four financial statements

Question 1

Statement of Financial Position
Purpose

Answer 1

Reports the financial position (economic resources and sources of financing) of an accounting entity at a point in time.

Question 2

Statement of Financial Position
Structure

Answer 2

Assets = Liabilities + Shareholders’ Equity

Question 3

Statement of Financial Position
Examples

Answer 3

cash, accounts receivable, plant and equipment, notes payable, contributed capital

Question 4

Statement of Earnings
Purpose

Answer 4

Reports the net earnings achieved during the accounting period.

Question 5

Statement of Earnings
Structure

Answer 5

Revenue - Expenses = Net earnings

Question 6

Statement of Earnings
Examples

Answer 6

sale revenue, cost of sales, selling expense, interest expense

Question 7

Statement of Changes in Equity
Purpose

Answer 7

Reports how elements of comprehensive income, dividends, and changes to contributed capital affected the financial position of the company during the accounting period.

Question 8

Statement of Changes in Equity
Structure

Answer 8

Equity, beginning of the period
+ Net earnings for the year
+ Other Comprehensive income
– Dividends
+/- Other changes, net
= Equity, end of the period

Question 9

Statement of Changes in Equity
Examples

Answer 9

retained earnings, elements of comprehensive income, distributions of dividends, increase in contributed capital

Question 10

Statement of Cash Flows
Purpose

Answer 10

Reports inflows (receipts) and outflows (payments) of cash during the accounting period in the operating, investing, and financing categories.

Question 11

Statement of Cash Flows
Structure

Answer 11

+/- Cash Flow of Operating activities
+/- Cash Flow of Investing activities
+/- Cash Flow of Financing activities
= Change in cash

Question 12

Statement of Cash Flows
Examples

Answer 12

cash collected from customers, cash paid to suppliers, cash paid to purchase equipment, cash borrowed from banks