Financial Statements

Question 1

What is a balance sheet?

Answer 1

a financial statement that reports the resources (assets) owned by a company and the claims against those resources (liabilities and stockholders’ equity) at a specific point in time

Question 2

What is a statement of cash flows?

Answer 2

a financial statement that provides relevant information about a company’s cash receipts (inflows of cash) and cash payments (outflows of cash) during an accounting period

Question 3

Describe a picture of the relationship among statements - literally describe the image from the book

Answer 3

Question 4

What is an income statement?

Answer 4

a financial statement that reports the profitability of a business over a specific period of time

Question 5

What is a retained earnings statement?

Answer 5

a financial statement that reports how much of the company’s income was retained in the business and how much was distributed to owners for a period of time

Question 6

What is articulation?

Answer 6

describes the linkages between the financial statements
-the income statement links the beginning and ending balance sheet through the retained earnings statement
-the statement of shareholders’ equity links the beginning and ending balances of equity
-statement of cash flows links the beginning and ending balances of cash