Week 1 - What are Financial Statements

Question 1

What is a financial statement a mechanism for?

Answer 1

A mechanism to establish business confidence

Question 2

What are the three types of financial statement?

Answer 2

• income statement (profit and loss account)
• statement of financial position/balance sheet
• cash flow statement

Question 3

What does an income statement/profit and loss account show?

Answer 3

Shows how much money a company has made over a period of time (normally a year) by showing the sales made, minus the cost of making those sales

Question 4

What is another name for an income statement?

Answer 4

Profit and loss account

Question 5

What is a statement of financial position?

Answer 5

A financial photograph at a moment in time

Question 6

What does a statement of financial position show?

Answer 6

The assets of the companies and its liabilities

Question 7

What does a statement of financial position give us an idea of?

Answer 7

How much a company is worth

Question 8

What is another name for a statement of financial position?

Answer 8

Balance sheet

Question 9

What does the cash flow statement do?

Answer 9

Shows what cash comes into the company and what cash leaves it, and what their position is at the end of the financial year