Exam 10: Understanding a Firms Financial Statements

Jane is determining the overall financial situation for her business.Since she has to report to a group of investors,she should just give them the income statement.

From her sales income,Barbara has subtracted cost of goods sold,operating expenses,interest expense,and taxes.What she has left is her company's _____ income

Match the term with its definition. a.Cost of goods sold b.Gross profit c.Long-term notes d.Net profits e.Operating profits f.Profit margins g.Profits before taxes h.Total asset turnover -Earnings after operating expenses and interest expenses but before taxes

The terms earnings,profits and income refer to different amounts on the income statement.

To determine his company's net profits,Edward should

Profits reward owners for investing in a company,but they do little to promote future growth.

The income statement answers which question?

The income statement shows a firm's financial position on a specific date.

Compare and contrast the income statement and balance sheet.What is important to know about each statement to determine how a company performed during the year?

What accounts would be included as operating activities and financing activities for an income statement?

Buildings and machinery are considered to be