2-6 Financial Statements

Question 1

What is Step 7 of the Accounting Cycle?

Answer 1

Prepare Financial Statements

Question 2

What is the order in which financial statements are prepared?

Answer 2

1. Income Statement
2. Statement of Stockholder’s Equity
3. Balance Sheet

Question 3

Income Statement

Answer 3

Reports revenue and expenses

Summarizes the profits/losses of a company over a specific period of time

Question 4

Statement of Stockholder’s Equity

Answer 4

Summarizes the changes in Retained Earnings and Common Stock
Changes in Retained Earnings that are reported in the Statement of Retained Earnings are captured in the Statement of Stockholder’s Equity

Question 5

Balance Sheet

Answer 5

Summary of ending balances of assets, liabilities, and stockholders equity (including retained earnings) AT A POINT IN TIME

Question 6

Statement of Comprehensive Income

Answer 6

Reports the changes in stockholder’s equity not resulting from transactions with owners for a period of time

Question 7

Statement of Cash Flows

Answer 7

Reports and classifies changes in cash over a period of time as operating activities investing activities, or financing activities