Aqua Swimming Club€™s financial statements follow.

Aqua Swimming Club
Balance Sheet
November 30, 2014

Required
1. Explain how Aqua Swimming Club€™s four statements relate to each other.
2. Which statements are most closely associated with the goals of liquidity and profitability? Why?
3. If you were the owner of this business, how would you evaluate the company€™s performance? Give specific examples.
4. If you were a banker considering Aqua Swimming Club for a loan, why might you want the company to be audited by an independent CPA? What would the audit tellyou?

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Aqua Swimming Club income Statement For the Month Ended November 30, 2014 Revenues: Swimming lesson revenue Locker rental revenue Total revenues 4,650 1,275 5,925 Expenses: Salaries expense Supplies expense Utilities expense Total expenses $1,125 750 450 2,325 3,600 Net income Aqua Swimming Club Statement of Owner's Equity For the Month Ended November 30, 2014 Owner's capital, October 31, 2014 Investment by owner Net income for the month Subtotal Less withdrawals Owner's capital, November 30, 2014 $34,975 5,000 3,600 43,575 2,400 $41,175 Aqua Swimming Club Balance Sheet November 30, 2014 Assets Liabilities S 7,125 900 750 15,750 22,500 Accounts payable $13,350 Cash Accounts receivable Owner's Equity Owner's capital 41,175 Supplies Land Building Equipment Total assets $54,525 Total liabilities and owners equity $54,525 Cash flows from operating a ctivities: Net income $3,600 Adjustments to reconcile net income to net cash flows from operating activities: Increase in accounts receivable Increase in supplies Increase in accounts payable Net cash flows from operating a S (400) 400 (550) $3,050 ctivities Cash flows from investing activities: Sale of equipment Purchase of equipment Net cash flows from investing activities 2,000 (1,000 1,000 Cash flows from financing activities: Investment by owner Cash withdrawals Net cash flows from financing activities 5,000 (2400) Net increase in cash Cash at beginning of month Cash at end of month 2,600 56,650 475 $7,125