1. GAAP PowerPoint #4

2.  A formal record of the financial activities of a business  Includes four basic financial statements: ◦ Balance Sheet (Statement of Financial Position) ◦ Income Statement (Statement of Comprehensive Income) ◦ Statement of Cash Flows ◦ Statement of Changes in Equity

3.  Reports a company’s financial position/condition at a given point in time  Reports on: ◦ Assets ◦ Liabilities and ◦ Equity  Details about cash in bank, amounts owed to creditors, and value of company’s assets.

4.  Reports on a company’s income and expenses over a given period of time  Reports on ◦ Revenue (income) ◦ Expenses  Shows a company’s profit or loss over a given period of time

5.  Reports on a company’s cash flow activities into and out of the business from: ◦ Operating Activities ◦ Investing Activities and ◦ Financing Activities  Shows how changes in the balance sheet and income statement affect cash and cash equivalents

6.  Reports the changes in the company’s equity throughout the reporting period  Reports ◦ profit or loss from the company, ◦ dividends paid, and ◦ other items that are debited/credited to retained earnings

7.  Explain the purpose of the Balance Sheet.  Explain the purpose of the Income Statement.  Explain the purpose of the Statement of Equity.  Explain the purpose of the Statement of Cash Flows.