Financial Statements: January

Now, you will see how different activities for the month of January impacts the three financial statements. 

In this video you saw the following:

• The cash balance at the end of the previous month becomes the cash balance at the beginning of the next month.

• The material and utility cost is an expense for the production of pizza.

• The inventory of raw materials at the end of the previous month is used to produce the pizzas in the current month, leaving no inventory at the end of the current month. 

• By the matching principle concept, the 'Cost of goods sold' is equal to the quantity sold multiplied by the production cost per unit.

• Using the matching principle, the sales revenue is equal to the quantity sold multiplied by the selling price per pizza.

• The difference between the 'cash inflows + cash at the beginning' and 'cash outflows' gives the cash balance at the end of the period. 

• The income statement accounts for the sales, cost of goods sold and other expenses for the current period to arrive at the profit. 

• The bottom line of the income statement is the profit for the month. It belongs to the company’s shareholders and is added to the share capital in the balance sheet. 

In the next segment, you will learn how to calculate the break-even point for the pizza food truck business.