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The Four Key Financial Statements, Chapter 2 UNDERSTANDING FINANCIAL…
The Four Key Financial Statements
Balance Sheet
A balance sheet is prepared as soon as the income statement is completed
current liability
long term
debt capital
equity
other asset
preferred Stockholders
fixed asset
common Stockholders
current asset
Statement of Retained Earnings
It shows the amount of net
earnings (income) reinvested
(retained) in the business
Retained earnings (inappropriate profit) are funds reinvested in the business over a period of years and these funds are not usually held in the form of cash but invested in other assets (eg: machinery, equipment) of the company.
Statement of Retained Earnings for The Year Ended Dec 31,
2019
Balance of RE Dec 31,2018
(+) EAT 2019
(-) Dividend Payment 2019
Balance of RE Dec 31,2019
Statement of Cash Flows
It provides a summary of the cash flows over the period of concern
Cash flow from investing activities
Cash flow from financing activities
Cash flow from operating activities
Income Statement
The income statement
measures performance over
a specific period of time
Interest Expense
Income Taxes
Operating Expenses
Preferred Stock Dividends
Cost of Goods Sold
Chapter 2
UNDERSTANDING FINANCIAL STATEMENTS
SALES