles of Accounting 1 it is about financial Statements. I don't get any of it and don't understand what it means. It talks about the balance sheet and what the financial statements mean. I don't get what it is talking about and need help. What do financial statements in accounting do and what is it used for ? Some of the topics are Repor/ Account form,Balance Sheets, and the basics to what financial statements are about. If you can please help me it will be very appreciative. Accountants or people in accounting that knows this please help!! THANK YOU! if you have MSN or AIM or Yahoo messenger and may help me by instant message and are online often please be kind and leave me your sn so i can get some help. again thank you.

Public Comments

1. Financial statement refers to the statement that identifying your total income; including your assets and your debts. In the end, it should be able to tell you if you have positive or negative or zero financial (money)
2. Yes, it is confusing, isn't it. Even for some business owners, so don't get down on yourself. Here is an easy way to distinguish between the two reports: Balance Sheet is a picture of your business at any point in time. Don't care what date it is. So as of that date here is how much cash you have, here is how much people owe you (Accounts Receivable) - providing you are using the Accrual system, here is how much you owe other people (Accounts Payable), etc. Income Statement - this is the activity in your business over a specific period of time. If you look at it monthly, there here is how much we did in sales, how much it cost us for those sales (Cost of Goods Sold) and how much the expenses were (utilities, rent, insurance, etc.), and here is the Net Profit. Then you start over. So if you are looking at May, then June 1 you have no sales on the books, etc. Ok, now on the Balance Sheet there are only two areas that are cummulative - Accummulated Depreciation and Retained Earnings. Accummlated Depreciation is what the government has allowed you to write off on your taxes from the time you bought the capital asset (a truck, piece of machinery, etc.) So Fixed Assets is what you paid for the "stuff", minus the Accummulated Depreciation equals Net Fixed Assets. This is what you have left to write off. It is also called Book Value. Not to be confused with Market Value which is what you could sell that piece of equipment for. Retained Earnings is the Profit and Loss in the business from the time the business started. So, let's say in year 1 you made $10 profit, your retained earnings are $10. Year 2 you lose $5, so now you Retained Earnings are $5. $10 - $5 = $5. Remember that the Balance Sheet must BALANCE - Assets = Liabilities + Equity so the area that gets "adjusted" most often is Retained Earnings. Does that help you? Think of the Balance Sheet as taking a picture and the Income Statement is activity.