1. A companys financial statements consist of the balance sheet, income statement, and statement of cash flows. Describe what each statement tells us. (15 pts)

2. What are retained earnings? (10 pts)

3. What is an example of Long Term debt? Why? (10 pts)

4. How do gross profits, operating profits and net income differ? (15 pts)

5 Prepare a balance sheet and income statement for Belmond, Inc, from the following: (50 pts)

Inventory	$5,500
Common Stock	$58,000
Cash	$19,700
Operating Expenses	$1,350
Short-Term Notes Payable	$600
Interest Expense	$750
Depreciation Expense	$500
Net Sales	$15,500
Accounts Receivable	$9,600
Accounts Payable	$5,200
Long-Term Debt	$49,300
Cost of Goods Sold	$6,100
Buildings and Equipment	$123,500
Accumulated Depreciation	$34,000
Taxes	$2,440
General and Administrative Expense	$850
Retained Earnings	?