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  • What can financial statements tell readers?

    Financial statements can be used for just about anything the reader wants them to be used for! Financial statements can tell the reader about the economic resources owned by the company, the solvency and liquidity, as well as their ability to obtain financing. Financial statements also provide a high-level of the operations of the business. […]

  • What are the primary components of the income statement?

    Revenues and expenses are the primary components of financial statements, along with gains and losses. Revenue relates to cash received from customers for products or services sold, while expenses relate to the cash cost to produce the goods and services. The company may also have gains and losses that are not related to revenues and […]

  • What is a balance sheet?

    The balance sheet represents the assets, liabilities, and equity at a point in time (e.g. December 31st, Year 1) and not over a period of time (January 1, Year 1 to December 31st, Year 1). The balance sheet is a key part of a company’s financial statements, along with the income statement and statement of […]