Answer 2 Questions

Week 2 Discussion Board 1. Explain the nature and general purposes of financial statements 2. Explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles 3. Demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners' Equity 4. Explain how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation, 5 Explain how the income statement reports an enterprise's financial performance for a period of time in terms of the relationship of revenues and expenses. 6. Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating, investing, and financing activities 7. Explain how the statement of financial position (balance sheet), income statement, and statement of cash flows relate to each other. 8. Explain common forms of business ownership-sole proprietorship, partnership, and corporation-and demonstrate how they differ in terms of their statements of financial position 9. Discuss the importance of financial statements to a company and its investors and creditors and why management may take steps to improve the appearance of the company in its financial statements