Understanding Balance Sheets

A Balance Sheet shows:

• The financial position of a company at a specific point in time.

• The income and expenses over a period of time.

• The cash inflows and outflows over a period of time.

• The changes in equity over a period of time.

What is included in an Income Statement?

• Assets, Liabilities, and Equity

• Revenue, Expenses, and Net Income

• Cash Flows from Operating, Investing, and Financing Activities

• Budgeted and Actual Figures

What is the purpose of analyzing Ratios in financial statements?

• To assess the financial health of a company

• To calculate tax liabilities

• To determine employee satisfaction

• To forecast weather patterns

What information does a Cash Flow Statement provide?

• Financial position of a company

• Cash inflows and outflows

• Profit and loss details

• Shareholder equity

A balance sheet tells you about:

• The financial position of a company at a specific point in time

• The income and expenses over a period of time

• The cash flow activities of a company

• The market share of a company

Fill in the blank: Liabilities + Net Worth = ________.

• Assets

• Revenue

• Expenses

• Equity

Which of the following is considered an asset?

• Cash

• Accounts Receivable

• Furniture

• All of the above

What are the two categories of liabilities?

• Current liabilities and long-term liabilities

• Fixed liabilities and variable liabilities

• Tangible liabilities and intangible liabilities

• Operating liabilities and non-operating liabilities

True or False: The balance sheet shows income or expenses over a period of time.

• True

• False

What is the total amount of Current Assets for Max Computer Company as of December 31, 2004?

• $500,000

• $750,000

• $1,000,000

• $1,250,000