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Accounting Reports

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Submitted By lilangel4824
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A set of financial statements for a company includes three related accounting reports. These reports are called; Statement of Financial Position, Income Statement, and Statement of Cash Flows.
A statement of financial position, also known as a balance sheet, displays the financial position of a company at any given date/time. It consists of three key categories: assets, equity, and liabilities. Statement of financial position aids the users of these statements in evaluating the financial reliability of a company in terms of its risk; financial, credit, and business risk. These statements can help identify underlying trends in the financial position of the company which would assist the manager. The investor would be interested in determining the company’s financial risk.
An income statement is a summary of performance as reflected in its profitability (or lack thereof) of a company over a certain time. The income statement accounts all profits for a business during this given period (monthly, quarterly or annually), as well as the operating overhead cost for the business. This would assist a manager because he/she would be able to determine the operating performance of the business over a period of time. The investor would likely be looking at the same information as a manager, but using it to determine if the company is making money or losing money.
Statement of cash flows describes the cash flow into and out of the business. Its specific emphasis is on the types of activities that create and use cash. If a company is consistently generating more cash than it is using, the company will be able to increase its dividend, buy back some of its stock, or lessen its debt. This is information that would benefit the manager. The investor would be interested in seeing what kind of cash flow is coming into the business, so he/she could determine the cash flow that would

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