Topics: Income statement, Generally Accepted Accounting Principles, Financial statements Pages: 2 (509 words) Published: February 19, 2013
IndividualFinancial Statements Paper| Write a 700- to 1,050-word paper in which you do the following: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.Discuss how the financial statements would be useful to external users such as investors and creditors. * Format the paper consistent with APA guidelines.|

In order for a small business or a Fortune 500 company to be successful the company must understand the basic financial statements. There are four main statements that a company should consider and take serious if it wants to expand from a small business to a Fortune 500 or remain a Fortune 500 company. The first of the financial statements is statement of financial position or balance sheet. This “balance sheet contains reports of a company’s assets, liabilities, and ownership equity at any given point in time. “ In order to determine a company’s assets we must add its liabilities and equity. “Liabilities represent the portion of a firm’s assets that are owed to creditors. Equity is referred to as owner’s equity in a sole proprietorship or a partnership, and stockholders’ equity or shareholders’ equity in a corporation.” Assets can be classed as either current or fixed assets. The difference between current and fixed assets is that fixed assets are things that are recorded at historical cost much less than the market value. Balance sheets are useful when evaluating the ability of the company to meet its long-term obligations.

The second financial statement that a company should base their company around is the income statement. Income statements are revenues minus expenses for a given time period ending a specified date. These statements are generally presents the result of the entity’s operations during a year time frame. In order to...
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