(1)
Transaction: The economic events which bring about any changes in the financial items of a business, and can be measured in the monetary units are referred to as transactions.
Accounting equation is expressed as shown below:
Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Statement of
Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.
Return on Assets (ROA): This financial ratio evaluates how efficiently the assets are used in earning net income. So, ROA is a tool used to measure the performance of a company.
Formula of ROA:
To analyze: The transactions of CC Company, using the accounting equation in the given format
(2)
To prepare: Income statement of CC Company for the month ended November 30, 2018.
(3)
To prepare: Statement of retained earnings of CC Company for the month ended November 30, 2018.
(4)
To prepare: Balance sheet of CC Company on November 30, 2018.
(5)
To solve: ROA for CC Company for November 2018.
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Horngren's Financial & Managerial Accounting The Financial Chapters (6th Edition)
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