1. 2. 3. 4. 5. Accrual accounting is GAAP because it is considered better than cash-basis theory to measure profitability of the enterpise. in the retained Earnings account is the sum of all dividends paid to shareholders since the beginning of the company. Goodwill is an Intangible Asset calculated as the amount paid to acquire a business in excess of the book value of net assets. Due to long-tm use of stock buybacks by companies, Return on Equity has become less useful as a metric for evaluating Senior Management effectiveness. If the Accumulated Depreciation account balance is nearly 90% of the Equipment amount, it means the Equipment is nearing the end of its expected useful life. Dividends is an expense that should be reported in the Income Statement Cost of Good Sold is an expense representing the cost of Inventory taken from the Balance Sheet Inventory account for products sold. Income Tax Expense is usually NOT the amount of income tax that is paid by a company. A publicly-traded company has stock that is traded on the major exchanges and is governed by the rules and regulations of Securities Exchange Commission Prepaid Expenses are shown on the Income Statement. 6. 7. 8. 9. 10