¶ … Accounting and Financial Statements
The purpose of accounting is to provide managers with the information they need to evaluate the liquidity of an organization. The balance sheet, income statements, statement of owner's equity, and statement of cash flows are financial statements that provide a basis on which managers, investors and creditors can make decisions. Of the four financial statements only the balance sheet, whose amounts are carried over from year to year, is considered to be a permanent statement. The income statement, statement of owners' equity, and statement of cash flows close out at the end of each fiscal year and are considered temporary. David Kurtz (2010) describes each of the four financial statements and their individual purpose.
The Balance Sheet
The balance sheet is based on the following accounting model: assets equal liabilities plus equity. A company's balance sheet reflects its position on a specific date. The picture it paints is of the company's assets together with its liabilities and owner's equity. Balance sheets are...
Financial Statements Identify the four basic financial statements. The four basic financial statements include: the balance sheet, income statement, owners' equity and cash flows. The balance sheet is when there is a focus on the current financial strengths or weaknesses inside a firm. This gives managers, employees, investors and regulators the ability to determine what issues are impacting the company. (Ingram, 2011) ("Four Financial Statements," 2010) The income statement is concentrating on the
Financial Statement Differentiation Analysis of the Use of Four Types of Financial Statements The four fundamental types of financial statements include the balance sheet, income statement, statement of retained earnings and statement of cash flows and each meets a very specific series of needs within a business. Investors are most interested in the risk profiles of companies they are interested in investing in more than any other information element. Creditors are most
Financial Statements Accounting is a means of keeping track of a firm's financial transactions. There are two different types of accounting, financial and managerial. Financial accounting focuses on the construction of financial statements with the intention of providing an accurate overview of the firm's financial condition. The four major financial statements are the income statement, the balance sheet, the statement of changes in owner's equity and the statement of cash flows
Accounting Qualitative Characteristics of Financial Statements There are four principal qualitative characteristics that make the information provided in financial statements useful to users. These are understandability, relevance, reliability and comparability. The first section of this paper will be dedicated to explaining each of these concepts and how they relate to making financial statements more valuable for the audience. The first principal qualitative characteristic is understandability. This relates not only to the information but
Financial Statements All publicly-traded firms are required to produce financial statements. These statements are produced according to standardized guidelines, and their production is an essential component to the efficient function of modern capital markets in the west. This paper will discuss the nature of financial accounting statements, and will provide insight into how these statements provide a benefit to different stakeholder groups, both internal and external. The production of consistent, reliable financial
Financial Accounting Accounting Concepts Financial Statements (Regulatory oversight) The rapid failure and bankruptcy of Enron has prompted severe criticism of the nation's financial reporting and auditing systems, which are fundamental to maintaining investor confidence in U.S. capital markets; there are four areas in which the Enron failure revealed serious problems: corporate governance, the independent audit of financial statements, oversight of the accounting profession, and accounting and financial reporting issues (GAO, 2002). The financial
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