Basic Financial Statements

Topics: Generally Accepted Accounting Principles, Balance sheet, Income statement Pages: 3 (806 words) Published: March 14, 2013

Basic Financial Statements

Robert A. Weir

Basic Financial Statements

There are four financial statements that business’ use to reference the financial data of a company. These statements are the balance sheet, the income sheet, the statement of retained earning and the statement of cash flows. These four statements show a variety of information that pertains to the financial situation of a company during a specific accounting period. Managers and executives must be knowledgeable about the financial statements of their company and know where their company stands financially.

The Balance Sheet
The balance sheet is a report that shows the overall financial position of a company during a specific accounting period. The balance sheet contains four main components. The name of the company and the time period the report covers is the first item on the balance sheet. The name of the company is always listed in capital letters and a unit of measure should be available in this portion. Next on the report are a listing of total assets including cash, inventory, accounts receivable and all assets the company possess. Liabilities are listed next showing accounts payable, notes payable and all liabilities the company has. Last is a list of stockholder’s equity. This information gives any amount invested into the company by investors and any earnings being retained.

The Income Sheet
The income sheet is a report used to show the income of a company and whether it is operating at a profit or loss through a given period of time. The income sheet has four main components. Again, the first item is the name of the company and the time period that the report covers and units of measure for the report. The next information shows all revenues brought in to the company which is followed by all expenses. Both of these parts are broken down to detail the types of revenues and expenses....

References: The Four Basic Financial Statements: An Overview. (2009). Retrieved from our_basic_financial_statements__an_overview.htm
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