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RUNNING HEAD: FINANCIAL STATEMENTS PAPER

Financial Statements Paper
ACC 290

Financial Statements Paper In this paper the four basic financial statements will be defined. Each of the four financial statements has its purpose for use. As part of the paper the description of the purpose of the four basic financial statements is acquired. The discussion of the financial statements would be useful to internal and external users is performed as well in this paper. The four basic financial statements are the balance sheet, income statement, retained earnings statement, and statement of cash flow (Kimmel, Weygandt, Kieso, 2011). The balance sheet is used to present a picture of what a company owns (Kimmel, Weygandt, Kieso, 2011). The balance sheet reports the amount of assets and claims to assets for a period of time (Kimmel, Weygandt, Kieso, 2011). Assets are items the company owns that could be used if needed to retain cash. The claims to assets are either creditor or owner. The creditor would be the individual or company that is using the asset as collateral to a debt. Once debt is paid the creditor releases asset back to owner. The income statement is used report the financial health of the company in a certain time frame (Kimmel, Weygandt, Kieso, 2011). The income statement provides the revenues and expenses in the time frame (Kimmel, Weygandt, Kieso, 2011). The revenue is the income funds, and expenses are the outgoing funds. The retained earnings statements show how previous income was distributed to owners in the form of dividends (Kimmel, Weygandt, Kieso, 2011). The retained earnings statements give the business the ability to review how much are acquired and the changes to the earnings. The time period used to calculate retained earnings will be same as reported on the income statements. The statement of cash flows

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