Understanding Financial Statements


Assignment 2: DiscussionUnderstanding Financial Statements

In this assignment, you will learn to read and interpret financial statements. Understanding the picture these four-document summaries provide a company’s financial performance is critical to making decisions about its management and its relation to the global economy and financial markets.


  • Please put the following income statement and balance sheet terms in the proper order:

Taxes, Interest, gross profit, selling, general and administrative expenses, sales, depreciation, net income, the cost of goods sold, EBITDA.

  • Please put the following balance sheet terms in the appropriate category as either short-term assets, long-term assets, short-term liabilities, long-term liabilities, and/or owner's equity: 

Cash, accounts payable, accruals, property, plant and equipment, inventory, accounts receivables, paid-in capital, retained earnings, notes payable, mortgage, accounts payable.

  • In terms of McGladrey and Pullen’s "Reading & understanding financial statements," explain the balance sheet equation in 300 words or less.


Your initial post should be demonstrate critical thinking and analysis. Apply APA standards to all citations of sources.

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