This document discusses key financial statements including the balance sheet, income statement, and statement of cash flows. It provides examples of each statement for a sample company in 2002 and 2001. The balance sheet shows a company's assets, liabilities, and equity at a point in time. The income statement summarizes revenues and expenses over a period of time. The statement of cash flows reports how a company's activities affected cash flow over a given period.

1. BASIC FINANCIAL STATEMENTS

4. Introduction to Financial Statements Describes where the enterprise stands at a specific date . Income Statement Balance Sheet Statement of Cash Flows

5. Introduction to Financial Statements Depicts the revenue and expenses for a designated period of time . Income Statement Balance Sheet Statement of Cash Flows

6. Introduction to Financial Statements Revenues result in positive cash flow. Expenses result in negative cash flow. Either in the past, present, or future.

7. Introduction to Financial Statements Net income (or net loss) is simply the difference between revenues and expenses. Income Statement Balance Sheet Statement of Cash Flows

8. Introduction to Financial Statements Depicts the ways cash has changed during a designated period of time . Income Statement Balance Sheet Statement of Cash Flows

10. A Starting Point: Statement of Financial Position

11. Assets Assets are economic resources that are owned by the business and are expected to provide positive future cash flows.

12. Liabilities Liabilities are debts that represent negative future cash flows for the enterprise.

13. Owners’ Equity Owners’ equity represents the owner’s claim to the assets of the business.

14. The Accounting Equation Assets = Liabilities + Owners’ Equity $300,000 = $80,000 + $220,000