Question

False QUESTION 5 Name and describe the four primary financial statements for a corporation Make sure to include the period of time for each statement. TT TT Paragraph Arial 3 (12pt) %DOQO T 'T. 25. - - - - 3x Mashups - © Align Full EEEEEEE IN HTML CSS Path:p QUESTION 6 May 23 Cash 22.000 Common St 22nd

Answer 1

The four primary financial statements are – balance sheet, income statement, cash flow statement and statement of shareholder’s equity.

• Balance sheet – This financial statement provides detailed information about a company’s assets, liabilities and shareholder’s equity. It shows what a company owns and what it owes at a fixed point in time. There is no time period for balance sheet as balance sheets are presented for a specific point in time and not for a period. For instance if a company’s financial year ends on 31^st December then its balance sheet will be as on 31^st December.
• Income statement – This financial statement presents the revenues, expenses, and profits/losses that are generated during the reporting period. The income statement presents the operating results of a company. The time period for income statement is the reporting period. For income statement in quarterly report it will be three months and for income statement in annual report it will be one year.
• Cash flow statement – This statement shows the cash inflow and outflow that has occurred during the reporting period. This statement breaks down the cash inflow and outflow into cash from operating activities, from investing activities and from financing activities. This statement’s time period is also the reporting period (just like the income statement). For cash flow statement in quarterly report it will be three months and for income statement in annual report it will be one year.
• Statement of shareholder’s equity – This statement is also known as the statement of retained earnings. This statement provides information with regards to movement in owner’s equity over a period. It will show changes in equity during a period due to different elements like share capital issued, payment of dividends, repurchase of shares, changes due to reported profit/loss. Like income statement and cash flow statement the statement of shareholder’s equity is also for the reporting period. It is usually prepared for a period of one year.