Chapter 1, Problem 12QS

To determine

Concept Introduction:

Income Statement: An income statement is a financial report that shows the financial performance of a business entity during a particular time period. Income statements are prepared by assessing the income and expenditure of the operating and non-operating activities. It shows the net profit or net loss of the business entity during the assessment period.

Balance Sheet: A balance sheet is a statement which presents the financial position of a business entity during a particular time period. Balance sheets provide details of the business entity such as its financial structure and status i.e. assets, liabilities, capital, income, expenditure etc.

Statement of owner’s equity: The statement of owner’s equity is mostly prepared by a sole proprietorship to present the changes in the capital investment of the individual/owner/proprietor during a particular time period. Generally, the income earned is added to the opening balance and the owner’s drawings are subtracted which results in the closing balance in the capital account.

Statement of cash flows: The statement of cash flows records and presents how the cash and cash equivalents are affected by changes in the balance sheet and income. It assesses the changes in the operating, investing and financing activities. It records and presents the inflow and outflow of cash and cash equivalents.

To identify: The items of income statement, balance sheet, statement of owner’s equity and statement of cash flows.