Chapter 1: Types of Financial Statements and their Important Terms

Question 1

This statement presents the revenues and expenses and resulting net income or net loss over a specific period of time.

Answer 1

Income Statement

Question 2

This statement summarizes the changes in owner’s equity for a specific period of time.

Answer 2

Changes in Owner’s Equity/ Owner’s Equity

Question 3

This statement reports the assets, liabilities, and owner’s equity at a specific date.

Answer 3

Statement of Financial Position/Balance Sheet

Question 4

This statement summarizes the information about the cash inflows (receipts) and outflows (payments) over a specific period of time.

Answer 4

Statement of Cash Flows

Question 5

What is the basic accounting equation?

Answer 5

ASSETS= LIABILITIES + OWNER’S EQUITY

Question 6

These are the resources the business owns and needs to generate economic benefits and services, eventually resulting to cash inflows.

Answer 6

Assets

Question 7

These are the claims against the business’ assets, referring to the owner’s current obligations from past transactions that may/will result to outflow of cash or resources in the future.

Answer 7

Liabilities

Question 8

These are the owner’s investments into the business. This is also known as the owner’s claim on the assets.

Answer 8

Owner’s Equity