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Week 2 Paper Acc 497

In: Business and Management

Submitted By saraheiss
Words 1436
Pages 6
In accounting there are many sheets that accountants have to put together and analyze for the company directors and the investors. There are three major statements, the Income Statement, the Balance Sheet, and the Statement of Cash Flows. When deciding how a company is fairing there are many aspects to look at within each sheet.
Income Statement:
An income statement is a summary of two key categories of cash flow. It reflects the total revenue generated during a specific time period, and the total expenses that were sustained during that same period. The preparation of income statements on a steady basis allows a business leader to have three key tools. One tool is the ability to understand how the business has performed during the last period. The second tool is the ability to compare the performance of the business over time. The final tool is to utilize an existing income statement as a planning tool to see how a major business decision would impact earnings. The practice of reviewing sales on a monthly basis provides clarity of the actual performance. If there are multiple products or services being offered, it highlights the sales performance of each one. Ultimately an income statement allows the business leader to know how much the business has earned.
Balance Sheet:
The balance sheet tells investors a lot about a company's fundamentals; how much debt the company has, how much it needs to collect from customers (and how fast it does so), how much cash and equivalents it has and what kinds of funds the company has generated over time. Assets, liability and equity are the three main components of the balance sheet. Wisely analyzed, they can tell investors a lot about a company's fundamentals.

Assets
There are two main types of assets: current assets and non-current assets. Current assets are likely to be used up or converted into cash within…...

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