Understanding Financial Statements: A Student's Guide
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11 cards
Question: What are the three main financial statements?
Answer: Income Statement, Balance Sheet, Cash Flow Statement.
Question: What does the Income Statement show?
Answer: Profitability.
Question: List the typical line items found on an Income Statement from the content.
Answer: Revenue; Cost of sales; Gross profit; Operating expenses; Depreciation; Interest expense; Tax; Net profit.
Question: What does the Balance Sheet show?
Answer: What the farmer (or company) owns and owes.
Question: Name asset items listed on the Balance Sheet in the content.
Answer: Land; Machinery; Licensure; Inventory; Cash; Accounts receivable.
Question: Name liability and equity items listed on the Balance Sheet in the content.
Answer: Liabilities: Loans; Accounts payable. Equity: Owned capital; Retained earnings; Shared capital.
Question: What are the three sections of the Cash Flow Statement?
Answer: Operating activities; Investing activities; Financing activities.
Question: When you buy a tractor for cash, how does the Balance Sheet change?
Answer: Machinery increases; Cash decreases.
Question: When you buy a tractor for cash, how does the Income Statement change immediately?
Answer: No immediate expenses except future depreciation.
Question: When you buy a tractor for cash, how does the Cash Flow Statement change?
Answer: Shows an investing outflow.