Accounting

Question 1

How do the three accounting statements flow together?

Answer 1

Net income from income statement flows into shareholders equity on the balance sheet and into the top line of the cash flow statement

Changes to balance sheet appear as working capital changes on the cash flow statement

Investing and finance activities affect balance sheet items

Question 2

If I could only choose one statement to assess the health of a company, which one would I choose?

Answer 2

Cash flow state,met because it gives the true picture of the cash you’re actually generating.

Question 3

If I could look at two statements what would they be?

Answer 3

Income statement and balance sheet because from these two you can create the cash flow statement (assuming you have at least a two year comparative balance sheet)

Question 4

Where does net income from the income statement flow?

Answer 4

Shareholder’s equity on the balance sheet

Top line (cash from operations) of the cash flow statement

Question 5

Changes on the balance sheet flow where?

Answer 5

Net working capital on the cash flow statement

Question 6

Ending cash from the cash flow statement flows where?

Answer 6

Current assets on balance sheet