Keep track of the firm’s performance

Managers within the firm, as well as the firm’s owners and lenders, keep track of the firm’s performance by reviewing its financial statements - income statement, balance sheet, and statement of cash flows.
• What is the purpose of the income statement? Identify the major types of expenses that are shown on the typical income statement.
• What is the purpose of the balance sheet? Identify the major types of assets and the claims of creditors and owners shown on the typical balance sheet.
• What are the three different accounts that comprise the owners’ equity (also known as stockholders' equity) section on a typical corporate balance sheet?
• What is a statement of cash flows? Describe the three standard sections contained in a statement of cash flows.