tailieunhanh - Lecture Financial accounting (15/e) - Chapter 2: Basic financial statements

After completing this unit, you should be able to: Explain the nature and general purpose of financial statements; explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles; explain how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation;. | Basic Financial Statements Chapter 2 Chapter 2: Basic Financial Statements Describes where the enterprise stands at a specific date. Income Statement Balance Sheet Statement of Cash Flows Introduction to Financial Statements The balance sheet (also referred to as the statement of position) describes the financial position of a company at a specific point in time. A balance sheet may be prepared monthly, quarterly, or annually depending on the needs of management and external users. The balance sheet is sometimes referred to as the statement of financial position. Depicts the revenue and expenses for a designated period of time. Income Statement Balance Sheet Statement of Cash Flows Introduction to Financial Statements Net income is defined as the excess of revenues over expenses. Financial statements begin with a three-line title comprised of the company name, the name of the statement, and the period covered by the report. The income statement lists revenues and expenses that were incurred over a period of time. Most companies prepare monthly income statements. In the long-run, revenues will generate positive cash inflows to the company and expenses will result in negative cash flows to the company. Just remember, revenues and expenses that appear on the income statement may not always produce cash flows in the current accounting period. Net income (or net loss) is simply the difference between revenues and expenses. When revenues exceed expenses, the result is net income. When expenses exceed revenues, the result is a net loss. Depicts the ways cash has changed during a designated period of time. Income Statement Balance Sheet Statement of Cash Flows Introduction to Financial Statements The statement of cash flows will be covered in detail in a later chapter. The statement of cash flows is divided into three major sections: (1) cash flows from operating activities; (2) cash flows from investing activities, and (3) cash flows from financing activities. | Basic Financial Statements Chapter 2 Chapter 2: Basic Financial Statements Describes where the enterprise stands at a specific date. Income Statement Balance Sheet Statement of Cash Flows Introduction to Financial Statements The balance sheet (also referred to as the statement of position) describes the financial position of a company at a specific point in time. A balance sheet may be prepared monthly, quarterly, or annually depending on the needs of management and external users. The balance sheet is sometimes referred to as the statement of financial position. Depicts the revenue and expenses for a designated period of time. Income Statement Balance Sheet Statement of Cash Flows Introduction to Financial Statements Net income is defined as the excess of revenues over expenses. Financial statements begin with a three-line title comprised of the company name, the name of the statement, and the period covered by the report. The income statement lists revenues and expenses that