Financial statements

Question 1

Financial reporting

Question 2

Financial Statement Analysis

Question 3

Balance Sheet

Answer 3

(also known as the statement of financial position or statement of financial condition) reports the firm’s financial position at a point in time

Question 3

The Balance sheet consists of three elements

Answer 3

1. Assets are the resources controlled by the firm
2. Liabilities are amounts owed to lenders and other creditors
3. Owner’s Equity (also shareholder’s equity, shareholder’s funds, or net assets) is the residual interest in the net assets of an equity that remains after deducting its liabilities from its assets

Question 3

Accounting Equation

Answer 3

Assets = liabilities + owners’ equity

Question 3

Capital Structure

Answer 3

The proportions of liabilities and equity used to finance a company are know as the company’s capital structure

Question 4

statement of comprehensive income

Answer 4

Reports all changes in equity except for shareholder
transactions (e.g., issuing stock, repurchasing stock, and paying dividends).

Question 5

Income Statement

Question 5

Elements of the Income statement

Answer 5

Revenues, expenses, and gains and losses.

Question 6

Statement of Changes in Equity

Answer 6

Reports the amounts and sources of changes in equity investors invest in the firm over a period of time

Question 6

Statement of Cash Flows

Answer 6

Reports the company’s cash receipts and payments

Question 6

Statement of Cash Flows are classified as:

Answer 6

• Operating Cash Flows: Include the cash effects of transactions that involve the normal business of the firm
• Investing Cash Flows: Are those resulting from the acquisition or sale of property, plant, and equipment; of a subsidiary or segment; of securities; and of investments in other firms
• Financing Cash Flows: are those resulting from issuance or retirement of the firm’s debt and equity securities and include dividends paid to stockholders.

Question 7

Financial Statement Notes (footnotes)

Answer 7

Include disclosures that provide further details about the information summarized in the financial statements.

Question 7

Footnotes:

Answer 7

• Discuss the basis of presentation such as the fiscal period covered by the statements and the inclusion of consolidated entities
• Provide information about accounting methods, assumptions, and estimates used by management
• Provide additional information on items such as business acquisitions or disposals, legal actions, employee benefit plans, contingencies and commitments, significant customers, sales to related parties, and segments of the firm

Question 8

Management’s Commentary

Answer 8

[also known as management’s report, operating and financial review

Question 9

Management’s Discussion and Analysis (MD&A)

Answer 9

A section of a public company’s annual report or quarterly filing. It addresses the company’s performance. One of the most useful sections of the annual report. It discusses a variety of issues