1. Why do businesses produce financial statements?
2. What are the four financial statements typically produced by a company?
3. On which financial statement would one find revenues and expenses?
4. What is a gain?
5. How does a gain differ from a revenue?
6. What is a loss?
7. How does a loss differ from an expense?
8. Why are revenues and expenses reported separately from gains and losses?
9. What three items are typically listed at the top of a financial statement?
10. Define “cost of goods sold.”
11. Define “gross profit.”
12. How do companies determine if a cost is an expense or an asset?
13. Define “conservatism.”
14. Explain why dividends are not reported on the income statement.
15. What are retained earnings?
16. Define “capital stock.”
17. On which statement would assets and liabilities be reported?
18. What differentiates a current asset from a noncurrent asset?
19. Give the accounting equation and explain why it is true.
20. What are the three categories of cash flows on the cash flow statement?
21. How do operating, investing and financing cash flows differ from one another?