Balance Sheet

A balance sheet, also called a statement of financial position, is a report of the organization's
financial situation at a particular point in time. It lists the entity's assets, liabilities and owners'
equity. It is called a balance sheet because it reports the balance or amount in each asset, liability
and owners' equity account.

Income Statement
The income statement details the entity's operating performance during a specific period of time,
known as the accounting period, displayed at the top of the statement. In this income statement
for Global Grocer, the accounting period is the month of September 2014.

The income statement lists the revenues earned and expenses incurred during the period;
subtracting expenses from revenues results in the measurement of net income for the period.

Statement of Cash Flows

The statement of cash flows details the sources and uses of cash by the entity over an accounting
period. For the convenience of financial statement users, the statement of cash flows is organized
by type of business activity: operating, investing and financing.

Operating Activities
Business activities directly related to the delivery of goods and services that
generate revenues and expenses in the income statement (including paying off
interest).
Investing Activities
Business activities that relate to the purchase and sale of long-lived assets.
Financing Activities
Business activities related to the raising or retiring of debt, new issues or
repurchases of equity, and the payment of cash dividends.

Assets
To be recorded as an asset, an economic resource must meet four requirements:
Acquired at measurable cost

Obtained or controlled by the entity

Expected to produce future economic benefits
Arises from a past transaction or event
Current assets include cash and those assets that are expected to be converted into cash or
consumed within 12 months of the balance sheet date. Non-current assets are assets that are
expected to provide economic benefits for periods longer than a year.

Liabilities
A liability represents an obligations of the entity to other parties. To be recorded as a liability, an
obligation must meet three requirements:
It involves a probable future sacrifice of economic resources by the entity
The economic resource transfer is to another entity
The future sacrifice is a present obligation, arising from a past transaction or event
Current liabilities are obligations that are expected to become due within 12 months of the
balance sheet date. Non-current liabilities are obligations that are expected to become due more
than 12 months past the balance sheet date.

Debits and Credits

T-Accounts Debits on LEFT, Credits on RIGHT

Cash Flows