biws rough draft

1. Walk me through the 3 financial statements.

The Income Statement gives revenue and expenses, ending at Net Income. The Balance Sheet shows Assets (Cash, Inventory, PP&E), Liabilities (Debt, Accounts Payable), and Shareholders' Equity — Assets must equal Liabilities plus Shareholders' Equity. The Cash Flow Statement starts with Net Income, adjusts for non-cash expenses and working capital changes, then lists investing and financing activities, ending at the net change in cash.

2. Can you give examples of major line items on each of the financial statements?

3. How do the 3 statements link together?

4. If I were stranded on a desert island, only had 1 statement and I wanted to review the overall health of a company – which statement would I use and why?

6. Walk me through how Depreciation going up by $10 would affect the statements.

7. If Depreciation is a non-cash expense, why does it affect the cash balance?

8. Where does Depreciation usually show up on the Income Statement?

9. What happens when Accrued Compensation goes up by $10?

10. What happens when Inventory goes up by $10, assuming you pay for it with cash?