📌 The balance sheet is a snapshot at a specific date, whereas the income statement is a film covering a period and cash flow tracks actual money entering and leaving the business.
📐 Formula - The balance sheet must satisfy .
📐 Formula - The income statement calculates .
📌 Revenue is not cash received, and profit is not cash: a company can make a profit while lacking cash or hold cash while making a loss.
A photo for the balance sheet, a film for the income statement, and flowing coins for cash.
1. Which description correctly distinguishes the balance sheet, income statement, and cash flow statement?
2. A company reports a profit this year but has not yet collected several major customer invoices; what does this situation demonstrate?
3. How does depreciation affect a fixed asset and cash after the asset has been purchased?
What equation must the balance sheet satisfy?
Assets equal Liabilities plus Equity.
How is profit calculated on the income statement?
Profit equals Revenue minus Expenses.
What does depreciation reduce on the balance sheet?
The carrying value of a fixed asset.
What percentage of cumulative positive pre-tax income is corporate tax in the course model?
25%.
What formula calculates net fixed-asset value?
Net value equals gross fixed assets minus accumulated depreciation.
What does runway measure in cash metrics?
The number of months before cash is exhausted.
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