Financial Statements and Cash Flow

Topic

Financial Statements and Cash Flow

Instructions

1. Explain the importance of the balance sheet and income statement in financial decision making.
2. Describe the difference between average and marginal tax rates.
3. Identify the sources and uses of cash represented on the statement of cash flows.

Answer preview

A balance sheet clearly demonstrates what a business organization owns as well as what it owes via the date listed. In addition to this, a balance sheet demonstrates this information in terms of the company’s liabilities, assets and equity. It is clear that liabilities are payments which business organizations need to make. On the other hand, income statements provide business organizations with tools for better decision making.

Word count: 256