Financial Statement Differentiation Paper

Topics: Income statement, Balance sheet, Generally Accepted Accounting Principles Pages: 3 (592 words) Published: August 25, 2013
Keena N. Lewis
Financial Statement Differentiation Paper
Instructor Richard Gottifried
February 22, 2013

Financial Statement Differentiation Paper
Keena Lewis
University of Phoenix,

Accounting is used for various reasons by many businesses. Currently, many businesses use accounting to create and report financial information. Investors and managers use the reports to asset the companies’ net worth and the performance of the company. Financial statements are used by investors and managers to made imperative decisions. The information provided from financial statements is vital to the structure of the business. Financial planning requires proper documenting, summarizing, identifying, and reporting. The following four types of financial statements are: income statement, balance sheet, statement of cash flow, and the retained earning statement. Which financial statement, or statements, would be of most interested to investors and creditors? Income Statement

The income statement reports the progress such as the success or failure of the company’s operations for a period time. The income statement provides information concerning businesses’ expenses, income, and revenue. This document is imperative for investors because identifies share holding positions within a business. Investors are very concern with a companies’ past net income because it provides practical information to predict future net income. Many investors make decisions based on the income statements such as buying and selling stocks. This document is useful to creditors as well. Creditors use the income statement to predict the potential future earnings. For example, a bank evaluates a business’ income statement to determine if a business is capable of repaying a loan. Which financial statement, or statements, would be of most interested to creditors and managers? Balance Sheet

The balance sheet tracks assets and claims of current operations. Investors use...

References: by John Wiley & Sons, Inc. or related companies
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