January 3, 2013
In this paper it will go through: Identify the four basic financial statements, describe the purpose of each of the four financial statements, discuss how the financial statements would be useful to internal users such as managers and employees, and discuss how the financial statements would be useful to external users such as investors and creditors.
Identify the four basic financial statements.
The four basic financial statements are as follow balance sheet, income statement, statement of retained earnings, and statement of cash flows. These four financial statements are the basic statements normally prepared by profit-making organizations for use by investors, creditors, and other external decision makers. These are the main financial statements that all company’s use to follow how the business is doing threw out the year and each quarter of the facial year.
Describe the purpose of each of the four financial statements.
The purpose of the balance sheet is to report the financial position of an accounting entity at a particular point in time. The income statement reports the accountant's primary measure of performance of a business, revenues less expenses during the accounting period. The statement of retained earnings reconciles the beginning and ending retained earnings for the period, using information such as net income from the other financial statements. The statement of cash flows is one of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter.
Discuss how the financial statements would be useful...