Week 1 Acct Xacc290
Business and Management
Submitted By shaemari
The four major financial statements are the balance sheet, income statement, statement of retained earnings and statement of cash flows. The balance sheet shows the financial condition of a company. It reports the company's assets, liabilities and net equity. The income statement shows the profit and loss of a company. It reports the company's income, expenses and profits over a period of time. The statement of retained earnings shows the changes of a company's retained earnings over a period of time. It shows how much income was given to owners and how much was used for growth in the future. Lastly, the statement of cash flows shows the company's operating, investing and financing activities.
Internal users are a variety of managers who create, organize and oversee a business. The types of managers included under this category are, marketing managers, production supervisors, finance directors and company officers. It is important for these managers to know the all around financial condition of a company so that they have the answers to many important questions. There are many important questions such as which marketing strategies will help maximize profit and successful sustainability of a business. There are human resource questions that need answers such as can a company afford to give paid vacations to their employees. There are also management questions like which products are more profitable and which can be removed due to lack of profit. This is why financial statements hold important information for Internal Users.
External users are described as Investors and Creditors. The overall financial standing of a company is important to Investors because they need to determine whether the company is worth investing in. Investors will have important questions about a company and they’ll be able to get these answers from the company’s...