Key financial Statements

1. Four types of key financial statements

1. Balance sheet (the only static one)::

1. Show financial postion by showing Assets + Liabilities at a given time
2. Assets = Liability + Equity — Equity = Net Assets

2. Income statement::

1. Also called P&L, show financial performance over a period of time
2. Net income(the bottom line) = Revenue - Expenses

3. Cash flow statement::

1. Cash receipts and payments

4. Satement of change in equity::

1. Amounts and sources of changes in equity investor’s investment

2. Purpose of financial reporting

Provide info about:

1. Financial position(头寸)—static
2. Financial performance — dynamic(during a period of time)
3. Changes in financial position of an entity

3. Purpose of financial reporting analysis

1. To make economic decisions