Exercise: Big 3 Statement Relationships Flashcards
1
Q
Draw the three financial statements
A
2
Q
How is the income statment related to the cash flow statement?
A
via Net Income
3
Q
How is the cash flow statement related to the balance sheet?
A
- [Cash flow Statement] Change in Cash —–> Cash [Balance Sheet]
4
Q
How does the following impact the big 3 statements?
Customer buys item and pays for it on account
A
Income Statement
Revenue [goes up]
COGS [goes up]
Gross Profit [goes up]
SG&A [no change]
Operating Income (EBIT) [goes up]
Interest Expense [no change]
Taxes [goes up]
Net Income [goes up]
Cash Flow Statement
Net Income [goes up]
Working Capital [goes down]
Operating Cash Flow [probably goes down]
Balance Sheet Statement
Inventory - Down
Expense: COGS: Increased
Accounts Receivable: Increased
Earned Revenue: Increased
