The Income Statement. It shows a business’s sources of income as well as the expenses it has incurred over a given time period that is being examined. The difference between the total incomes of the business and its expenses gives its net profit. The main aim of a business is to maximize its profit. The importance of an income statement therefore is to help in making an analysis of how the different decisions the business makes affect its level of profitability. The Cash flow Statement. It
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Chapter 01 Financial Statements and Business Decisions True / False Questions 1. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. True False 2. Assets on the balance sheet are recorded at market value or replacement cost. True False 3. In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other
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The Four Financial Statements In accounting there are four statements used to display a business’s finances. They are the income statement, retained earnings statement, balance sheet, and statement of cash flows. These charts interconnect to each other to show a specified amount of time. Without one of them, an accountant cannot see accurately the state of a business. Accountants are not the only people who find this information useful. Internal and external users can find the information
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Chapter 01 Financial Statements and Business Decisions True / False Questions 1. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. True False 2. Assets on the balance sheet are recorded at market value or replacement cost. True False 3. In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other
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How are the income statement and statement of cash flows used to make business decisions? The income statement reflects the company’s financial performance by showing how much money was generated (revenue), how much was spent (expenses), and the difference (profit) between the two over a period of time. It is divided into the operating and non-operating sections. It can also tell how much money shareholders would receive if the company were to distribute all of its net earnings. The cash flow
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In today’s society, businesses and organizations complete various financial statements that will inform management, creditors, and investors of its financial status. Corporations complete financial statements, such as the income statements, balance sheets, retained earnings statement, and statement of cash flows on a monthly or annually basis. Financial statements must indicate true, accurate, and precise information according to the rules and regulations mandated by the United States of America
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Business Analysis 11 By Gloria Rodriguez MTG/521 December 5, 2011 Analyzing a business environment like Chevron’s is important, so that investors can determine if Chevron is a company one can invest in. Researching a company’s business environment is helpful to further secure business decisions. Careful consideration must be taken, and a closer review of historical financial statements is suggested to determine the company’s financial health. One way to determine a company’s health is by
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the business world is tied in with numbers in the form of accounting and financial statements. Able to understand and properly use these statements is a critical component in truly knowing a business and properly assessing its total performance. In the accounting world there are four main financial statements commonly understood and prepared for most corporations and many small and medium-sized businesses: the income statement, the balance sheet, the statement of cash flows, and the statement of
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The Consolidated Statements of Earnings or the income statement tells financial statement users that there was a decrease in gross profit and net sales for the fiscal year 2008. The Consolidated Statements of Earnings show that the closing of underperforming stores, removal of new store openings from the pipeline, and staff reductions in many Home Depot projects resulted in $951 million in pretax charges. The difference profit and net sales is also a cause of fiscal year 2008 being 52 weeks and
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* Background * A business is a continuous economic activity carried out to earn profit through: * Production and sales of goods and services to customers * Generating and rendering services * It may be- Manufacturing, Merchandising/Trading Companies, Services or Hybrid companies. * Business Organizations will be of different forms- Sole Proprietorship , Partnership Firm, Joint Stock Company and Others like cooperative, non-profit making etc. * Such organizations need to
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