BALANCE SHEET FORMULA

Assets liabilities = equity (or assets = liabilities + equity)

RETAINED EARNINGS FORMULA
Beginning balance + net income net losses dividends = ending balance
INCOME STATEMENT FORMULA
Revenue (sales) expenses = profit (or net income)
GROSS MARGIN
Sales cost of sales
OPERATING INCOME (EARNINGS)
Gross profit selling, general, and administrative (SG and A) expenses
STATEMENT OF CASH FLOWS FORMULA
Beginning cash balance + cash flow sources (uses) from operations + cash flow sources
(uses) from financing + cash flow sources (uses) from investing = ending cash balance
This formula adds cash sources and subtracts cash uses.
INVENTORY FORMULA
Beginning inventory + purchases cost of sales = ending inventory (or beginning inventory +
purchases ending inventory = cost of sales)
NET SALES FORMULA
Gross sales sales discounts sales returns and allowances
BOOK VALUE OF FIXED (DEPRECIABLE) ASSETS
Original cost accumulated depreciation
STRAIGHT LINE DEPRECIATION
(Original cost salvage value) / number of years in useful life
Salvage value is the dollar amount that the owner can receive for selling the asset at the end
of its useful life.