ACC 6040 Module 1 Financial Statements Overview Example

Course	ACC-6040 Fundamentals of Accounting I
Module	Module 1
Paper type	Written Assignment 1: overview of the FASB and an entity's financial statements
Length	About 829 words, 6 pages
Format	APA 7 student paper
School	Thomas Edison State University
Program	Master of Science in Accounting
Updated	October 2026

Free sample paper for ACC 6040 Module 1

Garden State Ice Rinks, Inc., Year One: The Four Statements and the Threads Between Them

Student Name

Master of Science in Accounting, Thomas Edison State University

ACC-6040: Fundamentals of Accounting I

Mentor Name

Month Day, Year

What this page is doingThe title names the composite company used through all eight ACC-6040 assignments and the connections between statements that this first assignment emphasizes.

Garden State Ice Rinks, Inc., Year One: The Four Statements and the Threads Between Them

Question 1: Who sets accounting standards, and for whom?

In the United States, generally accepted accounting principles are set by the Financial Accounting Standards Board, a private body whose standards the Securities and Exchange Commission recognizes for public companies. The FASB's aim is information useful to investors and creditors deciding whether to provide resources to a company (Libby et al., 2017). Other users, such as managers, employees, suppliers and tax authorities, also read financial statements, but the standards are written mainly with outside capital providers in mind. Private companies like Garden State Ice Rinks follow GAAP when their lenders or investors require audited or reviewed statements, which most banks do for a loan of any size. The FASB states that the objective of general purpose reporting is to give investors, lenders and other creditors information useful for deciding whether to provide resources (Financial Accounting Standards Board, 2010).

Question 2: What are the four statements?

Statement	Question it answers	Point in time or period
Balance sheet	What does the company own and owe, and what is left for owners?	A point in time
Income statement	Did operations produce a profit?	A period
Statement of retained earnings	How much profit was kept in the business?	A period
Statement of cash flows	What brought cash in, and what used it?	A period

Question 3: Garden State Ice Rinks' First Year

Two former hockey players opened the rink on January 1, 2026, investing $600,000 for common stock and borrowing $900,000 from a bank on a ten-year note at 6%. They operate in a township-owned arena rent free in exchange for public skating hours, and they bought a refrigeration system, dasher boards and a resurfacing machine for $1,200,000; ice time revenue reached $820,000, skate rentals and lessons $210,000 and concessions $140,000. Expenses were wages of $460,000, utilities of $190,000, concession supplies of $60,000, depreciation of $120,000, insurance of $40,000 and interest of $54,000. Income tax expense was $50,000. The owners paid $40,000 of dividends.

The statement of retained earnings starts at zero for a new company, adds net income of $196,000 and subtracts dividends of $40,000, leaving $156,000.

The balance sheet above does not balance: total assets of $1,350,000 fall $306,000 short of claims of $1,656,000. Tracing the difference reveals the error: in December the company also prepaid $306,000 for a two-year lease of a second rink in Parsippany beginning January 1, 2027, and the first draft left that prepayment off the balance sheet. Adding prepaid rent of $306,000 brings total assets to $1,656,000 and the statement into balance.

Income statement, 2026	Amount
Ice time revenue	$820,000
Rentals and lessons	210,000
Concession sales	140,000
Total revenues	1,170,000
Wages	460,000
Utilities	190,000
Concession supplies	60,000
Depreciation	120,000
Insurance	40,000
Interest	54,000
Income before tax	246,000
Income tax expense	50,000
Net income	$196,000
Balance sheet, December 31, 2026	Amount
Cash	$244,000
Accounts receivable from youth hockey leagues	26,000
Equipment, $1,200,000 less $120,000 accumulated depreciation	1,080,000
Total assets	$1,350,000
Note payable to bank	$900,000
Common stock	600,000
Retained earnings	156,000
Total liabilities and stockholders' equity	$1,656,000
Corrected balance sheet, December 31, 2026	Amount
Cash	$244,000
Accounts receivable from youth hockey leagues	26,000
Prepaid rent for the Parsippany rink, 2027-2028	306,000
Equipment, net of $120,000 accumulated depreciation	1,080,000
Total assets	$1,656,000
Total liabilities and stockholders' equity, as above	$1,656,000

What this page is doingLeaving the first draft unbalanced and then finding the missing asset demonstrates the use of the accounting equation as a check, a skill the first module is meant to build.

Question 4: How the Statements Connect

Net income of $196,000 from the income statement flows into the statement of retained earnings, whose ending balance of $156,000 appears in stockholders' equity on the balance sheet. The rink began with no cash and ended with $244,000, and the cash flow statement shows why: money earned from skating, money spent on equipment and the lease, and money raised from shares and the loan, minus dividends paid. The ending cash figure on the cash flow statement must equal cash on the balance sheet. These links mean an error in one statement shows up in another, which is why preparers build them in order.

No rent expense appears for 2026 because the lease starts in 2027. The prepayment is shown here as investing because it secures a second facility for two years; many companies would classify such a payment as operating, and the course text explains the judgment involved. In a large survey, Graham et al. (2005) found that most finance executives would give up projects with positive value to avoid missing an earnings target, which is why readers look past net income to the cash flow statement.

Statement of cash flows, 2026	Amount
Cash collected from customers: revenues of $1,170,000 less $26,000 not yet received	$1,144,000
Cash paid for wages, utilities, supplies, insurance, interest and taxes	(854,000)
Cash from operating activities	290,000
Purchase of equipment	(1,200,000)
Prepayment of the 2027-2028 Parsippany lease	(306,000)
Cash from investing activities	(1,506,000)
Issue of common stock	600,000
Bank loan	900,000
Dividends paid	(40,000)
Cash from financing activities	1,460,000
Increase in cash	$244,000

References

Financial Accounting Standards Board. (2010). Conceptual framework for financial reporting: Chapter 1, the objective of general purpose financial reporting (Statement of Financial Accounting Concepts No. 8).

Graham, J. R., Harvey, C. R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3), 3-73. https://doi.org/10.1016/j.jacceco.2005.01.002

Libby, R., Libby, P. A., & Hodge, F. (2017). Financial accounting (9th ed.). McGraw-Hill Education.

Reading the ACC 6040 Module 1 assignment instructions

ACC-6040 sets seven written assignments worth 40 percent of the grade; the syllabus weights Written Assignments 1 and 3 together at 15 percent and the other five at 25 percent. Written Assignment 1 covers Module 1, the FASB and an entity's financial statements, using Libby, Libby and Hodge's Financial Accounting. Expect questions on the purpose of financial reporting and who sets standards, the four basic statements and their elements, and exercises that prepare simple statements from a list of account balances or transactions. The figures belong to an invented rink company that reappears in every later set.

How this ACC 6040 Module 1 example is built

The answers move from the institutional setting to the statements. The first explains the FASB's role and its focus on capital providers. A table summarizes what each statement answers. The worked problem builds the income statement and retained earnings for the invented rink, then deliberately presents a first-draft balance sheet that does not balance and finds the missing asset, showing how the accounting equation catches errors. The final answer traces the links among the statements and presents the statement of cash flows, with a note on a classification judgment, so the assignment ends with all four statements reconciled. The paper closes with a note on who uses each statement.

Reading the ACC 6040 Module 1 grading rubric

This first assignment is paired with Written Assignment 3; the two carry 15 percent of the ACC-6040 grade together. On this assignment, mentors check that the purpose of financial reporting and the FASB's role are stated accurately, that each statement is prepared in the correct format with items properly classified, that net income flows into retained earnings and that the balance sheet balances. Explanations of how the statements connect show understanding beyond formatting. A cash flow statement whose ending balance matches the balance sheet is strong evidence that everything ties together. Statements that tie together, with net income flowing into retained earnings and retained earnings into the balance sheet, show the structure mentors are checking. Explaining why the FASB sets standards and who relies on them frames the computations that follow.

ACC 6040 Module 1 help from the desk

The most common errors in this first assignment are placing dividends on the income statement, mixing point-in-time and period statements, and forgetting that the balance sheet must balance. If it does not, look for an omitted asset, liability or equity item before forcing the numbers. Prepare the statements in order: income statement, retained earnings, balance sheet, then cash flows. Classify each item carefully. Prepare the statements in order, income first, so each one feeds the next. Name each subtotal, and prove the balance sheet balances before starting the cash flow statement. A free first sample of your own ACC-6040 Module 1 assignment is available on request.

Write yours, or have the desk draft it

This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.

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ACC 6040 Module 1 questions, answered

Where can I find a free ACC 6040 Module 1 sample paper?

Garden State Ice Rinks' first-year statements are worked above: the FASB's role, the four statements, an unbalanced draft corrected and the links between statements traced.

Who sets U.S. GAAP?

The Financial Accounting Standards Board, a private body whose standards the SEC recognizes for public companies.

What are the four basic financial statements?

The balance sheet, the income statement, the statement of retained earnings or stockholders' equity, and the statement of cash flows.

How do the financial statements connect?

Profit feeds retained earnings, retained earnings sits in the equity section, and the cash flow statement accounts for the movement in the cash line.

Are dividends an expense?

No. Dividends are distributions of profit to owners and reduce retained earnings, not net income.

ACC 6040 Module 1 Written Assignment: Reading an Entity's Four Statements Example