Chapter
1
Financial
Statements
and
Decisions
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA
Charles W Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA
Cynthia J. Rooney, Ph.D., CPA
McGraw­Hill/Irwin
Copyright © 2014 by The McGraw­Hill Companies, Inc. All rights reserved.
The
Accounting
System
1­2
The
Four
Basic
Financial
Statements
BALANCE SHEET reports the amount of assets, liabilities, and
stockholders’ equity of an accounting entity at a point in time.
INCOME STATEMENT – reports the revenues less the expenses of the
accounting period.
STATEMENT OF STOCKHOLDERS’ EQUITY – reports the changes in
each of the company’s stockholders’ equity accounts, including the
change in the retained earnings balance caused by net income and
dividends during the reporting period.
STATEMENT OF CASH FLOWS – reports inflows and outflows of cash
during the accounting period in the categories of operating, investing,
and financing.
1­3