Far 1 M1 Flashcards
(26 cards)
What is an income statement?
A financial statement that summarizes revenues, expenses, and profits or losses over a specific period.
True or False: The income statement is also known as the profit and loss statement.
True
What are the main sections of an income statement?
Revenues, Expenses, and Net Income.
Fill in the blank: The income statement reports financial performance over a _______.
specific period.
What does net income represent?
The total revenue minus total expenses.
What is the purpose of a balance sheet?
To provide a snapshot of a company’s financial position at a specific point in time.
True or False: A balance sheet lists assets, liabilities, and equity.
True
What are the two main categories of assets on a balance sheet?
Current assets and non-current assets.
Fill in the blank: Liabilities are obligations that a company owes to _______.
external parties.
What does equity represent on a balance sheet?
The residual interest in the assets of the entity after deducting liabilities.
What is comprehensive income?
The total change in equity from transactions and other events and circumstances from non-owner sources
True or False: Comprehensive income includes only net income.
False
What are some examples of items included in other comprehensive income?
Unrealized gains and losses on certain investments, foreign currency translation adjustments.
Fill in the blank: The balance sheet equation is _______ = Assets - Liabilities.
Equity
What is the format of the income statement?
Typically presented in a multi-step or single-step format.
What does gross profit represent?
Sales revenue minus the cost of goods sold.
True or False: Operating expenses are included in the calculation of gross profit.
False
What is the difference between current and non-current liabilities?
Current liabilities are due within one year, while non-current liabilities are due after one year.
What is retained earnings?
The cumulative amount of net income retained in the company rather than distributed as dividends.
What is the significance of the statement of comprehensive income?
It provides a broader view of a company’s financial performance beyond just net income.
Fill in the blank: The income statement typically ends with __________.
Net income or loss.
What is an example of a non-current asset?
Property, plant, and equipment.
What is the purpose of the notes to financial statements?
To provide additional detail and context to the financial statements.
True or False: The balance sheet must always balance.
True
