WGU C214 Financial Managment Topic 2

Accounting - ansis backward-looking and risk free Finance - ansis forward-looking and involes massive uncertainty Income Statement - ans- show results of operation over time; - revenues - expenses = net income - Think of the income statement as a video camera tracking performance for a period. - usually regarded as the most difficult to analyze and interpret. Balance Sheet - ans- a "snap shot" of a firm's assests & financing at a paticular point in time - viewed as a still shot of what the firm has at one particular moment. - Assets= Liabilities + Owner's Equity Statement of Cash Flows - anstracks all cash in and out of the firm Cash Accounting - anscash in =revenue cash out=expense Accrual Accounting - ans- revenues are recognized when the earnings process is complete; - expenses are "matched" to recongized revenues