A final question from Anne Marie.

1. I see these things called current assets and current liabilities. What are they? Why show them? I have current assets of $47,797.50 and current liabilities of $5,200. Is that good or bad?

Anne's Beauty Salon, Inc
Income Statement
For the Year 20XX
Sales (Revenue)	$125,000.00
Cost of Goods Sold	25,000.00
Gross Profit	100,000.00
Payroll Expense	67,500.00
Sales, General, Administrative Expense	5,000.00
Rent Expense	1,400.00
Utilities Expense	1,670.00
Insurance Expense	500.00
Depreciation Expense	2,500.00
Total Operating Expense	78,570.00
Total Operating Income	21,430.00
Income Taxes	6,430.00
Net Income	$15,000.00

Anne's Beauty Salon, Inc
Statement of Retained Earnings
For the Month Ending December 31, 20XX
Retained Earnings, December 1	$5,000.00
Add: Net Income	15,000.00
Subtract: Dividends	(2,402.50)
Retained Earnings, December 31	$17,597.50

Anne's Beauty Salon, Inc
Balance Sheet
At December 31, 20XX
Assets			Liabilities
Current Assets			Current Liabilities
Cash		$949.50	Accounts Payable	$5,000.00
Accounts Receivable		11,948.00	Unearned Revenue	200.00
Supplies		20,500.00	Total Current Liabilities	5,200.00
Prepaid Rent		8,400.00
Prepaid Insurance		6,000.00
Total Current Assets		47,797.50	Note Payable	15,000.00
Equipment	$25,000.00		Total Liabilities	20,200.00
Less: Accumulated			Stockholders' Equity
Depreciation	(5,000.00)	20,000.00	Common Stock	30,000.00
Total Long-Term Assets			Retained Earnings	17,597.50
Total Assets		$67,797.50	Total Liabilities and	$67,797.50
			Stockholders' Equity

Anne's Beauty Salon, Inc Statement of Cash Flows For the Year Ended December 31, 20XX Cash flows from operating activities: Cash receipts from revenue $12,000.00 Cash payments for expenses (14,500.00) Net cash flow from operating activities (2,500.00) Cash flows from investing activities: Cash payment to purchase equipment (20,000.00) Cash flows from financing activities: Cash receipts from issuing stock 28,000.00 Cash payment on loan (9,000.00) Cash flow from financing activities 19,000.00 Net decrease in cash (3,500.00) Plus: beginning cash balance 4,449.50 Ending cash balance $949.50