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Financial Statement Paper

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Financial Statements Paper

Twanda Anderson
ACC / 280 Principles of Accounting
Michael Ford
August 15, 2011

Financial Statements Paper Many people assumed that accounting is just adding and subtracting numbers but financial accounting has several important parts for a business to be profitable. In the accounting process there are significant parts and these parts provide excellent information about the company’s finances that identify, record, and communicate its finances. The financial statement has four parts and how these parts interrelate to each other they are the Income statement, Retained earnings statement, Balance sheet, and Statement of cash flows to help the company provide relevant financial data for internal and external users. According to Weygandt (2008), Accounting consist of three basis activities and it is an information system that identifies, records, and communicates the economic events of an organization to interested users. Accounting has two primary qualities that make its information useful for decision making and they are relevance and reliability. The primary purpose of accounting is to provide a financial report showing its performance during a specific time period usually for a year. These reports are made available for its user’s which are creditors, stockholders, and tax authorities. Accounting is also the financial information that gives an organization/company its understanding of what is happening financially to its organization. With accounting a company can identify its economic events and records these events in order to have a history of the company’s financial activities. This will allow the company to measure their finances in dollars and cents therefore an accountant can communicate the company’s economic events through analyze and by interpret the reported information to the company. Analyzing uses

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