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Business Finance Quarter 1 module 1

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BSED English (BLAW 2019, English 3)

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Cebu Roosevelt Memorial College

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SOUTHERN MASBATE ROOSEVELT COLLEGE, INC.

KATIPUNAN, PLACER, MASBATE

GRADE 12

Module 1

Prepared by: SHIELA MAE GONZALES

Subject Teacher

 BASIC FINANCIAL STATEMENTS

This section discusses the four basic financial statements and the kind of information that can be found and generated from each report.

STATEMENT OF FINANCIAL POSITION OR BALANCE SHEET

The Statement of financial position is the new name that the International Accounting Standards Board ( IASB) suggested for the “balance sheet” since 2009 to better reflect the kind of information found in the financial report. This financial report provides information regarding the liquidity position and capital structure of a company as of a given date. For example, if a company reported a cash of Php 1 500 000 as of December 31,2014, this cash balance may no longer be the same. More cash may have been received from sales or interest income or cash may have been spent for operating expenses on January 1,2015. Liquidity refers to the ability of a company to pay maturing obligations. The current assets of a company are compared with its current liabilities to determine its paying capacity.

STATEMENT OF PROFIT OR LOSS OR INCOME STATEMENT

The statement of profit or loss or otherwise known as income statement provides information regarding the revenues or sales, expenses, and net income of a company over a given accounting period. This accounting period may be a for a month, a quarter, or a year. The income reported by a company is not that useful if the accounting period is not stated. In analyzing earnings performance, a comparison with the previous periods and with other companies, especially those coming from the same industry, is a must. Such comparison will not be made possible without knowing the accounting periods covered in the statement of profit or loss.

STATEMENT OF CASH FLOWS

The statement of cash flows provides an explanation regarding the change in cash balance from one accounting period to another. The cash flow are also classified into three main categories: operating, investing, and financing. The statement of cash flow is a very important financial statement because it provides information regarding the quality of earnings of a company as shown in the cash flows from operating activities.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY This financial statement provides information that explains the changes in the stockholders’ equity account from one accounting period to another. The changes may be due to the following:

Profit or Loss for the accounting period
Cash dividend declaration
Issuance of new shares of stocks

CHAPTER 2

REVIEW of FINANCIAL STATEMENT PREPARATION, ANALYSIS, AND INTERPRETATION

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