Flashcards: Fundamentals of Financial Statements and Business Structures — 16 cards

Business forms — liability?

Corporations have limited liability; sole proprietorships have unlimited.

Financial managers — primary goal?

Maximize shareholder value by increasing stock price.

Financial statements — components?

Income statement, balance sheet, cash flow statement, statement of equity.

Balance sheet — structure?

Assets = liabilities + equity at a specific date.

Income statement — key elements?

Revenues, expenses, net profit.

Cash flow categories?

Operating, investing, financing activities.

Statement of equity — purpose?

Shows changes in owners' equity over time.

Financial statements — interrelation?

Net income affects retained earnings; cash flows link to operations.

Liability types — short-term?

Due within one year, e.g., accounts payable.

Net profit — impact?

Increases retained earnings, affects equity.

Cash flow from operations?

Cash generated from core business activities.

Balance sheet — at a point?

Snapshot of assets, liabilities, and equity.

Income statement — over period?

Details revenues and expenses to show profit or loss.

Assets — examples?

Cash, accounts receivable, inventory, fixed assets.

Liabilities — examples?

Accounts payable, long-term debt.

Equity — components?

Share capital, retained earnings, reserves.