Unit11FinancialStatements

Ⅰ.BalanceSheetⅡ.IncomeStatementⅢ.CashFlowStatement

2FinancialStatementsForabusinessenterprise,alltherelevantfinancialinformation,presentedinastructuredmannerandinaformeasytounderstand,arecalledthefinancialstatements.TheytypicallyincludefourbasicfinancialstatementsBalancesheet:referredtoasstatementoffinancialpositionorcondition,reportsonacompany'sassets,liabilities,andownershipequityataspecifictime.Incomestatement:referredtoasProfitandLossstatement(ora"P&L"),reportsonacompany'sincome,expenses,andprofitsoveraperiodoftime.Statementofretainedearnings:explainsthechangesinacompany'sretainedearningsoverthereportingperiod.Cashflows

Statement:reportsonacompany'scashflowactivities,particularlyitsoperating,investingandfinancingactivities.3Forlargecorporations,thesestatementsareoftencomplexandmayincludeanextensivesetofnotestothefinancialstatementsandmanagementdiscussionandanalysis.Notestofinancialstatementsareconsideredanintegralpartofthefinancialstatements.Allthefinancialstatementsarebuilttobeusedtogethertopresentacompletepictureofacompany’sfinance.4Purposeoffinancialstatements"Theobjectiveoffinancialstatementsistoprovideinformationaboutthefinancialposition,performanceandchangesinfinancialpositionofanenterprisethatisusefultoawiderangeofusersinmakingeconomicdecisions."Reportedassets,liabilitiesandequityaredirectlyrelatedtoanorganization'sfinancialposition.Reportedincomeandexpensesaredirectlyrelatedtoanorganization'sfinancialperformance.Financialstatementsshouldbeunderstandable,relevant,reliableandcomparable.5Financialstatementsareintendedtobeunderstandablebyreaderswhohave"areasonableknowledgeofbusinessandeconomicactivitiesandaccountingandwhoarewillingtostudytheinformationdiligently."Financialstatementsmaybeusedbyusersfordifferentpurposes.

Ownersandmanagersrequirefinancialstatementstomakeimportantbusinessdecisionsthataffectitscontinuedoperations.Financialanalysisisperformedonthesestatementstoprovidemanagementwithamoredetailedunderstandingofthefigures.Theyarealsousedaspartofmanagement'sannualreporttothestockholders.

6Employeesneedthesereportsinmakingcollectivebargainingagreements(CBA)withthemanagement,inthecaseoflaborunionsorforindividualsindiscussingtheircompensation,promotionandrankings.Prospectiveinvestorsmakeuseoffinancialstatementstoassesstheviabilityofinvestinginabusiness.Financialanalysesareoftenusedbyinvestorsandarepreparedbyprofessionals(financialanalysts),thusprovidingthemwiththebasisformakinginvestmentdecisions.Financialinstitutions(banksandotherlendingcompanies)usethemtodecidewhethertograntacompanywithfreshworkingcapitalorextenddebtsecurities(suchasalong-termbankloanordebentures)tofinanceexpansionandothersignificantexpenditures.

7Governmententities(taxauthorities)needfinancialstatementstoascertaintheproprietyandaccuracyoftaxesandotherdutiesdeclaredandpaidbyacompany.Vendorswhoextendcredittoabusinessrequirefinancialstatementstoassessthecreditworthinessofthebusiness.Mediaandthegeneralpublicarealsointerestedinfinancialstatementsforavarietyofreasons8CaseFruitJuice&SugarDiversifiedproducts,suchaspowergeneration,jetengines,medicaltechnologiesandservicesMilk9Ⅰ.BalanceSheet10Assets=Liabilities+Owner’sequityThebalancesheetisthefundamentalandbackboneofthewholeaccountingandreportingsystem.Itprovidesasnapshotofthebusiness’sfinancialposition,suchasassets,liabilitiesandowner’sequityataspecifictime.

111.FunctionsofBalanceSheet(1)Evaluatingandpredictingshort-termsolvencyofabusiness

Solvencymeansthefinancialabilityofacompanytopaydebtswhentheybecomedue.(2)Evaluatingandpredictingcapitalstructureandlong-termsolvencyLong-termsolvencyofabusinessisdeterminedbybothitsprofitabilityandcapitalstructure.122.FormatofBalanceSheetThebalancesheethastocontain:NameofthebusinessNameofthefinancialstatementDateofthereportThefinancialitemsitreflectsHuntningtonGalary

Balancesheet

December31,200913Assets,Liabilitiesandowner’sequityarelistedonabalancesheet,andaccordingtotheirliquidity,theitemsaresubcategorizedandlistedseparately.14151617181920Ⅱ.IncomeStatement21Profit=Revenues-Expenses

Incomestatementisasummaryoftheoperatingresultsofabusinessforanaccountingperiod.Itprovidesinformationaboutrevenuesgeneratedandexpensesincurred.Thedifferencebetweentherevenuesandexpensesisidentifiedasthenetincomeornetloss.22(1)Evaluatingtheprofitabilityofabusiness

Fromincomestatement,wecanknowwhetherthecompanyisprofitableinthisperiodandbycomparingthemindifferentperiods,wecanknowwhetherthecompanyhasbetterprofitability.(2)Evaluatingthesolvencyofabusiness

Solvencyisalsodeterminedbyprofitability.

(3)Facilitatingdecision-makingManagementgetsaclearideaofrevenues,expensesandprofitsandtherelationshipamongthem,andthencanmakebetterdecision.(4)EvaluatingmanagementperformanceIncomestatementindicatestheoperatingefficiency,whichfinallyreflectsthemanagementperformanceofabusiness.1.FunctionsofIncomestatement232.FormatofincomestatementTheincomestatementhastocontain:NameofthebusinessNameofthefinancialstatementPeriodofthereportThefinancialitemsitreflectsHuntningtonGalary

IncomeStatement

FortheyearendedDecember31,200924252627Ⅲ.CashFlowStatement28Thecashflowstatementshowstheinflowsandoutflowsofcashandcashequivalentsduringacertainaccountingperiodasaresultofoperating,investing,andfinancingactivitiesoftheenterprise.cash-basisaccounting291.FunctionsofCashflowstatement(1)Clearlyvisualizethecashmovementsinthebusinessoveraperiodoftimeandenablebetteruseofcash.(2)Evaluatethechangesinnetassetsofabusinessandevaluateitsfinancialstructurewhenconsideredtogetherwithbalancesheetandincomestatement.(3)Facilitateassessmentoftheabilityofabusinesstogeneratecash.(4)Itisthebasisoffinancialanalysisandbudgets.302.Contentofcashflowstatement(1)OperatingactivitiesOperatingactivitiessh