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Understanding Financial Statements

Understanding Financial Statements - in the following...

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Understanding Financial Statements The financial statements shown on the next several pages are for a  sole proprietorship,  which is a  business owned by an individual. Corporate financial statements are slightly different. The four basic  financial statements are the income statement, statement of owner's equity, balance sheet, and  statement of cash flows. The income statement, statement of owner's equity, and statement of cash  flows report activity for a specific period of time, usually a month, quarter, or year. The balance sheet  reports balances of certain elements at a specific time. All four statements have a three-line heading 
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Unformatted text preview: in the following format: Income statement . The income statement , which is sometimes called the statement of earnings or statement of operations, is prepared first. It lists revenues and expenses and calculates the company's net income or net loss for a period of time. Net income means total revenues are greater than total expenses. Net loss means total expenses are greater than total revenues. The specific items that appear in financial statements are explained later....
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