Financial Statements

What are the three key financial statements that guide a business to financial health?

Balance Sheet, Income Statement, Cash Flow Statement

What does a Balance Sheet represent?

A statement of the financial position of a business at a particular point in time.

What are the three main components of a Balance Sheet?

Assets, Liabilities, and Owners' Equity

What do assets represent in a Balance Sheet?

What the business owns.

What do liabilities represent in a Balance Sheet?

What the business owes.

What does owners' equity represent in a Balance Sheet?

Who owns what percentage of the business.

What is the purpose of an Income Statement?

To report a company's financial performance over a specific accounting period.

What is another name for an Income Statement?

Profit and Loss Statement or P&L

What does the Income Statement summarize?

How the business incurs its revenues and expenses through operating and non-operating activities.

What does a Cash Flow Statement show?

The movement in the cash account of a company, including cash inflows and outflows.

What are the three activities of business represented in a Cash Flow Statement?

Operating, Investing, and Financing activities.

What key question does a Balance Sheet answer?

What is owned, what is owed, and what is our net worth?

What key questions does an Income Statement answer?

How much money did we bring in, how much did we spend, and how much did we keep?

What key questions does a Cash Flow Statement answer?

When will money flow in and when will money flow out?

What is included in the assets section of a Balance Sheet?

Current Assets and Fixed Assets.

What is included in the liabilities section of a Balance Sheet?

Current Liabilities and Long-term Liabilities.

What are examples of current assets?

Cash, Accounts Receivable, Inventory, Prepaid Expenses.

What are examples of current liabilities?

Accounts Payable, Salaries Payable, Taxes Payable.

What is net income as shown in an Income Statement?

The total revenues minus total expenses.

What does the Cash Flow Statement track?

Cash flows from operating, investing, and financing activities.

What is the significance of the Cash Flow Statement?

It helps assess the liquidity and financial flexibility of a business.

What does 'net cash provided by operating activities' indicate?

The cash generated from the core business operations.

What does 'net cash used for investing activities' indicate?

The cash spent on investments in long-term assets.

What does 'net cash provided by financing activities' indicate?

The cash received from or paid to investors and creditors.