Explain the Three Basic Financial Reports That a Business Uses

question 133

Essay

Explain the three basic financial reports that a business uses in building a financial statement: the balance sheet,the income statement,and the statement of cash flows.What information is contained in each,what is their value to the small business owner,and how are they used to build financial statements?

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Definitions:

Direct Labor-Hours

The number of labor hours spent specifically on the manufacturing of products.

Direct Labor Rate

The cost per hour for labor directly involved in the manufacturing process of a product.

Master Budget

A comprehensive financial plan made up of various individual budgets that outline a company's sales, production, and financial goals.

Raw Materials

Basic materials that are used in the manufacturing process to create finished goods.