Net income is calculated by subtracting total expenses and total dividends from total revenues.

Revenues are increases in liabilities resulting from delivering goods or services to customers.

Property, plant and equipment does NOT include patents.

Net income is computed as revenues - expenses - dividends.

The accounting equation can be stated as Assets -Liabilities = Owner's Equity.

Every corporation must pay dividends every year.

The balance sheet is organized in terms of the organization's operating, investing, and financing activities.

The statement of cash flows measures operating performance.

The Owner's Equity Statement reports cash payments and cash receipts for a period of time.

Assets will appear on the income statement.

A company's interest expense for the period is reported on the balance sheet.

Cost of sales is another term for gross profit.

Gross Profit is equal to net sales less cost of goods sold.

Operating expenses are the costs of everyday operations.

An investor wishing to assess the reasons for a change in owner's equity over a period of time would probably examine the Owner's Equity Statement.

A potential investor interested in predicting the earnings of a company in the future should examine the income statement.

A Balance Sheet is dated at the moment in time when the accounting period ends.

The income statement covers a defined period of time.

An example of an operating expense is cost of goods sold.

A net loss occurs when not enough cash exists.

A Balance Sheet is normally prepared before the Income Statement.

Accumulated depreciation is a contra-asset account.

Notes payable (due in 60 days) would appear on the balance sheet as a long term liability.

The current portion of a long-term note payable is classified on the balance sheet as a current liability.

Accumulated depreciation increases the cost of property, plant, and equipment on the balance sheet.