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Week 1 Financial Statements Paper
John Dow
ACC/290
2/24/2014

Week 1 Financial Statement Paper.
In the accounting realm there are many terms that get tossed around and it can become quite baffling. The great thing I have learned thus far is that there are four basic financial statements that we operate on today. These statements are very important to the vitality of a company/corporation to continue business in a progressive fashion. In the following text I will articulate the needs and importance of the four basic financial statements, and why they are necessary.
The four basic financial statements are: * Balance sheet. * Income statement. * Retained earnings statement. * Statement of cash flows
These four statements are essential to the successful operating of a company. With these four statements you can feel prepared when you head to a bank and request a loan for your business, or decide to invest into the stock of a company. These four statements also hold the required information to properly lead a company to higher growth potential and sustainability. The balance sheet is a term that most have heard of, this statement tells the internal or external user of the total assets owned compared to the liabilities or debt at a certain time. This statement is crucial for internal use so that managers can decipher whether they have cash on hand, or if there are going to be layoffs. Lending companies require companies to hand over their balance sheet to display their debt to income status. Balance sheets are also used to tell stockholders what or if their receiving a return on their dividends. Balance sheets are also a tool needed for underwriters to evaluate companies and verify their abilities to pay back their liabilities. Income statements are basically the same thing as balancing your checkbook. Income statements show the user how

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