Kendall MBA 702 - Mod 1-2 Financial
statements
Vital financial statements - answer Income statement, Balance sheet, Cash flow
statements
Income Statement - answer Summarizes a firm's revenues and expenses over a given
period of time.
Balance Sheet - answer Provides a snapshot of a firm's financial position at one point in
time. (at a particular date)
Cash flow statements - answer This summarizes cash inflows (revenues) and cash
outflows (expenses).
The balance sheet includes three main items: - answer assets, liabilities and equity
Assets (A) - answerare resources owned by the firm
Liabilities (L) and owner's equity (E) indicate - answerhow those resources are financed
or,
•A=L+E
Transactions in balance sheets are recorded - answerhistorically, at cost price
So, the book value of an org may be different than the market value
Simple Balance Sheet- Assets: - answereconomic resources the company controls as a
result of past transactions
An org uses its assets to: - answercreate future revenues and original cost of the assets
can be measured reliably.
Liabilities - answerObligations of firm that come from prior transactions and events.
Equity - answerthe residual interest that represent the residual assets after the liabilities
have been paid.
Current assets - answercan be converted into cash in 1 year or less.
Net fixed assets - answeroriginal value of long term assets minus accumulated
depreciation
statements
Vital financial statements - answer Income statement, Balance sheet, Cash flow
statements
Income Statement - answer Summarizes a firm's revenues and expenses over a given
period of time.
Balance Sheet - answer Provides a snapshot of a firm's financial position at one point in
time. (at a particular date)
Cash flow statements - answer This summarizes cash inflows (revenues) and cash
outflows (expenses).
The balance sheet includes three main items: - answer assets, liabilities and equity
Assets (A) - answerare resources owned by the firm
Liabilities (L) and owner's equity (E) indicate - answerhow those resources are financed
or,
•A=L+E
Transactions in balance sheets are recorded - answerhistorically, at cost price
So, the book value of an org may be different than the market value
Simple Balance Sheet- Assets: - answereconomic resources the company controls as a
result of past transactions
An org uses its assets to: - answercreate future revenues and original cost of the assets
can be measured reliably.
Liabilities - answerObligations of firm that come from prior transactions and events.
Equity - answerthe residual interest that represent the residual assets after the liabilities
have been paid.
Current assets - answercan be converted into cash in 1 year or less.
Net fixed assets - answeroriginal value of long term assets minus accumulated
depreciation
