DQ1 WK5 - In what ways does the statement of cash flows...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
In what ways does the statement of cash flows relate to the balance sheet and income statement? The most important three financial statements include the, income statement balance sheet, and  statement of cash flows. The balance sheet is a snapshot of a company's financial health at a fixed point in time, covering  assets and liabilities. You can tell a great deal about a company just from looking at its balance  sheet. Note that, unlike the other statements, the balance sheet does not cover a period of time.  Instead, it reflects a company's condition  at one moment in time . The balance sheet is divided into three parts. 1. Assets Assets are items that can provide a future economic benefit to the firm. In many cases,  assets represent what is used to generate revenues, without which profits would not be  possible. 2.   Liabilities Liabilities are claims that different parties have on the assets of a firm. In other words,  these are IOUs. The key thing to keep in mind is that the company has already received  some kind of benefit, and the creation of a liability represents something that hasn't yet  been fully paid for. For instance, a company may still owe its suppliers for items purchased in the past. These IOUs  are known as accounts payable. Likewise, it may owe its own employees for wages that haven't 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/27/2010 for the course ACCT 230 taught by Professor Yates during the Winter '09 term at Arizona.

Page1 / 2

DQ1 WK5 - In what ways does the statement of cash flows...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online