Financial Statements Paper
Accounting in business is an important tool to companies and organizations to understand how their revenues is invested, so reports are made of data of every investment, purchased and monetary entry. This data is used to run the business and how it is distributed to promote their assets. There are four type financial statement that companies and organization used. Accounting is the financial information system that provides these insights. In short, to understand your organization, you have to know the numbers (Weygandt, 2008). There are four main financial statements. They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time. Income statements show how much money a company made and spent over a period of time. Cash flow statements show the exchange of money between a company and the outside world also over a period of time. The fourth financial statement, called a “statement of shareholders’ equity,” shows changes in the interests of the company’s shareholders over time (U.S. Securities and Exchange Commission, 2007). Balance sheets are most used accountant to use to resume entries and exits. That data shows the total worth of the investments. Balance Sheets
A balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity. Assets are things that a company owns that have value. This typically means they can either be sold or used by the company to make products or provide services that can be sold. Assets include physical property, such as plants, trucks, equipment and inventory. It also includes things that can’t be touched but nevertheless exist and have value, such as trademarks and patents. And cash itself is an asset. So are investments a company makes. Liabilities are amounts of money that a company owes to others. This can include all kinds...
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