Financial Statements

Question 1

Gross Prodit

Answer 1

Total revenue - COGS

Question 2

COGS

Answer 2

Cost of Goods Sold
-total expenses incurred in manufacturing the goods a business sells
-includes items for resale, raw materials, parts, labor, supplies, and shipping or freight expenses

Question 3

What is the purpose of the balance sheet?

Answer 3

-evaluating a business’ financial position at a specific moment in time
-demonstrates whether a business can meet its current obligations

Question 4

What is the purpose of the Income Statement/P&L Statement?

Answer 4

-provides a summary of a business’s performance over a certain period
-helps identify how the business can improve its performance

Question 5

What is the purpose of the statement of cash flow?

Answer 5

-provide insights into how the business used its cash over a certain period of time

Question 6

Where can you find Net Income?

Answer 6

-calculated on the income statement
-displayed on the statement of equity, and in the equity portion of the balance sheet

Question 7

Where can you find Retained Earnings?

Answer 7

-Calculated on the statement of equity
-displayed on the balance sheet in the equity section