Ratio Analysis

It measures the ability of the business to pay its current trade payables.

• Solvency

• Liquidity

• Activity

Compute for the company's working capital.

Current Assets = P 30, 000

Current Liabilities = P 15, 000

• P 45, 000

• P 10, 000

• P 15, 000

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the:

• Balance Sheet

• Statement of Retained Earnings

• Statement of Cash Flows

• Statement of Profit or Loss

If total expenses exceed total revenue, a net loss is reported

• True
• False

The Statement of Profit or Loss can be expressed as an equation:

• Income =Income-Expenses

• Revenue-Expenses = Net Profit/Loss

• Revenue + Expenses = Net Profit/Loss

• Expenses = Net Income + Revenue

Examples may include salaries, utilities, rent, insurance, and office supplies.

• Revenue
• Expense
• Net Income
• Net Loss

The sources of money generated by the sale of products or services.

• Revenue
• Expenses
• Net Income
• Net Loss

This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners o the company are entitled to.

• Income Statement

• Statement of Financial Position

• Statement of Cash Flows

• Balance Statement

Assets = Liabilities + Equity

• Statement of Financial Position

• Income Statement

What a company owes to creditors:

• Assets

• Liabilitites

• Equity