What information is provided in Facebook’s basic financial statements?

Facebook, Inc., is a publicly held corporation and is frequently in the news.  For example, in August 2016, it announced a new feature called “Lifestage,” which is an iOS app that emulates Snapchat and is designed to be used by teens. Also in that same month, Mark Zuckerberg sold $95 million of his Facebook shares. Facebook routinely makes the headlines and is seemingly everywhere. It continues to experience growth.

To follow are Facebook’s four basic financial statements for its most recent year, the year ending December 31, 2015.  Please note that all statements have been adapted and condensed for educational use and should not be used for investment decisions.

Income Statement

Statement of Retained Earnings

Balance Sheet

Statement of Cash Flows

Facebook’s complete, unabridged financial statements can be found on its investor relations website.

Note: The financial statements above can also be downloaded in Excel format for enhanced readability.

Questions

1. What form of business organization is Facebook? How do you know?
2. Identify what line item flows from the income statement to the statement of retained earnings.
3. Identify what line item flows from the statement of retained earnings to the balance sheet.
4. Identify what line item flows from the balance sheet to the statement of cash flows.
5. Did Facebook have net income or net loss for 2015? Over what period of time was this amount earned?
6. Write Facebook’s accounting equation as of December 31, 2015.
7. How much in total resources does Facebook have to work with? How much does Facebook owe to creditors?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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