Explain the Three Basic Financial Reports That a Small Business

question 109

Essay

Explain the three basic financial reports that a small business uses in building a financial plan: the balance sheet, the income statement, and the statement of cash flows. What information is contained in each, and of what value is it to the small business owner?

Grasp the significance of activity levels in the management of costs and the preparation of flexible budgets.

Interpret the implications of variances on material cost and efficiency.

Recognize the importance of standards in budgeting and variance analysis.

Understand how the measurement of efficiency varies with actual and standard costs in manufacturing overhead.

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Definitions:

Salivary Gland

Glands located in the mouth that produce saliva, which aids in digestion and keeps the mouth moist.

Muscularis Externa

The layer of muscle in the gastrointestinal tract located outside the submucosa, responsible for the movements of peristalsis and segmentation.

Hepatopancreatic Duct

A duct that carries bile from the liver and pancreatic juice from the pancreas into the duodenum.

Common Bile Duct

A duct that carries bile from the liver and gallbladder to the duodenum, important in digestion.