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Financial Statements Paper ACC/290




Financial statements are very important when doing business. The four basic financial statements are very important to a business. A business would not be able to obtain credit, loans, investors, or many other issues without correct financial statements. Financial statements should be consistent and follow the expected guidelines. It is extremely important for the financial statements to be accurate at all times. When being used they keep track of the company?s all transactions. The four basic financial statements are Balance Sheets, Income Statements, Retained Earnings Statement, and Statement of Cash Flows. Each statement is organized and helpful to both internal and external users.;The balance sheet shows what a business owns and what it owes during a period of time. An income statement lists the company?s revenues followed by its expenses during a period of time, this determines the company?s net income or loss. Company?s use the retained earnings statement to indicate how much of their previous income was dispersed to the business owner and investors in the form of dividends over a period of time and how much was retained in the business to allow for future growth. Finally, the statement of cash flow reports where the business obtained cash during a set time period and how that cash was utilized. The balance sheet presents detailed information about a company?s assets, liabilities and shareholders? equity. Income statements illustrate the success or failure of a company. Income statements do this because they not only track how much revenue a company has earned over a period of time but they also track the cost and expenses associated with earning that revenue. The income statement shows a company?s ?bottom line?, which is the net income after taxes, wages, advertising and capital losses. This allows the company to see their profit or their losses.;Cash flow statements report a


Paper#20666 | Written in 18-Jul-2015

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