Jacksonville CPA | Complying With Government Standards
So this is Brandon Mallory, welcome to another episode of the podcast. We’re just, I’m going through a lecture by Robert Swollen and accounting teacher. I’m going over the different accounting terms and phrases and basically accounting formula, formulas and all the basics that you need to know to be familiar. You don’t have to be an accounting expert, but you do need to know some basics and how the financial statements work. So fear Jacksonville CPA is not taking the time to help you and to give you the information you need to grow your business. Tim, please give him an eva call. I’m the. I see so many Jacksonville cpas that are just focusing on compliance work, compliance work, meaning just doing the work that they have to do to comply with the government and not going above and beyond and helping their clients achieve their financial goals. So if that is you, then please give me a call.
Notice I put brackets around the expenses in accounting, putting parentheses or brackets around a number that’s going to be subtracted, or a negative number is common practice. Okay. I see supplies expense for a thousand gas and oil expense. $600. Utility expense? Three hundred and wage expense?
1,400.
Okay. My revenues 7,000 minus my expenses. Which total?
Two thousand
2,900 $4,300
equals net income.
Okay, so revenue minus expense. Okay. And what does that come to? C, 2037. So 3,300.
That’s my net income. And Jacksonville CPA notified put two lines underneath it. That’s called double underscoring. It simply means this is the last number on a particular financial statement or a column we double underscore. Okay, so revenues minus expenses equals net income. Now that we’ve prepared the income statement, our second financial statement is to prepare retained earnings and I repair retained earnings underneath the income statement or after the net income from the income statement in order to prepare the retained earnings statement. So I will put the retained earnings statement over here or a line in between these.
That’s
ABC company 6:30 x X.
So, um, if you were a small business owner, and I hope all this information is valuable for you, if you’re Jacksonville CPA is not helping you grow your business. If they’re just, if you feel like your underserved, then please give me a call.
Ain’t no abbreviate. So there’s my header. Okay? Now if we look at the slide, I’ll be back in a second year. We noticed it says on June first, the service company was started with an investment of 26,200 cash. It is now June 30th. So this was the very first month that this company has been in business. So the format of the retained earnings statement, we take beginning, we’ll abbreviate retained earnings and this was on June first. Okay? Now think about this. If this is the very first day we’re in business, June first eight, a, m in the morning, we’d simply just opened the doors. Haven’t done any business yet. We haven’t sold anything. We don’t have any earnings in the very first time period. Only beginning retained earnings is zero. It has to be. We haven’t done anything yet. So day one of the business, beginning retained earnings is zero, then we add net income and that income comes from the income statement right here, beginning retained earnings plus net income. Had this been a loss and it’s very common in the first couple of years of a business to lose money, had expense has been more than revenue. We would have had a net loss. That’s the case, I would have subtracted a netball.
So what we just heard, it’s very common in the first few years of our business, uh, for it to lose money. So if you’re a Jacksonville CPA is not helping your fewer, losing my give Mineva call and we will help you turn things around in your business and make sure that you are achieving your financial goals because that’s what we’re all about at the Neva to lead guide and direct and help you achieve your financial goals.
Then
we subtract any dividends paid back to the owner. And again, if you refer to your slide, I’ll be back in a sec. It says they paid a $2,000 dividend. So I’m going to subtract the dividends. Now, let’s, let’s go back for a moment. The retained earnings is a summary of what we begin with and what we ended up with in retained earnings, which is a stockholder’s equity account, and if we think back, we remember revenues and expenses and dividends are in retained earnings revenues, Jacksonville CPA increased retained earnings expenses, decreased retained earnings, so the summary of revenue minus expense is net income. So here’s my revenues and expenses going into retained, earning dividends, we said decreased retained earnings and so ending, and I’m going to abbreviate our, he retained earnings December 31st at the end of whatever year is going to be $1,300.
Okay.
Beginning retained earnings. Remember in the first period only, please remember that this is the first period only is zero.
So first period only retained earnings zero. Think give an a call, then we will help you fix that. A fear Jacksonville CPA is not meeting your needs. Give us a call. Um, anyway, just a. let’s get back to the lecture here.
Lots of that income from the income minus dividends paid back to the owners equals end of the period retained earnings. Now a quick comment, we said that revenues and expenses on the income statement would be set back to zero, just like we’re playing a new ballgame. Okay, and so we refer to revenues and expenses and dividends as temporary accounts. We’ll talk about this more down the road. Assets, Liabilities and equity. We call permanent accounts or accounts because we don’t set them back to zero. If on December 30, first you have a thousand dollars in your bank account, then when the clock strikes midnight and it goes from December 30, first to January first you still have a thousand dollars in your account. Cash is an asset. Assets are permanent.