Financial Statements Cockpit — Experience a year of a company in 25 transactions
Stack one fiscal year of transactions from start to end and observe how the financial statements respond — paid-in capital, working-capital borrowings, purchases and sales of goods, fixed-asset acquisitions, year-end adjustments, profit-and-loss closing, dividend payments. Push the total of 25 transactions (23 in the current period + 2 in the next period) in order, and the balance sheet (BS), income statement (PL), cash flow statement (CS), and statement of changes in shareholders' equity (SS) — the four financial statements — move in lockstep.
Transaction 1 / 25Paid-in capital (incorporation of the company)
The company was incorporated with paid-in capital of 500, all recorded as capital stock.
Paid-in capital (incorporation of the company)
Debit
Amount
Credit
Amount
Cash and cash equivalents
— Proceeds from issuance of shares
500
Capital stock
500
Impact on financial statements▶
VOICEVOX:Zundamon
Balance Sheet
Cash and cash equivalents
-
Inventory
-
Accounts receivable
-
Prepaid expenses
-
Total current assets
-
Buildings
-
Tools, furniture and fixtures
-
Vehicles
-
▲ Accumulated depreciation
-
Total tangible fixed assets
-
Long-term loans receivable
-
Total investments and other assets
-
Total non-current assets
-
Total assets
-
Accounts payable
-
Short-term loans payable
-
Deposits received
-
Unearned revenue
-
Income taxes payable
-
Total current liabilities
-
Long-term loans payable
-
Total non-current liabilities
-
Total liabilities
-
Capital stock
-
Retained earnings
-
Total shareholders' equity
-
Total equity
-
Total liabilities and equity
-
Income Statement
Sales
-
Cost of goods sold
-
Gross profit
-
Directors' compensation
-
Statutory welfare expenses
-
Advertising expenses
-
Supplies expenses
-
Depreciation expenses
-
Selling, general and administrative expenses
-
Operating profit
-
Interest income
-
Non-operating revenues
-
Interest expense
-
Founding expenses
-
Non-operating expenses
-
Ordinary profit
-
Extraordinary gains
-
Extraordinary losses
-
Income before income taxes
-
Income taxes
-
Net income
-
Cash Flow Statement (Direct method)
Operating receipts
-
Payments for goods
-
Personnel payments
-
Other operating payments
-
Subtotal (direct method)
-
Interest received
-
Interest paid
-
Income taxes paid
-
Cash flows from operating activities
-
Purchase of fixed assets
-
Loans extended
-
Other investing payments
-
Cash flows from investing activities
-
Proceeds from issuance of shares
-
Proceeds from short-term borrowings
-
Repayment of short-term borrowings
-
Proceeds from long-term borrowings
-
Dividend payments
-
Cash flows from financing activities
-
Net change in cash
-
Cash and cash equivalents at beginning of period
-
Cash and cash equivalents at end of period
-
Cash Flow Statement (Indirect method)
Income before income taxes
-
Depreciation
-
Founding expenses
-
Interest income (reversal)
-
Interest expense (reversal)
-
Change in trade receivables
-
Change in inventory
-
Change in trade payables
-
Change in other liabilities
-
Subtotal (indirect method)
-
Interest received
-
Interest paid
-
Income taxes paid
-
Cash flows from operating activities
-
* Investing and financing cash flows are identical under direct and indirect methods, so they are omitted.
Statement of Changes in Shareholders' Equity
Capital stock
Retained earnings
Total shareholders' equity
Total equity
Legal capital reserve
Retained earnings
Balance at beginning of period
-
-
-
-
-
Issuance of new shares
-
-
-
-
-
Net income
-
-
-
-
-
Dividend payments
-
-
-
-
-
Balance at end of period
-
-
-
-
-
Pick a transaction from the dropdown above, and click Post journal entry to send the numbers flying into the statements on the right. To revert, use ↺ Undo. To start over, use ↺ Reset all. The Next-period tab is locked until you post No.23 (closing transfer) — current-period closing must be complete first. Click the ⛶ Expand button at the top right to view the statements full-screen.
1. Overview
A company moves through a high-level flow within a fiscal year: incorporation → setup → operations → year-end closing → next-period appropriation. Textbooks teach individual journal entries one at a time, but the moment they connect into the financial statements is rarely something you get to feel. On this page, a newly-formed company receives 500 in paid-in capital, runs purchases and sales of goods, acquires fixed assets, locks in profit at year-end, and pays taxes and dividends in the next period — all as 25 transactions you can push through in order.
2. Storyline
Founding (No.1–2): Paid-in capital of 500, founding expenses of 30
Operating preparation (No.3–5): Buy a PC for 40, supplies for 5, advertising for 5
Working capital (No.6): Short-term borrowing of 600 (half-year prepaid interest of 9 paid simultaneously)
Purchase and sales (No.7–12): Inventory purchase 700, sales 1,200, with collections and payments
Fixed assets (No.13–15): Delivery vehicle 100, long-term borrowing 2,000, store building 2,000
Loans, repayments, payroll (No.16–19): Loan receivable 330, short-term loan repayment, directors' compensation and social insurance
Year-end adjustments (No.20–22): Depreciation 128, prepaid/unearned reclassifications, income tax accrual
Closing transfer (No.23): Transfer to the income summary account → transfer to retained earnings
Next-period appropriation (No.24–25): Income tax payment, dividend payment (including legal capital reserve appropriation)
3. How to read
On the left you have the transaction summary and the journal card; on the right, the financial statements. Click "Post journal entry" on the journal card and the numbers on the right change according to the debit/credit accounts. The changed rows briefly highlight, and the delta amounts fly out from the journal card as yellow pills.
The statements switch between Current period and Next period tabs. The Next-period tab activates only after you post the current-period closing transfer (No.23-1 to No.23-3) — you cannot start the next period until closing is complete.
4. Key takeaways
Purchase and sales are different — Inventory bought in No.7/8 is reclassified to cost of goods sold in No.9/10. The PL does not move at the time of purchase.
Expense without cash outflow — Depreciation in No.20 does not move cash, but it is recognized on the PL.
Taxes are fixed at year-end — Accrued in No.22, actually paid in No.24 of the next period.
Net income flows to retained earnings — In No.23-3, the income summary account balance (= net income) is transferred to retained earnings.
Dividends come from retained earnings only — In No.25, retained earnings are drawn down to pay the dividend.