Question

What are the most important financial statements used by an entrepreneur?

Answer 1

Answer:

1. Income Statement

2. Balance Sheet

3. Statement of owner's equity (If it is a corporation)

4. Cash flow statement

Explanation:

1. Income statement: A financial statement showing the revenues and expenses of a particular firm or a company in a specific period is an income statement. An entrepreneur knows the gross profit, net income from the operation, tax expenses. If it is a corporation, an entrepreneur can get the idea of earnings' per share as well.

2. Balance Sheet: A financial statement representing the total assets and total liabilities, and owner's capital is known as the balance sheet. The balance sheet includes current assets, non-current assets, current liabilities, long-term liabilities, and owner's equity. The income statement is prepared for an accounting period where the Balance sheet is prepared for a specific date.

The other important financial statements are -

3. If the firm is a publicly held or privately held corporation, the statement of owners' equity is needed. It shows the beginning balance, retained earnings, and dividend paid by the company.

4. Cash flow statement: A financial statement showing the cash inflow and outflow are called cash flow statement.