Key Financial Statements in Business

Statement of financial position (Balance sheet), Income statement (Profit and Loss account), and Statement of cash flows.

Revenues, cost of goods sold, expenses, and highlights the total profit or loss during a particular time period.

To provide a summary of money coming in and going out of the firm, tracking a company's receipts and cash payments.

<p>Revenue measures the inflow of economic benefits, while cost of sales measures the cost of producing a good or service.</p> Signup and view all the answers

<p>Depreciation is an attempt to measure the portion of the cost of a non-current asset that has been depleted in generating revenue during a particular period.</p> Signup and view all the answers

<p>The fundamental accounting equation is Assets = Liabilities + Equity. It is the basis for the balance sheet.</p> Signup and view all the answers

<p>Current liabilities are typically due in one year or less, whereas non-current liabilities are not due for one year or longer.</p> Signup and view all the answers

<p>Liquidity ratios measure a firm's ability to turn assets into cash to pay its short-term debts.</p> Signup and view all the answers

<p>The formula for the current ratio is current assets / current liabilities. A higher ratio indicates a safer investment, as it suggests that the firm has sufficient assets to cover its short-term debts.</p> Signup and view all the answers

<p>The acid-test ratio measures a firm's ability to pay its short-term debts using its most liquid assets, such as cash, accounts receivable, and market securities.</p> Signup and view all the answers

<p>Leverage ratios measure the degree to which a firm relies on borrowed funds in its operations.</p> Signup and view all the answers

<p>Performance ratios are used to evaluate a firm's ability to generate earnings from its operations.</p> Signup and view all the answers

<p>Raising and investing funds for the business.</p> Signup and view all the answers

<p>To meet the accounting needs of all users except managers.</p> Signup and view all the answers

<p>A summary of all the financial transactions that have occurred over a particular period.</p> Signup and view all the answers

<p>Owners, lenders, and managers.</p> Signup and view all the answers

<p>Management accounting meets the needs of managers, while financial accounting meets the needs of all users except managers.</p> Signup and view all the answers

<p>To ensure that the information is prepared for the intended purpose and user.</p> Signup and view all the answers