Page 47 - Finance for Non-Financial Managers

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Finance for Non-Financial Managers
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Balance sheet An item-
difference between the
ized statement that sum-
carrying value of the
marizes the assets and the available information. The
liabilities of a business as of a given assets and that of the lia-
date, usually the end of a month, a bilities is the equity inter-
quarter, or a year. est accruing to the owners
of the company. The bal-
ance sheet will be discussed in detail in Chapter 3.
The Income Statement
The income statement recaps all of the activities of a company
intended to produce a profit. It shows the amount of sales, all
the costs incurred in making those sales, and all the overhead
costs incurred in running the operations of the company so it
would be able to deliver on its promises to customers. This
statement goes by various names, including income statement,
profit and loss (P&L) statement, statement of income and
expenses, operating statement, etc. In this book we’ll call it the
income statement, but
keep in mind that your
Income statement An company may call it
accounting of revenue, something different. All
expenses, and profit for a
companies that keep their
given accounting period, usually a
month, quarter, or a year. accounting records on the
Also known as income statement, traditional accrual method
profit and loss (P&L) statement, state- produce a statement simi-
ment of income and expenses, and lar to this. The income
operating statement. statement will be dis-
cussed in Chapter 4.

Statement of Cash Flow
The income statement shows activities that were recorded with
accrual basis accounting. However, companies that keep their
books using accrual accounting still will have transactions that
do not appear on the income statement, usually involving the