(a)
A financial statement is the complete record of financial transactions that take place in a company at a particular period of time. It provides important financial information like assets, liabilities, revenues and expenses of the company to its internal and external users. It helps them to know the exact financial position of the company. There are four basic financial statements; they are:
- The income statement: This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a
profit and loss statement. The net income is the excess of revenue over expenses. - The
retained earnings statement: This is a financial statement that shows the amount of net income retained by a company at a particular point of time for reinvestment and pays its debts and obligations. It shows the amount of retained earnings that is not paid as dividends to shareholders. - The balance sheet: This is a financial statement that shows the assets, liabilities, and
stockholders’ equity of a company at a particular point of time. It reveals the financial health of a company. Thus, this statement is also called as theStatement of Financial Position . It helps the users to know about the creditworthiness of a company as to whether the company has enough assets to pay off its liabilities. - Statement of cash flows: This is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financial activities of a company.
Annual Report: It is a comprehensive financial report that shows all the business activities that takes place throughout the previous financial year. Its purpose is to provide the complete financial information of a company’s financial activities to its users in order to help them analyze and take well informed decisions.
To determine: the company’s net income and the time period of measuring it
(b)
the company’s total sales and the time period of measuring it
(c)
the company’s industry
(d)
the names of the four companies of this industry.
(e)
the name of the one of the competitor of A Incorporation, its total sales and net income.
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FINANCIAL ACCOUNTING LOOSELEAF
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- People affected by decisions made by a company, including Investors, creditors, employees, managers, regulators, customers, suppliers, and laypeople, are known as ________. A. quantitative factors B. qualitative factors C. stakeholders D. stockholdersarrow_forwardThe step-by-step process to record business activities and events to keep financial records up to date is ________. A. day-to-day cycle B. accounting cycle C. general ledger D. journalarrow_forwardIdentify the financial statement on which each of the following accounts would appear: the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS). A. Insurance Expense B. Accounts Receivable C. Office Supplies D. Sales Revenue E. Common Stock F. Notes Payablearrow_forward
- Which financial statement shows the financial position of the company? A. balance sheet B. statement of owners equity C. statement of cash flows D. income statementarrow_forwardThe three heading lines of financial statements typically include which of the following? A. company, statement title, time period of report B. company headquarters, statement title, name of preparer C. statement title, time period of report, name of preparer D. name of auditor, statement title, fiscal year endarrow_forwardList the three basic questions that must be answered when analyzing the effects of a business transaction on the accounting equation.arrow_forward
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