Terms

Profit: financial again.

Gross Income: profit before all taxes or expenses have been paid.
Net Income: profit after all expenses and taxes have been paid.
Asset: things a company owns.
Liability: things a company owes.

Financial Statements
Balance sheet:
● Statement of the assets and liabilities (everything company owns and owes).
● Assets= liabilities + owners’ equity

●
● Short term liabilities (under 1 year): Credit bills
● Long term liabilities (over 1 year): mortgage debt
Examples:
● Cash
● Accounts receivable
● Inventory
● Land
● Bulidings
● Machines

Income statement:
● Yearly report (what did they make).
● Primarily focuses on the companies revenue and expenses during a particular period.
● Provides detail about a companies operations, efficiency, and performance.
● Revenues: assets created through business activities.
● Expenses: assets consumed through business activities
● Net Income: revenues
Examples:
● Car loan
● Savings account
● Company equity
● Macbook
Cash flow statement:
● Money being transferred in and out.
● Inflows a company receives from ongoing operations
● Crucial for day-to-day operational management
● T- chart set up
● Revenie and expenses for the time requires (usually daily)