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Answers and Solutions:
3-
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Chapter 3
Financial Statements, Cash Flow, and Taxes
ANSWERS TO END-OF-CHAPTER QUESTIONS
3-1
a.
The annual report is a report issued annually by a corporation to its stockholders.
It
contains basic financial statements, as well as management’s opinion of the past
year’s operations and the firm’s future prospects.
A firm’s balance sheet is a
statement of the firm’s financial position at a specific point in time.
It specifically
lists the firm’s assets on the left-hand side of the balance sheet, while the right-hand
side shows its liabilities and equity, or the claims against these assets.
An income
statement is a statement summarizing the firm’s revenues and expenses over an
accounting period.
Net sales are shown at the top of each statement, after which
various costs, including income taxes, are subtracted to obtain the net income
available to common stockholders.
The bottom of the statement reports earnings and
dividends per share.
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- Spring '08
- Staff
- Balance Sheet, Generally Accepted Accounting Principles, common stockholders, Earnings BeforeInterest
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