Running Head: Accounting paper
March 25, 2008
MBA503 / Introduction to Finance and Accounting
The financial information is a very important matter in a company success. Allow them to see if they have been successful in the past, in the present and help them to predict a future performance of you company. The form, the use and the people involve with the financial and accounting information in a company is going to be developed in this report.
Knowing the status of your company in every single area will allow you to improve your performance and developed strategies with a solid background for a successful operation. In the financial department of every company different kind of data and report to provide the information needed is used. Without that information financial manager, investors and bankers would be flying blind (Block, Hirt 2005). Those are not all the groups of interest about the financial information; we also have the government (for taxes purposes), general public (for investment opportunities), the competition and the operational areas to determinate their performance. In finance there is three basic kinds of financial statements, the income statement, the balance sheet, and the statements of cash flow. The income statement is made for measuring the profitability of a firm over period of time. Inform how revenue is transformed into net income and show whether the company made or lost money during this time. Income statement should help investors and creditors determine the past performance, predict the future performance and assess the capability of generating future cash flows. That information and other non financial data (like the company goal or the marketing strategy) will help the financial manager for instance to determinate how much money should the company put in research and development. However, income statements has several...