Three Essential Financial Statements

Question 1

What are the three essential financial statements?

Answer 1

Income statement
Balance sheet
Statement of cash flows

Question 2

It shows you how profitable your business was over a given reporting.

It shows your revenue minus your expenses and losses.

Answer 2

Income statement

Question 3

Summarizes the results of the firm’s operations over a period of time

Answer 3

Income statement

Question 4

Income statements are prepared for different time periods usually: __,___&___

Answer 4

Monthly quarterly and annually

Question 5

Formula for operating income

Answer 5

Revenue-operating expenses= operating income

Question 6

Formula for net income before extraordinary items

Answer 6

Operating income-financial expenses-taxes= net income before extraordinary items

Question 7

Single step formula

Answer 7

Net income=(revenue+ gains)-(expenses+ losses)

Question 8

It describes the assets, liabilities, and equity of the firm at a specific point in time

Answer 8

Balance sheet

Question 9

These are the tangible or intangible things that the firm owns

Answer 9

Assets

Question 10

These are the firms debt

Answer 10

Liabilities

Question 11

Difference between what the firm owns and what it owes to others

Answer 11

Equity

Question 12

__ is specific to point in time, it is much like a photograph

Answer 12

Balance sheet

Question 13

The balance sheet is usually depicted in two sections

Answer 13

assets section — top or left side

liabilities and owners equity section — bottom or right side

Question 14

Two types of assets

Answer 14

Current assets
Fixed assets

Question 15

Two types of liabilities

Answer 15

Current liabilities
Long-term liabilities

Question 16

Formula of equity

Answer 16

Assets-liabilities= equity

Question 17

Long lived real asset

Answer 17

Fixed asset

Question 18

Short-lived assets

Answer 18

Current assets

Question 19

Investments in securities and assets of other firms

Answer 19

Financial investments

Question 20

Assets which are not physical, like patents and trademarks

Answer 20

Intangible assets

Question 21

Short term liabilities of the firm

Answer 21

Current liabilities

Question 22

It outlines the sources of the firm’s cash inflows and shows where the cash outflows went.

Answer 22

Statement of cash flows

Question 23

Activities that bring cash into the firm are referred to as____

Answer 23

Sources of cash

Question 24

Activities that take cash out of the firm are referred to as____

Answer 24

Uses of cash

Question 25

Formula for statement of cash flow

Answer 25

Beginning cash balance
+ cash inflows (sources)
- Cash out flows (uses)
________________________
= ending cash balance

Question 26

Three branches of statement of cash flow

Answer 26

Cash flow from operations
Cash flow from investing
Cash flow from financing

Question 27

This is the net cash flow from operations after taxes and interest expenses

Answer 27

Cash flows from operation

Question 28

This includes divestiture and acquisition of real assets (capital expenditures) and disposal and purchase of financial assets.

Also includes acquisitions of other firms.

Answer 28

Cash flows from investing

Question 29

Net cash flow from the issue and repurchase of equity, from the issue and repayment of debt and after dividend payments

Answer 29

Cash flows from financing