Balance Sheet
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Reports the assets, liabilities and owner’s equity at specific date, usually towards the
end of the month
The heading of the balance sheet identifies the company, financial statement and the
date
Like a snap shot of the company’s financial condition at specific moment in time
Assets are listed at the top, followed by liabilities and owner’s equity
Total assets MUST equal total liability and owner’s equity
The Income Statement
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An income statement presents revenues and expenses for a specific period of time.
The purpose of the income statement is to report the profit or loss during a period of
time.
The income statement is sometimes called the statement of earnings or statement of
operations.
The headings of the statement identify the company, the type of statement and the
time period covered by the statement.
On an income statement revenues are listed first followed by expenses. There are two
columns the left column is for individual values the right is for individual values.
Statement of Owners Equity
Heading(s) (in-order)
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Company’s name
Type of statement (Statement of owners equity)
Date (time period covered by the statement according to the income statement)
You take your net income from the income statement and add it to the investments.
Then subtract Drawings from the total Capital (Investment + Net Income)
Write a concluding statement stating the Initial of first name, full last name, capital, and date
Write total amount on the bottom right corner (double underline)
Statement of Owners’ Equity
1. Summarizes the changes in owner’s equity for a specific period of time
2. The data required in order to prepare the statement of owner’s equity are obtained from
the owner’s equity column.
3. Format: heading of the statement identifies the company, the type of statement, and the
period covered by the statement which is written in the format of the month ended.
4. Statement of Owner’s Equity indicates the reasons why the owner’s equity has increased
or decreased during the time period. For example, a net loss would reduce owner’s equity.
5. Things included in this statement are additional investments, net income, and drawings.
Cash Flow Statements
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Provides information about the cash receipts and cash payments for a
specific period of time.
Reports the following: (1) Cash effects of a company’s operations
during a period, (2) Cash inflows and outflows from investing
transaction (e.g., purchase and sale of capital assets), (3) Cash inflows
and outflow from financing transactions (e.g., borrowing and
repayment of debt),(4) Net increase or decrease in cash during the
period, and (5) Cash amount at the end of the period.
Provides answers to the following questions:
1. Where did the cash come from during the period?
2. What was the cash used for during the period?
3. What was the change in the cash balance during the period?
Increase or decrease (profit) in a company’s cash for a certain period of
time (Monthly).
Summary that incorporates the inflow and outflow of the income
statement, statement of owner’s equity, and balance sheet. (Final
outcome)
Balance Sheet:
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Reports assets, liabilities and owners equity for a specific period of time
Prepared at the month’s end
Heading must identify company, statement and date
A snapshot of the company’s financial condition at the specific moment (usually end
of quarter or year)
Assets are listed at top, followed by liabilities and then owners equity
Assets – liabilities = owners equity
Liabilities + owners equity must equal total assets
Cash Flow Statement:
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Provides info about cash receipts and payments for a specific period of time
Aids creditor and investors
Cash flow statement reports the following
1. Cash effects of a company’s operations during a period
2. Cash inflows/outflows from investing transactions (purchase and sale of
capital assets)
3. The cash inflows/outflows from financing transitions (EX borrowing and
repayment of debt)
4. Net increase/decrease in cash during the period
5. Cash amount at the end of a period
Change in cash is useful because investors/creditors want to know what’s happening
to a company’s money
Inflows is receipts and outflows is payments