At your first meeting with Alex, you ask to see his most recent financial statements so that you can get an overall assessment of the restaurant's financial health. Alex looks at you blankly and says, "I'm a chef, not an accountant, and I don't know what financial statements you're talking about. Can you explain to me?"

What should your response be?

Select an option from the choices below and click Submit

a. The financial statements for your restaurant summarize its financial information for a given period of time. The three most important statements are the statement of cash flows, the balance sheet, and the budget.

b. The financial statements for your restaurant summarize its financial information for a given period of time. The three most important statements are the statement of cash flows, the income statement, and the budget.

c. The financial statements for your restaurant summarize its financial information for a given period of time. The three most important statements are the balance sheet, the statement of cash flows, and the income statement.

The correct answer is option (c )The financial statements for your restaurants summarize its financial information for a given period of time. The three most important statements are the balance sheet , the statement of cash flows and the income statements .

Explanation:

Solution

The Reason

The output of accounting cycles are :

a.The Income statement,

b. The Statement of changes in equity

c. The Statement of financial position

d. The Statement of cash flow

e. The Notes to financial statements

Now,

The above stated output are very necessary data for any potential investors and stake holder such as, employees of the company, creditors , debtors,customers, government, Financial statement shows the true and fair view of the companies financial position. the amount of borrowed money,the investors can get a particular idea about the investment value, other liabilities etc. .

The income statement shows the companies gains or profit made. what are the main expenses and product of the company can be determined from the income statement .

Cash flow statement talks about the liquidity position of the companies. It shows the actual cash inflow and outflow during the company financial year.

The Statement of changes in equity shows the changes in value components to the investors.

Notes to account shows the policy of accounting followed by the company and same should be as per the widely received accounting principles.

However, financial statements are very necessary for analysing and understanding a company’s operational and financial position.

The income statement gives a deep insight into the core operating activities that produce earnings for the firm. The balance sheet and cash flow statement, aims more on the capital management of the firm in terms of both structure and assets.