The Basic Financial Statements

a. Most businesses prepare an income statement, balance sheet, statement of cash flows, and statement of changes in owners’ equity. The members of your investment club have raised a number of questions about one of the stocks that was purchased last year. For each of the following, indicate which financial statement would contain the information needed.

1. What was the revenue from the business’s sales last year?

2. Was the business profitable last year?

3. Does the company have its own production facilities?

4. What kind of claims are there against the company’s assets?

5. How much cash did the business generate last year?

6. Have the business’s profits been increasing or decreasing?

7. What was the amount of dividends distributed to stockholders last year?

b. Who provides most of the accounting information to decision makers? How often is it provided?