Fed Financial
Can someone help explain to me about financial statements?
I am interested in accounting and I know the four financial statements, but I am confused on them. What I'm wondering is if anyone can explain the components of cash flow statement, balance sheet, income statement, and the owner equity statement? Also can you explain what they tell about a buisness? I really want to understand this more and I need more detailed information. Can anyone help please?
Public Comments
- Balance Sheet is a snapshot of the company in time, meaning as of this given day - this is what assets we have (e.g. cash, property, equipment, whatever) versus what liabilities we have (bills to pay), and what the difference is (owner's equity). Hopefully equity is a positive number. Basically it's what will remain when you take all of your cash and other assets and pay off everyone to whom you owe anything. Income Statement is different. It is supposed to show how much profit (or loss) the company made over some period of time. E.g. this our revenue from sales, these were our expenses for producsts, and human resources, and profit (income) or loss is what's left. Cash flow statement shows what has been happening with your cash resources over some period of time - e.g. you get cash from your sales directly or through accounts receivable, then you pay it out on your expenses, then maybe you take a salary for yourself, and in the end when you account for everything , you should arrive at the cash number you have on your balance sheet. It's similar to balancing your checkbook. Hope this helps.
