Preview

Acc 561 Financial Statements Differential

Better Essays
Open Document
Open Document
910 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Acc 561 Financial Statements Differential
Financial Statement Differentiation Paper
Jasmine Unger
ACC/561
April 8, 2013
Professor Timothy Jared

Financial Statement Differentiation Paper
Financial statements provide documentation of a company’s financial history for a set timeframe. One of the financial statement used by investors, creditors, and mangers is the balance sheet. The second statement used by accountant’s income statement, which is also important to shareholders. The third statement is the retained earnings statement, and the fourth financial statement is the statement of cash flows. Each financial statement has a different purpose and shows different aspects of the company’s finances. However, these financial statements are integrated and work together to provide shareholders financial information. This paper will defines the four financial statements while explaining the financial statement most suitable for either an investor, creditor, or management.
The Four Financial Statements
The first financial statement is the balance sheet. The balance sheet provides a portrait of the company’s assets and liabilities. The balance sheet is the statement of financial position at a given point (Quick MBA, 2010). The second financial statement, the income statement, reports the revenues, and expenses during the same timeframe as the balance sheet. Revenue is the monies the company is gaining after expenses. The third statement is called the retained earnings statement, which explains changed in retained earnings. The retained earnings are changed by the company’s income and dividends. The retained earnings statement uses information form the income statement, which changes the financial information on the balance sheet. The final financial statement is the statement of cash flows. The statement of cash flows shows where the business obtained cash during a period of time and how that cash was used (Kimmel, Accounting, 3/e).
Financial Statement for Investors
Investors rely on more than one


References: Quick MBA. (2010). The Four Financial Statements. Retrieved from http://www.quickmba.com/accounting/fin/statements/ Wiley Plus. (2000-2013). Kimmel Accounting 3/e. Retrieved from Wiley Plus, Acc 561 website Stock 100. (2010). The Statement of Cash Flows. Retrieved from http://news.morningstar.com/classroom2/course.asp?docId=142913&page=4&CN= Chron. (2013). The Advantages and Disadvantages of a Classified Balance Sheet. Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-classified-balance-sheet-17538.html
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Better Essays

    Acc 280 Financial Statements Paper
    • 1007 Words
    • 5 Pages

    Acc 280 Financial Statements Paper

    The four basic financial statements of accounting are the Income Statement, Balance Sheet, Retained Earnings Statement (a.k.a. Statement of Stockholders Equity), and Statement of Cash Flows. The Income statement shows the profitability of the company over a specific period of time. Classifies financial data under two categories revenues and expenses. It represents revenues earned and expenses incurred. (Formula: Revenue-Expenses=Net Income or Net Loss). The Retained Earnings Statement a.k.a. Statement of Stockholder’s Equity shows increases and decreases to stockholders equity accounts for a specific period of time. (Formula: Stockholders Equity= Common Stock + Retained Earnings).The Balance Sheet reports financial data under…

    • 1007 Words
    • 5 Pages
    Better Essays
    Read More
  • Good Essays

    Relationship between Various Financial Statements
    • 651 Words
    • 3 Pages

    Relationship between Various Financial Statements

    Financial statements are demonstrated in four different financial statements, which are balance sheet, income statement, retained earnings, and statement of cash flows. A balance sheet illustrates a financial picture at a point of time of what a business owns, which are the assets and what it owes, which are the liabilities. The income statement portrays how well a business performed during a period of time; and it reports revenue and expenses. The retained earnings statement indicates how much dividends are distributed and how much was retained in the business for future growth. Finally, the statement of cash flows presents the cash use in a business (Kimmell, et al, 2009).…

    • 651 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Xacc/280 Week 5 Assignment
    • 749 Words
    • 3 Pages

    Xacc/280 Week 5 Assignment

    A Financial Statement can be defined as, “Summary report that shows how a firm has used the funds entrusted to it by its stockholders (shareholders) and lenders, and what is its current financial position” (Business Dictionary, 2011). The Financial information is required for various users to make an informed Decision. “The purpose of financial information is to provide inputs for decision making” (Kimmel, Weygandt, Kieso, 2009, Para 1, p. 6). There are four different parts covered in a Financial Statement; those are Balance Sheet, Income Statement, Retained Earnings Statement, and Statement of Cash flow. The assignment will elaborate the purpose of each statement and differentiate its utility for different…

    • 749 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    What Are The Four Most Important Financial Statements A
    • 862 Words
    • 3 Pages

    What Are The Four Most Important Financial Statements A

    In the accounting world there are several financial statements but the four main financial statements that are universally understood and prepared for most publically traded companies and many small and medium sized businesses are the income statement, the balance sheet, the statement of cash flows, and the statement of retained earnings (sometimes referred to as shareholders’ equity). A fundamental ability to properly interpret the information these statements contain allows internal and external users to make a wide array of decisions affecting company operations and decisions on whether or not to invest. Users of financial statements look to the income statement to learn and assess a company’s performance over a set period of time, often a month or a year. This statement depicts the company’s revenues and expenses with the difference reflecting the net income (or loss) resulting from the…

    • 862 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    ACC 421 Accounting Cycle Paper Week 1
    • 580 Words
    • 3 Pages

    ACC 421 Accounting Cycle Paper Week 1

    The procedure and instructions of an AIS are the methods it uses for collecting, storing, retrieving and processing data. These methods will be both manual and automated, and the data can come from both internal sources such as employees, and external sources like customers online orders. Procedures and instructions must be followed consistently to be effective.…

    • 580 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Bus 630 Week 1 Discussion
    • 1023 Words
    • 5 Pages

    Bus 630 Week 1 Discussion

    Financial accounting is the branch of accounting that organizes accounting information for presentation to interested parties outside of the organization. The primary financial accounting reports are the balance sheet (often called a statement of financial position), the income statement, and the statement of cash flows. The balance sheet is a summary of assets, liabilities, and shareholders’ equity at a specified point in time. The income statement reports revenues and expenses resulting from the company’s operations for a particular time period. The statement of cash flows shows the sources and uses of cash over a time period for operating, investing, and financing activities.…

    • 1023 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Acc 230 Week 1 Checkpoint
    • 415 Words
    • 2 Pages

    Acc 230 Week 1 Checkpoint

    The financial statement can show the records of the financial activities of a business. It was designed for common people to be able to read and understand this information. Three strengths of the financial statement is it that the owners and managers are able to understand the financial position of the company, this also allows individuals the ability to evaluate the historical and prospective financial performance, and this statement gives a vivid picture of the company’s financial health which will be the base of the owners and managers decision making. This type of foresight is important to the affects of a success in continuing of the company’s operation. Employees also can benefit from this information especially those in a labor union or in bargaining with upper management for a promotions based of the proven thriving performance. For the investors, the strengths of the financial statement give them a clear picture on whether or not to invest more or less in the future.…

    • 415 Words
    • 2 Pages
    Good Essays
    Read More
  • Better Essays

    Best Financial Statement
    • 1153 Words
    • 5 Pages

    Best Financial Statement

    Well, a little. It 's true that each of the three financial statements -- income statement, balance sheet, and cash flow statement -- holds certain puzzle pieces that are essential to solving the mystery of how a business makes money. The income statement tells us how much product was sold; the balance sheet shows what resources were used to run the business; and the cash flow statement reveals the actual inflows and outflows of cash.…

    • 1153 Words
    • 5 Pages
    Better Essays
    Read More
  • Better Essays

    Week 5 Assignment Final Paper
    • 1729 Words
    • 7 Pages

    Week 5 Assignment Final Paper

    In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial figures from the income statement which details monthly earnings as well as the company’s liabilities and equity position, and even project future yearly budgets.…

    • 1729 Words
    • 7 Pages
    Better Essays
    Read More
  • Powerful Essays

    This Paper Is an Overview of Wal-Mart’s Annual Report
    • 2000 Words
    • 8 Pages

    This Paper Is an Overview of Wal-Mart’s Annual Report

    A balance sheet reports the assets, liabilities, and owner's equity at a specific date. An income statement presents the revenues and expenses and resulting net income or net loss for a specific period of time. A statement of cash…

    • 2000 Words
    • 8 Pages
    Powerful Essays
    Read More
  • Better Essays

    Four Basic Financial Statements
    • 991 Words
    • 4 Pages

    Four Basic Financial Statements

    Accountants, business owners, investors, creditors and employees use four basic financial statements of an organization to determine the financial well-being and future earnings potential of that organization. Financial statements are a key tool in seeing and understanding the past, present and future condition of an organization. What are these financial statements and what do they mean to the reader? Do the financial statements mean something completely different to an investor, creditor, and employee?…

    • 991 Words
    • 4 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Acc 220 Financial Statement
    • 264 Words
    • 2 Pages

    Acc 220 Financial Statement

    * A balance sheet is summary of a company's financial condition at a specific point in time, including assets, liabilities and net worth. It allows the company to know what they have been paying for or what they owe out to people. An income statement is a report that tracks a company’s revenues, gross profits, operating income, and net worth. All businesses need to have revenue in order to establish a good foundation to have their business up and running. A retained earnings statement is the portion of net income not paid out to investors in the business as dividends. If the company earns a profit they have to decide whether or not to invest it or keep it as theirs and distribute it evenly throughout the others in the company. Statement of cash flows provides information about an entity's cash receipts and cash payments during a period. Cash flow statements classify cash receipts and payments according to whether they stem from operating, investing, or financing activities. Assets are any item or items of economic value owned by an individual or corporation, especially that which could be converted to cash. A liability is an obligation that legally binds an individual or company to settle a debt. Comparative statements are financial statements for different periods that allow the comparison of figures to illustrate trends in a company’s performance. Stockholder’s equity is the part of the balance sheet that represents the capital received from investors in exchange for stock donated capital and retained…

    • 264 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Accounting 201 Final Study Guide
    • 677 Words
    • 3 Pages

    Accounting 201 Final Study Guide

    What are the four financial statements? What is the purpose for each? Does each report for a period of time or for a point in time? Be able to calculate the change in stockholders’ equity for a period based on information contained in the retained earnings statement.…

    • 677 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Acc 561 Master Budget Paper
    • 566 Words
    • 3 Pages

    Acc 561 Master Budget Paper

    • The four financial statements share the same information in certain areas of the statement which leads to better understanding a company’s finances. For example, the income statement explains the net income (revenue-expense) and that number increase the ending retaining earning on the Statement of Retaining Earning Sheet. Furthermore, retaining earning is on the balance sheet which helps determining stockholders equity & total liabilities. The ending cash amount on the statement of cash flows gives the beginning cash balance on the balance sheet. This example show how all the financial statements relate to one another.…

    • 566 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    What Is ACC 561 Financial Statement
    • 686 Words
    • 3 Pages

    What Is ACC 561 Financial Statement

    Creditors will view the income statement for loans. Creditors will also view the retained earnings statement and the balance sheet to see the ability for a company to repay debt.…

    • 686 Words
    • 3 Pages
    Good Essays
    Read More