Financial Accounting
Sandy K.
November, 2013

According to the authors, Kimmel, Weygandt, and Kieso, of Financial accounting: Tools for business decision making, “we are learning to be financially literate.” Whether we are allowed to view the financial records of our company, we are expected to understand basic accounting principles which teach us of to read financial statements and evaluate those results (p.3). Why are we expected to understand financial statements and the resulting information? Decisions. Being in business requires a lot of decision making almost every day. Some of these decisions rely on financial information.

Financial Reports: What are they and Who do they Benefit
Financial statements are the accounting system backbone of any organization in their dealing with economic events. They are also used for evaluating performance in many areas. These statements “communication the numbers” (Kimmel, Weygandt, & Kieso, p. 3) of financing, investing, and operating business activities. This paper will identify the four basic financial statements; the purposes of each of the four statements; the internal and external users of this information; and the benefit of these statements to these various users.

Financial Statements. In an accounting system, whether prepared manually or electronically, there are four basic statements or reports that are used: The balance sheet, income statement, retained earnings statement, and the statement of income. They are the result of a business’s financing, investing, and operating activities.

Statements Defined. The balance sheet shows a snapshot of what is owned and owed by a business for a specific point in time. The balance sheet lists first assets then liabilities and finally stockholders' equity. The Income statement shows how well a company is performing for period of time. First revenues (income) then