August 24, 2013
Professor Deborah Wilson
A financial statement is a statement, or formal record, that lays out the activities of a business, person, or other entity. Quarterly or yearly financial information is put into relative categories and displayed to show how the company is matching up to expectations. For larger corporations, these statements may include large amounts of side notes and subcategories to show all the parts that the company may have connected to the larger company structure. It also shows overseas holdings and money accounts that are not included in usual company briefs. Management discussions and employee feedback can also be included in financial statements. This lets others know of potential discussions or train of thoughts that went into decision making. Also, it shows data that explain choices that were implemented into everyday company activity. Employee feedback is also included in reports to gauge moral or acceptance of potential changes of policy. In all, financial statements are important parts of business culture and are used to manage everyday operations that are vital to company growth and success.
Four Basic Financial Statements
There are four major financial statements that most business produces to show the production of the company. These statements are the income statement, the balance sheet, cash flow statement, and statement of owner’s equity.
First, the income statement is used to express a firm’s revenues, gains, expenses, and losses. Revenue is the money earned from day to day business dealings within the company. The expenses that are located on the income statement are due to cost of operating a...
References: Chron.com. (2013). The basic features of the four financial statements & their interrelationships . Retrieved from http://smallbusiness.chron.com/basic-features-four-financial-statements-interrelationships-24250.html.
Kimmel, P.D., Weygandt, J.J.,& Kieso,D.E. (2009) Financial accounting: Tools for business decisions making.(5thed) Hoboken,NJ: John Wiley & Sons.
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