Athena Riding Club€™s financial statements follow.

Required
1. Explain how Athena Riding 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 Athena Riding 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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Athena Riding Club Income Statement For the Month Ended November 30, 2014 Revenues: Riding lesson revenue Locker rental revenue Total revenues $4,650 1,450 $6,100 Expenses: Salaries expense Feed expense Utilities expense Total expenses $1,125 750 450 2,325 3,775 Net income Athena Riding Clulb 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 $35,475 6,000 3,775 $45,250 2 400 $42,850 Athena Riding Club Balance Sheet November 30, 2014 Assets Liabilities Cash Accounts receivable 6,700 900 750 15,750 22,500 7,500 $54,100 Accounts payable $11,250 Owners Equity Supplies Land Building Horses Total assets Owner's capital 42,850 Total liabilities and owner's equity 54,100 Athena Riding Club Statement of Cash Flows For the Month Ended November 30, 2014 Cash flows from operating activities: Net income $3,775 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 activities 5 (400) (S50) 400 (S50) $3,225 Cash flows from investing activities: Purchase of horses Sale of horses 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 6,000 (2400) Net increase in cash Cash at beginning of month Cash at end of month 3,600 $5,825 875 6,700