1. Financial Records and Financial Statements
Chapter 12
Section 2

2. Financial Records Types of Records
Used to record and analyze the financial performance of a business.
Types of Records
Asset Records – name the buildings and equipment owned by the business, their original and current value, and the amt. owed if money was borrowed to purchase the assets

3. Depreciation records - identify the amt
Depreciation records - identify the amt. assets have decreased in value due to their age and use.
Inventory records – identify the type and number of products on hand for sale.
Records of Accounts – identify all purchases and sales made using credit.
Accts. Payable identifies companies where credit purchases were made
Accts. Receivable identifies customers who made purchases using credit

4. Cash Records - list all cash received and spent by the business.
Payroll Records – contain information on all employees of the company, their compensation, and benefits.
Tax Records – shows all taxes collected, owed, and paid.

5. Financial Statements
Three most important elements of a company’s financial strength are its
Assets: what a company owns
liabilities: what the company owes
owner’s equity: the value of the owner’s investment in the business

6. The Balance Sheet
Houses the assets, liabilities, and owner’s equity for a specific date
Prepared every six months or once a year
Left side: list all assets (Current & long-term)
Right side: list liabilities ( Current & long-term) and owner’s equity

7. The Income Statement
Reports the revenue, expenses, and net income or loss from operations for a specific period
Covers a month, six months, or a year