Elements of the accounting statements

Question 1

What are elements?

Answer 1

-Income statement
-Balance sheet
-Cash flow statement
-Change in equity statement
-Notes/disclosure requirement

Question 2

What is the purpose of the income statement

Answer 2

The income statement shows the company’s revenues, expenses, and profits over a specific period (usually quarterly or annually).

Question 3

What is the purpose of the balance sheet

Answer 3

The balance sheet provides a representation of a company’s financial position at a specific point in time, showing what the company owns (assets) and owes (liabilities), as well as the owner’s equity in the company.

Question 4

What is the purpose of the cash flow statement

Answer 4

The cash flow statement shows how changes in the balance sheet and income statement affect cash and cash equivalents, breaking the information into three main activities: operating, investing, and financing.

Question 5

What is the purpose of the change in equity statement

Answer 5

This statement explains the changes in equity over a period, focusing on movements in retained earnings and other equity accounts.

Question 6

What is the purpose of the disclosure requirement

Answer 6

is to ensure that investors and other stakeholders have the information they need to make informed decisions at the end of the fiscal period.