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Financial Questions

What piece of information flows from the income statement to the statement of owner's equity?

What information flows from the statement of owner's equity to the blaance sheet? What balance sheet item is explained by the statement of cash flows?

How does the over-the-counter exchange operate? How does it differ from the organized securities exchanges?

What is the purpose of the cash budget? The key input to the cash budget is the sales forecast. What is the difference between external and internal forecast data?

Solution Preview

<br>First question: The main item that flows from the income statement to the statement of owner's equity is net income. Keep in mind that the amount of net income that flows is then reduced by the amoung of dividends that the firm decides to give to the shareholders.
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<br>Second question: The main item that flows from the owners' equity to the balance sheet is retained earnings, which is the net income minus dividends ...

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