Financial Statements Paper
Accounting identifies record; analyze financial transactions of an organization. This allows organizations to make informed decisions that benefit the organization and interested users (Kimmel, Weygandt, & Kieso, 2009). The company can view financial statements on a monthly or annual basis to monitor the finance decide if any changes are necessary. The four basics financial statements are balance sheet, income statement, retained earnings statement, and statement of cash flows. The first statement is a balance sheet it consists of assets, liabilities, and owner’s equity (Kimmel, Weygandt, & Kieso, 2009). Assets are possessions the company own, liabilities are obligations to pay or provide good or services, equity is net assets owing to the owner’s or partner’s of a business. Another term used to describe a balance sheet is a statement of financial position. The second statement is income statement. The income statement is the success and failures of business’s earnings and payments to other vendors during a specific time (Kimmel, Weygandt, & Kieso, 2009). Revenue is income the company receives and expenses are cost of operating a business. Terms associated with income statements are profit and loss statement, operating statement, earnings statement, and statement of operations. The third financial statement is retained earnings statement. This statement shows changes in amount and causes over a period. The changes are shown on the report in month and year. The fourth financial statement is a statement of cash flows. This statement shows information from operating, investing, and financing activities (Kimmel, Weygandt, & Kieso, 2009). The statement also shows the increase or decrease of cash. Internal users use accounting information to plan, organize, and operate his or her business (Kimmel, Weygandt, & Kieso, 2009). The internal users in a business are managers, supervisors, directors, and officers (Kimmel, Weygandt, & Kieso,...
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