Insider Claims Of A Business

Question: asset

Answer: An economic resource that is expected to benefit future operations

Question: owner’s equity

Answer: Represents the insider claims to the assets held by the owners of the business.

Question: liabilities

Answer: The outsider claims to the assets of a business

Question: income statement

Answer: Reports revenues and expenses of the year, and net income or net loss

Question: statement of retained earnings

Answer: Opens with the beginning retained earning balance, adds net income (or subtracts net loss), subtracts dividends, reports the retained earnings balance at the end of the year

Question: balance sheet

Answer: Reports assets, liabilities, and stockholders’ equity at the end of the year. Reports that assets=liabilities+stockholders’ equity, and retained earnings

Question: statement of cash flows

Answer: Reports cash flows from operating, investing, and financing activities. Each category results in net cash provided or used. Reports whether cash increased or decreased during the year, shows ending cash balance

Question: financial statement that covers a period of time

Answer: Income statement; statement of cash flows

Question: The valuation of assets on the balance sheet is generally based on

Answer: historical cost

Question: The primary objective of financial reporting is to provide information

Answer: useful for making investment and credit decisions