Intro to Financial Statements

Income Statement

A financial statement showing the revenue and expenses for the fiscal period.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Balance Sheet Equation

Assets = Liabilities + Owner's Equity

Current assets include

Cash and other assets to be converted to cash, or sold or consumed in business operations, within one year of the balance sheet date.

debt

Money owed

Current liabilities include

Notes payable, accounts payable, unearned revenues, and accrued liabilities such as taxes, salaries, wages, and interest.

Assets

Resources owned by a business

Net Income

Revenue - Expenses

income tax

Taxes paid to state, federal, and local governments are based on income earned over the past year.

Expenses

The cost of assets consumed or services used in the process of generating revenues.

cash flow

The difference between cash coming in and cash going out of a business

revenue

income

Financial Ratios

relationships determined from a firm's financial information and used for comparison purposes

Cost of Goods Sold

the amount of money a firm spends to buy or produce the products it sold during the period to which the income statement applies

Owner's Equity

the amount remaining after the value of all liabilities is subtracted from the value of all assets

Working Capital

the difference between current assets and current liabilities

Liabilities

what a company owes