Finanical Accounting Concepts Phase 2 DB Essay Example | Topics and Well Written Essays - 500 words

Finanical Accounting Concepts Phase 2 DB - Essay ExampleThis is also the reason why the expense incurred on Furniture is not shown on the income asseveration, The expense incurred on the furniture ($1500) will be shown in reduced amounts for a item of years in subsequent income statements.The Income Statement reflects the inflow and outflow of expenses and revenues. However, the Owners equity statement is a statement that reflects the position of the owners capital in the business. Therefore it reflects the shares position, the kinds of shares (common, preferred or deferred preferred shares) and their distribution. However, a balance sheet is a comprehensive statement that reflects the financial position of a firm at the end of a financial year. While the Income statement shows mainly operating expenses and force out revenues, the balance sheet is a summary of a Companys entire financial origin at any given point of time, therefore it includes entirely assets of the Company, al l liabilities and net worth. This statement also takes into account the ownership of non fluid assets and share ownership in the Company. Therefore, in a balance sheet, the chronicle equation would be Assets Liabilities + Owners Equity.The Accounting Cycle includes the process of recording entries of receipts and expenses in a diary in chronological order according to dates. These entries are then posted to the ledger, some(prenominal) under debits and credits, under the appropriate account heading. The trial balance is then prepared to ensure that all debits are equal to all credits. Any errors or discrepancies are then resolved with individual journal entries, in order to yield the adjusted trial balance. This forms the basis for the preparation of the various kinds of financial statements, such(prenominal) as cash statements, income statements and balance sheets. The final steps in preparing these statements are in the posting of the gag law entries and the preparation of th e final