University of Phoenix
Principles of Accounting
March 17, 2008
Examining Financial Statements Paper
There are four main financial statements: 1) Balance Sheet; 2) Income Statement or Statement of Income; 3) Statement of Cash Flow and 4) Statement of Shareholders’ Equity. These financial statements show a company’s financial activities and reflect the overall financial position of a company. All of the financial statements are equally important. Many investors, banking institutions, and upper level managers rely on these financial documents to make purchasing, investing, and spending decisions. In this paper, we will look at the financial statements of Landry Company and define the financial statements of this company.
Net Income and the Statement of Income
Landry’s enjoyed a net income of $45,901,054 for the year ended 2003. This was an increase of over $5M from the previous year. This information can be found on the Statement of Income. The Statement of Income shows how much money a company made and spent over a period of time. The two basic components of financial statements are the balance sheet and the income statement, which are directly related to each other. The balance sheet should always be balanced (assets should equal liabilities plus equity) and the income statement summarizes over a period of time while the balance sheet summarizes at a specific point in time.
The components of a financial statement are broken down into two different sections: the Operating section and Non-Operating section. In the operating section, revenue is the first and main item listed on the income statement. The revenue listed on this financial statement, in the Operating section, reflects the cash earned from routine operating activities. This revenue is normally presented as sales minus sales discounts, returns, and allowances, followed by operating expenses.
In the Non-Operating section of the income statement, revenue is... [continues]
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