Lesson 2

• Financial statements


  Formal records of the financial activities and position of a business, person, or other entity
• Financial statements


  • Provide an overview of the financial performance and financial position of an entity
  • Typically prepared at the end of an accounting period, such as a fiscal quarter or year
• Main types of financial statements


  • Income Statement (Profit and Loss Statement)
  • Balance Sheet
  • Cash Flow Statement
  • Statement of Changes in Equity
• Income Statement (Profit and Loss Statement)


  Summarizes the revenues, expenses, gains, and losses incurred by an entity during a specific period, typically a fiscal quarter or year
• Revenue


  Referred to as gross sales; the money your business earns by selling the product
• Profit


  Referred to as the amount your business has after accounting for all the expenses during a time. It is calculated by deducting expenditures from revenue
• Income


  Calculated by deducting all the expenses spent by a firm. It is the actual amount of money earned in that time period