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level: Understanding Financial Statements

Questions and Answers List

level questions: Understanding Financial Statements

QuestionAnswer
What does GAAP stands for?Generally Accepted Accounting Practice
What is the other name as the P&L?Income Statement
Name the 3 financial statements?1) Income Statement 2) Balance Sheet 3) Cash Flow Statement
What is the difference of a Calendar Year and Fiscal Year?Calendar Year is Jan - dec Fiscal Year is any 12 months
Revenue - Cost of Revenue (COGS) = ?Gross Profit
Gross Profit - Expenses = ?Operating Revenue
What does SG&A stands for?Sales, General Expenses and Admin
Operating Revenue - Taxes = ?Net Income / The Bottom line
What is the Income Statement?It is a year at a glance
If the Income statement is "a year at a glance" of the company, what is the balance sheet?The Balance Sheet is like the Entire Health of a company
What does the Balance Sheet documents?it documents the AGGREGATED Wealth of a company
Give one other word for a Balance Sheet?Statement of Financial Position
What does the Balance balance?Assets = Liabilities + Owner Equities
Give 7 examples of Assets?1) Cash / Cash Equivalent 2) Receivables 3) Inventories 4) Equipment 5) Building & Lands 6) Intangibles 7) Intellectual Property
There are 2 ways to list Assets. What are they and what are the difference1) Current Assets - Can be converted into cash in 12 months or less 2) Non - Current Assets - Useful asset with a life of more than a year (illiquid)
Give 4 examples of Liabilities?1) Payable 2) Mortgages 3) Debt 4) Taxes
How can Liabilities be listed and what is the difference?Current Liabilities: Thoses due within 1 year Non Current Liabilities: Those dues in more than a year
What is Equity )min. 2)?1) It is the book value of the company 2) It is what the amount of cash the shareholders would receive after all assets sold and all liabilities paid 3) It is the left over for the shareholders if the company was liquidated
How many types of Equity there is and what are they?1) Capital Stock (Initial Investment) 2) Paid in Capital 3) Retained Earnings
What is Capital Stock?Initial Value assigned to the share at creation
What is another word for Initial Value?Par Value
What is often the Initial Value / Par Value amount per share at creation?$0.1/share
What is Paid In Capital?Additional Monies collected above par value (initial value) from selling stock to fund the company
What are Retained Earning?Net Income ACCRUED after dividends since the company existence
What should be the Retained Earnings doing ideally?They should be increasing
What is another word for Shareholder Equity?Book Value of the company?
What is another word for the Book Value of the company?The Shareholder Equity
Give an example of treasury stocks?Buy Backs
What does the cash flow statement tracks?ti tracks the use of cash during the same year period as the Income Statement
How many sections are there in the Cash Flow Statement and what are they?1) Operating Cash Flow 2) Investing Cash Flow 3) Financing Cash Flow
What does the Income Statement determine (2 things) ?1) The income the company must report for tax purpose 2) Show the Net Income after taxes
What are the 2 things the Cash Flow Statement shows?1) Where the cash was spent 2) Reports the start / finish change in cash
Explain the 3 different types of cash flow?1) Operating Cash flow - Operation of the company 2) Investing Cash flow - Long term asset (building, cars...) 3) Financing Cash flow - Bank loans for investment
What is Common Stock Payment?Buy Backs
Give 3 examples of what to find in Financing Cash flow?1) Repayment or Issuance of debt 2) Common Stock Payments (buy back) 3) Cash dividends paid