Which of the following expenditures is not shown in the statement of financial performance
The three financial statements are the income statement, the balance sheet and the cash flow statement Show
What are the Three Financial Statements?The three financial statements are: (1) the Income Statement, (2) the Balance Sheet, and (3) the Cash Flow Statement. These three core statements are intricately linked to each other and this guide will explain how they all fit together. By following the steps below, you’ll be able to connect the three statements on your own. Key HighlightsThe three core financial statements are 1) the income statement, 2) the balance sheet, and 3) the cash flow statement. These three financial statements are intricately linked to one another. Analyzing these three financial statements is one of the key steps when creating a financial model. Overview of the Three Financial Statements1. Income StatementOften, the first place an investor or analyst will look is the income statement. The income statement shows the performance of the business throughout each period, displaying sales revenue at the very top. The statement then deducts the cost of goods sold (COGS) to find gross profit. From there, gross profit is impacted by other operating expenses and income, depending on the nature of the business, to reach net income at the bottom – “the bottom line” for the business. Key features:
2. Balance SheetThe balance sheet displays the company’s assets, liabilities, and shareholders’ equity at a point in time. The two sides of the balance sheet must balance: assets must equal liabilities plus equity. The asset section begins with cash and equivalents, which should equal the balance found at the end of the cash flow statement. The balance sheet then displays the ending balance in each major account from period to period. Net income from the income statement flows into the balance sheet as a change in retained earnings (adjusted for payment of dividends). Key features:
3. Cash Flow StatementThe cash flow statement then takes net income and adjusts it for any non-cash expenses. Then cash inflows and outflows are calculated using changes in the balance sheet. The cash flow statement displays the change in cash per period, as well as the beginning and ending balance of cash. Key features:
Summary Comparison
How are These 3 Core Statements Used in Financial Modeling?As explained above, each of the three financial statements has an interplay of information. Financial models use the trends in the relationship of information within these statements, as well as the trend between periods in historical data to forecast future performance. The preparation and presentation of this information can become quite complicated. In general, however, the following steps are followed to create a financial model.
More ResourcesWe hope this has been a helpful overview for you of the 3 financial statements. Through financial modeling courses, training, and exercises, anyone in the world can become a great analyst. To continue learning, explore these additional CFI resources:
What are the 5 components of financial statements?The main elements of financial statements are as follows:. Assets. These are items of economic benefit that are expected to yield benefits in future periods. ... . Liabilities. These are legally binding obligations payable to another entity or individual. ... . Equity. ... . Revenue. ... . Expenses.. Which of the following is included within the financial statements?The basic financial statements of an enterprise include the 1) balance sheet (or statement of financial position), 2) income statement, 3) cash flow statement, and 4) statement of changes in owners' equity or stockholders' equity.
Which of the following is not one of the financial statements that must be produced by a public company?Answer and Explanation: Answer: D) The statement of activities. The statements of activities are not one of the statements that a company is mandated to prepare. The statements of activities would indicate the activities that the firm has been engaged in.
What are the 6 basic financial statements?There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders' equity. Balance sheets show what a company owns and what it owes at a fixed point in time.
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