monitoring and controlling Flashcards
what are the three financial statements
income statement
cash flow statement
balance sheet
what is the purpose of financial statements
financial statements are an essential tool for monitoring and controlling business practices
who uses financial statements
business owners, managers, investors and shareholders all use a financial statement to check a business’s vitality
define a balance sheet
summarises the assets, liabilities and equity in a business at a given time(a snapshot of a given period/time)
what is the formula for a balance sheet
A = L + E
what is the accounting equation
A = L + E
define the income statement
summarises the income earned and expenses incurred by a business over a period of time
how to calculate COGS
sales - gross profit
how to calculate sales
cogs + gross profit
how to calcualte gross profit
sales - cogs
how to calculate net profit
gross profit - expenses
how to calculate expenses
gross profit - net profit
define a cash flow statement
a cash flow statement records the movement of cash receipts and payments within a business over a period of time
what is the three categories of the cash flow statement
cash flows from operating activities
cash flows from investing activities
cash flows from financing activities
