Financial Statements

Financial Statements

Exercise 7-1

1. The total assets are: $500,015.61

2. The total capital is: $318,987.48

3. Indicate the amount of net income or (net loss) for the month of March: (3,152.55)

4. The current month’s gross profit is: $64,719.54

5. The current month’s total expenses are: $67,872.09

The company’s total assets are what the company owns at a certain time and helps the investors and creators in seeing whether a company is financially health or not. The capital of the company reveals to the investors how much common shares there is and how much capital is being paid out and how much capital the company is holding back in retained earnings.

The information that comes from the income statement reveals to the users the activity of the business. The gross profits and the total expenses are important because the gross profit and total expenses gives the net income or loss for this certain accounting period.

Exercise 7-2

1. The current month’s net cash provided by operations is: $35,193.42

2. The year-to-date’s net cash provided by operations is: $4,974.22

3. The cash balance at end of period for the current month is: $35,193.31

4. The beginning retained earnings balance is: $189,037.60

5. The ending retained earnings balance is: $213,987.48

The information that comes from the statement of cash flows is important to the users because the statement of cash flows reveals where the cash comes from, what the funds were used for and the overall changes in cash for this certain accounting period.

The statement of retained earnings is important because the statement of retained earnings reveals the lifetime earnings and all the losses and dividends of that the business has.