Preparing Financial Statements Flashcards
What are the four financial statements?
- Income statement
- statement of changes in equity
- balance sheet
- cash flow statement
What does the income statement do?
Lists the company’s revenue and expenses
Revenue - expenses = …?
Net income (NI) AKA Profit
What is the income statement also known as?
Profit & loss statement (P&L statement)
What is listed in the statement of changes in equity?
All of the shareholders’ equity accounts
(Retained earnings & common shares)
What does the statement of changes in equity show?
How much £ in common shares you began with vs how much £ in common shares you ended with
What is the balance sheet for?
Lists the companies assets, liabilities and shareholder’s equity
What is on the left/right in a balance sheet?
Assets of the left
Liabilities & shareholders equity on the right
What is the accounting equation?
Assets = liabilities + shareholders equity
What is the balance sheet also known as?
Statement of financial position (SOFP)
What does the cash flow statement demonstrate?
Cash inflows and cash outflows over a period of time
What is the cash flow statement also known as?
Statement of cash flows (SOCF)
