Table Of Contents

1.  Introduction

2. The Income Statement

3. The Balance Sheet

4.  The Statement of Cash flow

5. Conclusion

             Introduction

    Hi! My name is Mary! For me, today is a special day. My father is an accountant and promised to take me on a trip today. Let's get started!

    He promised to tell me more about accounting. Wow, that sounds interesting.

            The Income Statement

Are you prepared? Get ready... set... go!

Our journey has begun. The income statement was our first stop. "Don't forget to take notes," Dad advised.

    "So, why do companies require income statements?" I began our conversation.

    "Well, businessmen use them to track their income over time."

    "Wow! That sounds very useful! "However, what do they write in there?"

    "It's actually quite easy to understand."    

We'll pass through all of the necessary components on our way. So, here's the grand total. I work for "The Sweets Bakery," as you are aware. In this case, the total revenue would be the money earned from selling the delectable items.

Then we need to deduct the cost of this (like the money the company spent to sell it, i.e., sugar and flour). That is how we arrive at the gross profit.

It's not disgusting! It just doesn't  contain tax!

Now comes the most painful part: deducting all operating expenses, such as store rent. We'll be given the total operating profit or loss.

Finally, just add the money you got from ongoing operations and the events that will never happen again. Voila! That's the end: we got  the Net income!"

              Question 1: 

What is the first line on the income statement?

a) Net income

b) Gross profit

c) total revenue

d) How much ice cream was sold

 The Business Statement

The next morning, we awoke to see a HUGE mountain.

"What exactly is it?" I inquired.

"This is the Business Statement, and we're climbing it today!" But first, you'll need to brush up on your vocabulary.

ASSETS: Everything a company owns.

LIABILITIES: everything a company owes.

Let's take a look at what's inside. Begin with the current assets. It's basically the money in my wallet: I can use it whenever I want!

The non-current assets. That's pretty strange: how can you own something not currently? In business language, it'S just something you own that you can't get actual money from quickly. For                                         example, it can be our house: we                                               can't sell it in 5 minutes                                               and get money to                                                         buy something,                                                                 but we STILL own it.

Yes! Excellent work! We made it halfway up the mountain while I was talking! Are you ready for the second block? Ok! We now proceed to the current liabilities. "What do you believe it is?"

"Well, it's similar to the current assets... Perhaps these are the liabilities that must be paid out within a year or something?"

“Precisely! It includes loans for small items such as televisions, as well as possibly food and inventory.

Non-current liabilities, on the other hand, are not required to be paid in a year. Again, houses are a good example: many people take out 15-30 year mortgages on their homes.

You are absolutely incredible! You made it to the top of the mountain despite the difficult journey! Typically, businesses can include stockholder equity: the profit made over the course of the business's history and the initial capital it possessed."