Financial Statement

Essay by ajohnson0037University, Bachelor'sA, March 2010

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Examining Financial Statements � PAGE \* MERGEFORMAT �1�

Examining Financial Statements Paper

Team C Paper

Victoria Martinez

Tiwana Neely

Karen Wilson

Chuma Lewis

I. Annette Johnson

University of Phoenix

ACC/300: Principles of Accounting


Gene A. Cooper

November 03, 2008



Examining Financial Statements Paper

Landry Restaurant's net income is $45,901. After reviewing the different statements we decided that the Cash Flow Statement sheet explained in more details how the net income was calculated. The components of a cash flow statement is distinct from the income statement and balance sheet because it does not include the amount of future incoming and outgoing cash that has been recorded on credit.

Therefore, cash is not the same as net income, which on the income statement and balance sheet, includes cash sales and sales made on credit. Cash flow is determined by looking at three components by which cash enters and leaves a company; core operations, investing and financing.

Complementing the balance sheet and income statement, the cash flow statement (CFS), a mandatory part of a company's financial reports since 1987, records the amounts of cash and cash equivalents entering and leaving a company. The cash flow statement allows investors to understand how a company's operations are running, where its money is coming from, and how it is being spent.

Measuring the cash inflows and outflows caused by core business operations, the operation component of cash flow reflects how much cash is generated from a company's products or services. Generally, changes made in cash, account receivable, depreciation, inventory, and accounts payable are reflected in cash from operations.

Cash flow is calculated by making certain adjustments to net income by adding or subtracting differences in revenue, expenses and credit transactions (appearing on the balance sheet and income statement) resulting from transactions that occur...