Essay on Chapter 4 Gapenski

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Ch 4, Ques 4.1
The difference between the income statement and balance sheet in regards to timing is the following: * An income statement is a report that contains information in regards to an organizations’ assets and financing in order to obtain those assets that is collected over a certain period of time * A balance sheet is snapshot of the financials for that organization (with assets on the left and liabilities on the right side) for that particular date that was requested
Ch 4, Ques 4.5 a, b, c a) The difference between long term investments and property and equipment on the balance sheet are as follows: * Long term investments are reported on the balance sheet at a fair market value instead of the purchase price
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taxes, wages) or amount owed. Equity is also known as owner’s net worth, stockholders’ equity, etc. or amount vested with no obligation to payback. This difference is known as the net asset or net worth of the company

b) What makes a liability a current liability?
A current liability is defined as a liability that must be paid within one accounting period.

c) Give some examples of current liabilities.
A company could owe unpaid wages, taxes, or a commercial bank loan that is due within one accounting period.

d) What is the difference between long-term debt and notes payable? A notes payable is normally a short term debt whereas a long-term debt is typically over a time frame of more than one accounting period or longer.
Ch 4, Ques 4.7 a, b a) Explain the difference between the equity section of a not-for-profit business and an investor-owned business.
Equity in a not-for-profit is known as net assets and for an investor-owned business it is termed as stockholder’s equity because it is owned by the investors/stockholders.

b) What is the relationship between net income on the income statement and the equity section on a balance sheet?
The net income on the income statement is used on the equity section for the balance sheet. When the net income increases of decreases because of revenue or expenses this carries over to the balance sheet under the equity section and reflects those fluctuations. This helps to give a better

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