Riding Club's financial statements follow.

Athena Riding Club
Statement of Retained Earnings
For the Month Ended November 30, 2014
Retained earnings, October 31, 2014................$35,475
Net income for the month................................3,050
Subtotal..................................................$38,525
Less dividends.............................................2,400
Retained earnings, November 30, 2014.............$36,125

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 CEO 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 tell you?

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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 Income before income taxes Income taxes expense Net income 2,325 $3,775 725 $3,050 Athena Riding Club Balance Sheet November 30, 2014 Assets Liabilities Cash Accounts receivable Supplies Land Building Horses Total assets 5,975 900 750 15,750 22,500 7,500 $53375 Accounts payable $11,250 Stockholders' Equity Common stock Retained earnings Total stockholders' equity 6,000 36,125 $42,125 Total liabilities and stockholders equity 53,375 Athena Riding Club Statement of Cash Flows For the Month Ended November 30, 2014 Cash flows from operating activities: Net income $3,050 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 $ (400) (550) 400 (550) $2,500 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: Issuance of common stock Dividends paid Net cash flows from financing activities 6,000 (2,400) Net increase in cash Cash at beginning of month Cash at end of month 3,600 $5,100 875 $5,975