Quickbooks Learning

14665 Words59 Pages
By Jeanie R. Hoshor, M.S. Accounting


Businesses run on information: information about the purchase of goods and services from their vendors, about the sale of goods and services to their customers, about their inventories of products, about their employees and the services they perform and the wages they earn, about all the things (cash, buildings, equipment, patents, supplies, etc.) they use to carry on their operations and activities. Most of this information deals with things that have a value that can be measured in dollars and cents; this is financial information. This course (OAS 120) and your textbook deal with the keeping of financial (accounting) records, using a software
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For example, we may use up some office supplies as we prepare invoices and other documents (office supplies expense). We consume the labor service of our employees as they carry out our business operations (salaries and wages expense).

Why is Interest Expense given a special section at the bottom of the Profit & Loss report? All of the income, and all of the other expenses, are “ordinary”: they come from doing what we are in business to do. In this case, we are in business to design web pages and give consultation on the internet. Interest expense comes from borrowing money. We are not in business to borrow money, so this is “Other.”

In summary, the Profit & Loss report shows revenues earned (increase in owner equity), expenses incurred (decrease in owner equity), and the resulting Net Income or Net Loss in owner equity from the operation of the business during one specific period of time. It is one of the two main financial statements presented to investors and creditors outside the business.

The other main financial statement is the Balance Sheet. What, exactly, is in balance on a Balance Sheet? Assets and equities are in balance. Recall that liabilities are also equities: the equities of the creditors of the business. So the equation in balance is: Total Assets = Total Equities, where the total equities include both creditor equities (liabilities)
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