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The Role of Accounting on Business and Our Society

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The Role of Accounting on Business and Our Society
Angel Ramos
Professor Darlene Green-Connor
ACC 100: Accounting I
March 2, 2014

The Role of Accounting on Business and Our Society

There are many decisions that companies make every day in order to be in business as well as to ensure it continues to stay in business. If in retail, such examples would be to extend its inventory or cut back on an item, place certain product on sale or on clearance, or even if it would be better to relocate or sell the company. Before making any of these decisions, management and the decision makers need to know how the company is doing. There are valuable key point indicators that can help in the ultimate direction but no other report is more commonly used than the financial statement.
The financial statement of a company tells the story of where the company stands in regards to their financial position, business strategy and future earnings. “As businesses have expanded internationally, so has the need for consistency and comparability in the financial reporting of events and transactions in the financial statements” (Ward, p.78). They are commonly standardized in a format that can be viewed and translated by financial and non-financial people alike. The four major components are the Income Statement, the Owner’s Equity Statement, the Balance Sheet and the Statement of Cash Flows.
Financial Statements
Income Statement The Income Statement is gathered within a specific time period of reporting. It reports how much money was made in comparison to how much money was used for the run of the company. As the end result, it provides the answer as to what is the current flow of the company and gives a view of either a net income or net loss in production for that specified time period.
Owner’s Equity Statement Along the same time the Income Statements are gathered, the…...

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