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The Structure of Financial Statements & Financial Reporting
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The Structure of Financial Statement & Financial Reporting: Bertha’s Bridal Boutique
“The balance sheet– also called the statement of financial position-summarizes a
firm’s assets, its liabilities, and its equity as of a specific date” (p.4-1). Cash flow indicates
that the cash flow from the company’s operating activity and from external opportunity
investments. The cash outflows that the company spends from operating and investing are
also seen in the cash flow statement. It also shows a shift in the balance of cash and cash
equivalents over time by breaking down the cash inflow and outflow into three categories:
operation, finance, and investing.
Bertha’s Bridal boutique cash collected in 20×1 is $7,113,000 in figure below. In
20×1, company sales were $7,200,000 thus showing less collected from its debtor from the
increase of company accounts receivable by $67,000 and this may arise the risk of bad
debts. On the other hand, companies that have good cash show less risk of liquidity
problems, and companies survive day–to-day cash expenses.
Requirement 1
