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Financial Statements

Financial Statements

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Financial Statements

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  1. Financial Statements A set of Financial Statements consist of four related accounting reports that summarizes the financial resources, obligations, profitabilityand cash transaction of a business in the few pages • Income Statement: Profitability of business • Balance Sheet: Financial resources and obligations • Statement of Owner’s Equity: Obligation of business to Owner • Statement of Cash Flow: Cash Transaction of a Business.

  2. Income Statement A statement that shows the profit or loss of the business for a specific time period. This statement consisting; • Revenue for the accounting period • Expenses for the accounting period

  3. ABC CorporationAdjusted Trial Balancefor the month of March 2009

  4. Income Statement ROBERTS REAL ESTATE COMPANY Income Statement For the month ended March 30th, 2009 ______________________________________________________________ Revenue: Sales commission earned………………………………… $ 10640 Less; Expenses: Advertising expense…………………………… $ 630 Salaries expense………………………….......... 7,100 Telephone expense……………………………. 144 Depreciation expense: building……………… 150 Depreciation expense: office equipment.. 45 (8,069) Net Income……………………………………………………………….. $ 2,571* * It is a part of owner’s equity because is to be paid to owner of the business

  5. Income Statement - 1

  6. Income Statement - 2

  7. Statement of Owner’s Equity This statement shows the obligation of business to its owner. This statement consisting ; • Capital invested by owner • Profit of the current accounting period • Drawings of the owner

  8. ABC CorporationAdjusted Trial Balancefor the month of March 2009

  9. ROBERT REAL ESTATE COMPANYStatement of Owner’s Equityas on March 30th, 2009 Capital: James Robert…….... $ 181,000 Add: Profit for the period........ 2,571* $ 183,571 Less: Drawings: ……………... 2,800 Net Owner’s Equity…….......... $ 180,771 * Form Income Statement

  10. Owner’s Equity Statement

  11. Balance Sheet That statement which shows the financial position of the business on a particular time is called “Balance Sheet”. This statement shows the resources of the business as well as the obligation of the business. Balance sheet consisting; • Assets of the business • Liabilities of the business • Owner’s Equity

  12. ABC CorporationAdjusted Trial Balancefor the month of March 2009

  13. ROBERT REAL ESTATE COMPANYBalance Sheetas on March 30th, 2009 Assets: Cash ………………………………………………………… $ 15,490 Accounts receivable…………………………………..…… 17,890 Land………………………………………………………..…. 130,000 Building…………………………………………. 36,000 Less: Accumulated Depreciation: Building… (150) 35,850 Office equipment…………………………......… 5,400 Less: Accumulated Depreciation: equipment.. (45) 5,355 Total Assets……………………………………………………………. $ 204,585 Liabilities: Accounts Payable…………………………………............... $ 23,814 Owner’s Equity: James Roberts……………………………………………….. $ 180,771 Total Liabilities & Owner’s Equity…………………………….. $ 204,585

  14. Balance Sheet - 1

  15. Balance Sheet - 2

  16. Cash Flow Statement A statement that shows the flow of cash during an accounting period. That how much cash comes in to the business and from which sources? And how much cash goes out from the business and for what purposes? Cash Flow Statement containing three type of activies: • Cash flow from operating activities • Cash flow from investing activities • Cash flow from financing activities

  17. Cash Flow Statement - 1