LOS b: Discuss the role of key financial statements (income statement, balance sheet, statement of cash flows, and statement of changes in owners’ equity) in evaluating a company’s performance and financial position.

The balance sheet represents information at a specific point in time. The income statement represents information over a period of time.

Revenues for a reporting period are presented on a company’s income statement. They can be, but are not required to be, classified as operating and nonoperating revenues. Cash from operating activities is presented on the company’s statement of cash flows, but this is not necessarily equal to operating revenues because revenue might be recognized in a different period than cash is collected. The balance sheet displays a company’s financial position at a fixed point in time.