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BASIC FINANCIAL STATEMENTS - Coggle Diagram
BASIC FINANCIAL STATEMENTS
Cash Flow statements
It is one of the three key financial statements that report the cash generated and spent during a specific period of time (e.g., a month, quarter, or year). The statement of cash flows acts as a bridge between the income statement and the balance sheet by showing how money moved in and out of the business.
Operating Activities
The principal revenue-generating activities of an organization and other activities that are not investing or financing; any cash flows from current assets and current liabilities.
Direct Presentation
Operating cash flows are presented as a list of cash flows; cash in from sales, cash out for capital expenditures, etc. This is a simple but rarely used method, as indirect presentation is more common.
Indirect Presentation
Operating cash flows are presented as a reconciliation from profit to cash flow.
Financing Activities
Any cash flows that result in changes in the size and composition of the contributed equity capital or borrowings of the entity (i.e., bonds, stock, dividends)
Investing Activities
Any cash flows from the acquisition and disposal of long-term assets and other investments not included in cash equivalents
Balance Sheets
A balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity.
Liabilities are amounts of money that a company owes to others.
Assets are things that a company owns that have value.
Shareholders’ equity is sometimes called capital or net worth.
ASSETS = LIABILITIES + SHAREHOLDERS' EQUITY
A company's assets have to equal, or "balance," the sum of its liabilities and shareholders' equity.
A company’s balance sheet is set up like the basic accounting equation shown above. On the left side of the balance sheet, companies list their assets. On the right side, they list their liabilities and shareholders’ equity.
A balance sheet shows a snapshot of a company’s assets, liabilities and shareholders’ equity at the end of the reporting period. It does not show the flows into and out of the accounts during the period.
Statements of Shareholders' Equity.
Statement of shareholders’ equity reports the changes in the value of shareholders’ equity or ownership interest in a company from the beginning of an accounting period to the end of it.
Preferred stock
A special ownership stake in the company that provides holders with a higher claim of a company’s earnings than common stockholders. They have a higher claim to dividends or asset distribution.
Common stock
Represents ownership in a company. Stockholders possess voting rights about company decisions, such as electing a board of directors and voting on policies.
Additional paid-in capital
This is the excess amount of the par value that investors pay for a stock.
Retained earnings
These are the total accumulated earnings of a company after it has distributed dividends to its shareholders.
Treasury stock
When a company repurchases its issued stock, it reports it under treasury stock.
Accumulated other comprehensive income(loss)
Reports gains/losses on the revaluation of certain assets or liabilities, “unrealized gains or losses”.
Non-Controlling Interests
Also known as minority interests, these are the share of ownership in a subsidiary’s equity not owned or controlled by the parent company.
It gives investors more transparency about the changes in equity accounts and reports the business activities that contribute to the movement in the value of shareholders’ equity.
It is a financial document that a company issues as part of its balance sheet, and it gives investors information about why accounts have changed.
Income statements
An income statement is one of the three important financial statements used for reporting a company’s financial performance over a specific accounting period. The other two key statements are the balance sheet and the cash flow statement.
Revenue and Gains
The following are covered in the income statement, though its format may vary, depending upon the local regulatory requirements, the diversified scope of the business, and the associated operating activities.
Operating Revenue
Revenue realized through primary activities is often referred to as operating revenue.
Non-Operating Revenue
Revenue realized through secondary, noncore business activities is often referred to as nonoperating, recurring revenue.
Gains
Also called other income, gains indicate the net money made from other activities, like the sale of long-term assets.
Expenses and Losses
A business's cost to continue operating and turning a profit is known as an expense. Some of these expenses may be written off on a tax return if they meet Internal Revenue Service (IRS) guidelines.
Primary-Activity Expenses
These are all expenses incurred for earning the average operating revenue linked to the primary activity of the business.
Secondary-Activity Expenses
These are all expenses linked to noncore business activities, like interest paid on loan money.
Losses as Expenses
These are all expenses that go toward a loss-making sale of long-term assets, one-time or any other unusual costs, or expenses toward lawsuits.
Net Income = (Revenue + Gains) - (Expenses + Losses)