Financial statements

Question	Answer
Why do we have financial statements?	Governments (tax) Managers Shareholders/investors Financial institutions Suppliers/customers
Accounting	Recording and reporting Emphasis on profit Backward looking Historic costs Book values
Financial management (Economics)	Resource allocation Emphasis on cash flow Forward looking Risky possibilities Present values Market values
Financial statements	Balance sheet Profit and loss statement Cash flow statement
Fundamental accounting relationship number one	Revenues - expenses = profit or loss Shows financial flows over period of time
Fundamental accounting relationship number two	Total assets = Total liabilities + equity Defines the balance sheet
Book vs market values	Balance sheet - book not market Book values - backward looking Market values - forward looking

Resource summary

	Created by sarah.novis almost 9 years ago