What you’ll learn to do: identify key financial statements and their components, and explain the primary use of each type of statement

In this section you will learn about key financial statements of accounting: the balance sheet, income statement, statement of owner’s equity, and statement of cash flows. By examining the components of each you will see the connections between the statements and be able to use this information to help you determine the point at which your business becomes profitable—the break-even point.

The specific things you’ll learn in this section include the following:

• Define the accounting equation
• Identify the use and components of the balance sheet
• Identify the use and components of the income statement
• Identify the use and components of the statement of owner’s equity
• Identify the use and components of the statement of cash flows
• Explain how the balance sheet, income statement, statement of owner’s equity, and statement of cash flows are connected