Financial Statements Paper

Topics: Income statement, Generally Accepted Accounting Principles, Balance sheet Pages: 4 (1105 words) Published: July 26, 2010
Running Head: FINANCIAL STATEMENTS

Financial Statements Paper
Ricardo E Mendoza
University of Phoenix
Principles of Accounting
Sandra Hernandez
21 January 2010

Abstract

In this paper I will discuss about the definition of accounting and the different financial statements that are use to monitor all the tangibles that flows within a company and how they relate to each other to control the flow of monies on any given business.

Financial Statements Paper

What is the purpose of accounting? The purpose of accounting is to provide the information that is needed for sound economic decision making. Businesses use financial and managerial accounting; financial accounting is to provide information about the business to the external parties such as investors, creditors, and tax authorities and is regulated according the Generally Accepted Accounting Principles guidelines. Managerial accounting is use for internal decisions making and doesn’t follow any type of rules issued by standard-setting bodies. Accounting financial statements are reports that allow interested parties to evaluate the profitability and solvency of a business. These reports include the Balance Sheet, Income Statement, Retained Earnings Statement, and Statement of Cash Flow. These four financial statements are the final product of the accountant’s analysis of the transactions of a business. The balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity. Assets are things that a company owns that have value. This typically means they can either be sold or used by the company to make products or provide services that can be sold. Assets include physical property, such as plants, trucks, equipment and inventory. It also includes things that can’t be touched but nevertheless exist and have value, such as trademarks and patents. And cash itself is an asset. So are investments a company makes. (Beginners' Guide to Financial Statements)...

References: The Beginners ' Guide to Financial Statements, U.S. Security and Exchange Commission2007. http://www.sec.gov.
QuickMBA, Financial Accounting, Retrieved on January 20, 2010, from: www.quickmba.com
Financial Accounting, Kimmel, Paul D., Kieso, Donald E., Weygandt, Jerry J., 6th Edition, 2007.
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