Financial Statements and Cash Flow Practice

Flashcards covering cash flow statements, income statements, balance sheets, and key financial formulas from the lecture notes.

A key financial statement that shows how cash moves in and out of a business over a period of time is the __________.

Cash flow statement

The three activities reported in a cash flow statement are Operating activities, Investing activities, and __________.

Financing activities

The formula to calculate the closing cash balance is __________.

$$\text{opening balance} + \text{cash inflow} - \text{cash outflow}$$

__________ refers to the ability of a company or an individual to settle short-term liabilities easily and on time.

Liquidity

__________ is the most liquid of assets, while tangible items are less liquid.

Cash

Funds from outside the business consisting of debt and equity are known as __________ sources.

External

In __________'s tax system, interest repayments are treated as a tax deduction.

Australia

The net worth of a company is essentially represented by __________, calculated by subtracting total liabilities from total assets.

Equity

The Income statement is also known as the __________.

statement of financial performance

Costs such as interest, rent, and commission that are not part of main business activities are classified as __________.

Non-operating expenses

The formula for the Cost of Goods Sold is __________.

$$\text{COGS} = \text{Opening stock} + \text{purchases} - \text{closing stock}$$

The figure calculated as sales minus COGS is __________.

Gross profit

The formula to calculate net sales is __________.

$$\text{net sales} = \text{gross sales} - \text{discounts}$$

Net profit is calculated using the formula __________.

$$\text{net profit} = \text{gross profit} - \text{expenses}$$

A financial statement that provides a snapshot of a business’s financial position at a specific point in time is the __________.

Balance sheet

Assets that can be turned into cash within 12 months, such as inventory or accounts receivable, are called __________.

current assets

Liabilities that are due after 12 months, such as long term loans, are classified as __________.

Non-current liabilities

A __________ allows an individual to withdraw money that is not in the account.

Bank overdraft

In the accounting equation, L (Liabilities) is calculated as __________.

$$L = A - OE$$

When the owner takes money, goods, or other assets out of the business for personal use, it is called a __________.

Drawing