ask Team of FUNDAMENTAL ACCOUNTING School of Business Sun Yat-sen University About financial performance during a period(Income Statement) About cash flows(Statement of Cash Flows The financial statements can help you to better understand the performance and position of a business, so that the students can be directed to participate in the in-class discussion on the following topics How well did the company perform (or operate)during the period? 2. Why did the company's retained earnings change during the period? 3. What is the company's financial position at the end of the period? 4. How much cash did the company generate and spend during the period? What Financial Statements Are Required by the GAaPs This section will explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles First of all, to make it clear to the students that some financial statements are required by the regulators, we review the concept of GAAP here. The rules that make acceptable accounting practices are referred to as Generally Accepted Accounting Principles(GAAP). Information presented using these principles is considered to be relevant, reliable, consistent and comparable INCOME STATEMENT A summary of an entity's results of operation for a specified period of time is revealed in the income tatement, as it provides information about revenues generated and expenses incurred. The differences between the revenues and expenses are identified as the net income or net loss This financial statement is use to explain how the income statement reports an enterprises financial performance for a period of time in terms of the relationship of revenues and expenses BALANCE SHEET The balance sheet focuses on the accounting equation by revealing the economic resources owned by an entity and the claims against those resources(liabilities and owners equity). The balance sheet is prepared as of a specific date, whereas the income statement and statement of retained earnings cover a period of time This financial statement demonstrates how certain business transactions affect the elements of the accounting equation: Assets= Liabilities+ Shareholders(Owners) Equity. After learning this, students are supposed to understand how the balance sheet is an expansion of the basic accounting equation Assets: properties or economic resources owned by the business. Common characteristic is the abil to provide probable future economic benefits to the business Liabilities: debts or obligations of a business or claims against assets. A common characteristic is capacity to reduce future assets or to require future services or product Equity: is the owner's claim to the assets or the residual interest in the assets of an entity after deducting liabilities. also called net assets STATEMENT OF CASH FLOWS This financial statement is a bit more complex, detailing an enterprises cash flows, broken downTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University About financial performance during a period (Income Statement). About cash flows (Statement of Cash Flows). The financial statements can help you to better understand the performance and position of a business, so that the students can be directed to participate in the in-class discussion on the following topics: 1. How well did the company perform (or operate) during the period? 2. Why did the company’s retained earnings change during the period? 3. What is the company’s financial position at the end of the period? 4. How much cash did the company generate and spend during the period? What Financial Statements Are Required by the GAAPs? This section will explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles. First of all, to make it clear to the students that some financial statements are required by the regulators, we review the concept of GAAP here. The rules that make acceptable accounting practices are referred to as Generally Accepted Accounting Principles (GAAP). Information presented using these principles is considered to be relevant, reliable, consistent and comparable. INCOME STATEMENT A summary of an entity's results of operation for a specified period of time is revealed in the income statement, as it provides information about revenues generated and expenses incurred. The differences between the revenues and expenses are identified as the net income or net loss. This financial statement is use to explain how the income statement reports an enterprise's financial performance for a period of time in terms of the relationship of revenues and expenses. BALANCE SHEET The balance sheet focuses on the accounting equation by revealing the economic resources owned by an entity and the claims against those resources (liabilities and owners' equity). The balance sheet is prepared as of a specific date, whereas the income statement and statement of retained earnings cover a period of time. This financial statement demonstrates how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Shareholders' (Owners') Equity. After learning this, students are supposed to understand how the balance sheet is an expansion of the basic accounting equation. Assets: properties or economic resources owned by the business. Common characteristic is the ability to provide probable future economic benefits to the business. Liabilities: debts or obligations of a business or claims against assets. A common characteristic is capacity to reduce future assets or to require future services or products. Equity: is the owner’s claim to the assets or the residual interest in the assets of an entity after deducting liabilities; also called net assets. STATEMENT OF CASH FLOWS This financial statement is a bit more complex, detailing an enterprises cash flows, broken down