IDENTIFY THE BASIC EQUATION FOR THE INCOME STATEMENT AND THE INFORMATION IT PROVIDES.

1. DISCUSS GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP) AND THEIR IMPORTANCE TO THE ECONOMY.
2. EXPLAIN THE BALANCE SHEET IDENTITY AND WHY A BALANCE SHEET MUST BALANCE.
3. DESCRIBE HOW MARKET-VALUE BALANCE SHEETS DIFFER FROM BOOK-VALUE BALANCE SHEETS.

4. IDENTIFY THE BASIC EQUATION FOR THE INCOME STATEMENT AND THE INFORMATION IT PROVIDES.
5. UNDERSTAND THE CALCULATION OF CASH FLOWS FROM OPERATING, INVESTING, AND
FINANCING ACTIVITIES REQUIRED IN THE STATEMENT OF CASH FLOWS.
6. EXPLAIN HOW THE FOUR MAJOR FINANCIAL STATEMENTS DISCUSSED IN THIS CHAPTER ARE RELATED.

7. IDENTIFY THE CASH FLOW TO A FIRM’S INVESTORS USING ITS FINANCIAL
STATEMENTS.
8. DISCUSS THE DIFFERENCE BETWEEN AVERAGE AND MARGINAL TAX RATES.

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