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