Financial Statement Differentiation

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Financial Statement Differentiation Paper

Write a paper of no more than 700 words discussing the four different types of financial statements. Explain the information provided by each financial statement and include your responses to the following questions:

• Which financial statement, or statements, would be of most interest to investors? • Which financial statement, or statements, would be of most interest to creditors? • Which financial statement, or statements, would be of most interest to management?

Format your paper consistent with APA guidelines.

According to Merriam-Webster (2012), accounting is “the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the result.” Its purpose is to identify and report the economic activities of business entities and is made up a variety of interrelated reports. These reports relay a variety of information, including assets, liabilities, expenses, and revenues, all of which are of interest to users of accounting information. According to Kieso, Kimmel, and Weygandt (2009), “this information is arranged in the format of four different financial statements, which form the backbone of accounting.” These four documents are the balance sheet, income statement, retained earnings statement, and the statement of cash flows (see Table 1.1).

| |Description |How It is Measured | |Balance sheet |Shows the assets (what it owns), |Specific date. | | |liabilities (what it owes), and | | | |shareholder’s equity of a business. | | |Income statement |Shows how successfully a business...
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