The bank wants to see financial statements because they want an answer to the question. Did the company make money during December? Now there's a number of different ways that we could try to answer this question. The first way would be to just look at all of the cash flows. So, if we take the facts and look at the cash flows, Dave's company received $50,000 cash from issuing stock, borrowed $80,000 from the bank, and bought $100,000 worth of truck. They paid $12,000 cash up front to rent office space for a year.
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They paid wages of $10,000 during December. And they did not collect any cash from customers during the month. So if we add it all up, they had a net cash inflow of $8,000. But as it turns out, this is a really bad way to figure out whether the company made money or not for December.