Module 2: Financial Statements

Question 1

What is a Financial Statement?

Answer 1

• Periodic report showing results of business operations and financial condition of company

Question 2

What is an Income Statement?

Answer 2

• Displays financial results of an entity within a reporting period
• Consists of Revenue and Expenses
• Revenue-Expenses=Income

Question 3

What is a Statement of Financial Position?

Answer 3

• Displays financial status of an entity.
• Asset = Liabilities + Owner’s Equity
• Consists of assets, liabilities, and equities

Question 4

What is a Statement of Changes in Equity?

Answer 4

• Displays additions and withdrawals of equity as well as income (loss)
• Capital+Income-Drawing
• Consists of Capital, Net Income and Drawing

Question 5

What is a Cash Flow Statement?

Answer 5

• Inflows and outflows of cash of a company
• Refers to the operating, investing, and financial activities done

Question 6

What is Notes to Financial Statement?

Answer 6

• Accompanies the main financial statement
• Provide detailed explanations, descriptions, and context to help understand the financial statements