Financial Statement Paper
Financial Statement PaperFinancial Statements paper
September 22, 2011
Financial Statements paper
Accounting is an action needed by companies in business. Without accounting and the knowledge of the inner workings of financial statements, a business is doomed to failure. In accounting there are four basic financial statements used for an array of reasons.
The first financial statement in accounting is the balance sheet. The balance sheet is used to represent an illustration at a point of what a business owns and owes; these are also known as assets and liabilities (Kimmel, Weygandt, & Kieso, 2011). The next statement used is the income statement. The income statement displays just how successful one’s business performance is during a certain period. The income statement basically shows the revenues and expenses of any business (Kimmel, Weygandt, & Kieso, 2011). After the income statement there is the retained earnings statement. This statement indicates how much of a business’s previous income is distributed to owners by way of dividends. It also shows how much income was retained within the organization to allot for future growth (Kimmel, Weygandt, & Kieso, 2011). The last of the four basic financial statements is the statement of cash flow. The statement of cash flow is used to indicate where a business obtained their cash during a period. This statement also shows how the obtained money is used over a particular period (Kimmel, Weygandt, & Kieso, 2011). These financial statements are meant to be understood not only by accountants but also by people who have a moderate wisdom of business and economic activities. If individuals are willing to learn and study this information with diligence, it can be used as a powerful tool toward business success (Mapsofworld.com, 2011).
People who use financial statements come from both inside and outside of an organization; these are known as internal and external users. Internal users of financial statements are...