Financial Statement Prediction and Evaluation of Future
- Formal record of the Financial Activities Cash Flow
and Position of a Business, Person, or
Other Entity. Assets: the properties of a business entity
- Usually prepared by a Company's (ex. cash, inventory)
Management, Investors, Lenders, Liabilities: present "debts" or monetary
Employees, Tax Authorities and obligations of a business. (Payables)
Government to present the Financial Capital/Drawings - The assets invested by
Performance and Position. owner = capital, withdraw by owner =
drawings
Projected Financial Statement Expense: costs incurred by a business in
- are detailed descriptions of a Company’s the process of earning revenue.
Operations and Prospects for the Upcoming (Salaries/wages)
Year. Income: earnings generated from business
activities, like sale of goods or services.
Balance Sheet (Sales revenue)
- is a Financial Statement that summarizes
a Company's Assets, Liabilities and Business organizations: Sole
Shareholders' Equity at a specific point in proprietorship, partnership, corporation
time.
Statement of Comprehensive Income
Income Statement (SCI) record results from performance of
- Also called Profit and Loss Account is one business operations. “ Income Statement”,
of the Financial Statements of a Company presents a company's total earnings over a
and shows the Company's Revenues and specific period, combining both net income
Expenses. Helpful to know about and other comprehensive income. Revenue
Company's Financial Condition. Ascertain and Cost and Expenses. accounts are
the earning capacity or profitability. To know called nominal accounts, at the end of the
the solvency of an organization. year, they will be closed to Income and
Expenses Summary accounts.
Projected Income Statement
- Income Statement is a Statement which is Statement of Changes in Equity
prepared to know Profit or Loss of the “Capital Statement”. the details of the Equity
Business. account in the Balance Sheet. The balance
of the Equity portion of the Statement of
Cash Flow Statement Financial Position must have the same
- is a Financial Statement that shows how balance with the Statement of Changes in
changes in Balance Sheet Accounts and Equity. shows the movements of the capital
Income affect Cash and Cash Equivalents, account of the owners. composed of capital
and breaks the analysis down to Operating, invested by the owners and net income or
Investing and Financing Activities. net loss of the company.
The Cash Flow Statement organizes and shows the changes in a company's capital
reports the cash generated and used in the or owner’s equity over a specific period. It is
following categories - important for understanding how a
1. Operating: cash generated or used in business's financial position evolves due to
day-to-day business operations. investments, profits, losses, and
2. Investing: cash used for or received from withdrawals.
investments in assets. (Selling or buying)
3. Financing: funding the business through - Statement dated "for the
debt or equity. year-ended".
- The report shows a reconciliation of
Projected Cash Flow Statement the beginning and ending balance of
is a key aspect of Financial Management of the equity accounts.
a Business, Planning its future cash - Summarizes the equity transactions
requirements to avoid a crisis of Liquidity. with the owners of the business that
Objectives of Cash Flow Statement occurred during the year.
Measure of Cash, Generating Inflow of Includes:
Cash, Classification of Activities,
1. Beginning investment: the balance
of capital balance carried forward
from the previous year.
2. Additional investment: some owners
invest additional assets to finance
the operation of their business.
3. Owner's drawings: are capital
withdrawal usually in cash. Personal
use
4. Net income or Net loss: is closed to
the equity account. Income earned
will form part of the capital of the
owner that could be personally
withdrawn or as an additional fund to
the business operation. If it is a net
loss, the equity will suffer for the
loss.