This website uses cookies to ensure you have the best experience. Learn more

Financial Statements Essay

642 words - 3 pages

Accounting departments in a business are a very important part of how the business functions. They take care of all aspects that have to do with money, but one of the most notable things they do for a business is handle the financial statements. Financial statements are essentially the backbone of what accountants do for a business. It consists of four separate financial statements in a specific order starting with an income statement, retained earnings statement, balance sheet, and a statement of cash flows. Businesses use an income statement to report if their operations during a certain period of time have been a success of a failure. The way the business determines if they have succeeded or failed is by looking over revenues and expenses. The accountants can then determine the companies’ net income or net loss by deducting the expenses from the revenues, if the businesses revenue comes out higher than ...view middle of the document...

A company would use these financial statements to make future business decisions by looking over them and determine what areas they are doing well in and what areas they are not doing well in. A company could determine that they need to focus on certain areas of the company and reevaluate expenses they could gain a higher net income or gain any kind of income if they are loosing money. Another way they could use these financial statements is to attract investors and creditors to their company so they can grow. Investors view a company’s income statement to evaluate the company’s past income so they can evaluate if the company will have future net income. If investors believe the performance of a company is going strong, they would go and invest their money into the company. Another way a company could make decisions for future growth is to reinvest their earnings into the company. Not only is this a great option to help grow, but it is also a trait that some investors look into so that they can invest in the company. A company could use a balance sheet to determine if they have enough assets to support future sales and whether they have enough money on hand for emergency cash needs. Assets are resources that are owned by a business such as property, equipment, and cash. In a balance sheet assets must be equal to the amount of liabilities and stockholders’ equity. Liabilities are the claims to the creditors, and stockholders; equity is the claims of owners. A company would use a statement of cash flows to make future business decisions by determining where they are in terms of cash position. The company can also use this information to manage how much they paying for operating activities and determine how to reduce the amount next time around to increase their cash flow. Another way a company can use financial statements to make future business decisions is by using comparative statements. Comparative statements essentially financial statement reports for more than one period. This would allow the company to examine multiple reporting periods and see what areas they have been doing well in and where they can improve.

Other Papers Like Financial Statements

Financial Statements Essay

751 words - 4 pages Accounting is essential in every business entity and serves a purpose to all internal and external users. Several business entities use financial statements to make the most efficient, economic decisions and to maintain a balance in the organization. For business entities, financial statements are the snapshots of the business. The financial statements purpose is to summarize and interpret the financial aspect of a business entity for internal

Financial Statements Essay

818 words - 4 pages Financial Statements Paper Every business, no matter its size or scale, relies on accounting as a tool to make sound economic decisions. The purpose of accounting is to show the financial health of a business through a series of financial reports or statements (Weygandt, p. 4, 2008). These statements will show how the company’s revenue is obtained as well as on what the company is spending its money. These statements are prepared by

Financial Statements

787 words - 4 pages Financial Statements Travis Atkins University Of Phoenix Principles of Accounting I ACC/290 Jim Hill February 25, 2014 Financial Statements In the corporate world there are many different things that must take place on a day to day occurrence for the company to maintain to operate at a successful level; one of the main things that must happen is the different type of financial reports that must be made. In any company there will be the

Financial Statements Differentiation Paper

608 words - 3 pages Financial Statements Differentiation Paper There are four different types of financial statements discussed in week which are comprehensive income statements, balance sheets, reconciliation statement and cash flow statement. There is significant differences between the financial statements and will define them. Also will discuss what individual financial statements would interest investors, creditors, and management. Financial statements

Importance of Financial Statements

776 words - 4 pages Financial Statements Page Number at the Top to the Right Author Note This paper was prepared for Principles of Accounting I, XACC/290 Abstract In accounting there are four important financial documents that makes a business whole, but in order to use these documents you must understand accounting. Basic accounting is just keeping track of expenses

Financial Statements Paper

732 words - 3 pages Financial Statements Paper Thomas Hastings ACC/290 April,11,2012 Rolland Roup Financial Statements Paper In the accounting world there are four different financial statements. These financial statements provide a very wide amount of information which is very valuable information to internal and external users in many different types of companies. These four financial statements are the balance sheet, income statement, retained

Financial Statements Paper

1093 words - 5 pages Financial Statements Paper ACC/290 Financial Statements Paper Medical doctors have various gadgets and apparatus to help them determine the health condition of their patients. Doctors use thermometers, stethoscopes, and high blood pressure machines to deduce whether a patient is sick or healthy. There are times when perfectly healthy looking individuals are diagnosed with diseases with the help of these instruments to save their lives

Financial Statements Overview

1026 words - 5 pages Financial Statements Dave Hall ACC/290 Lisa Henderson September 16, 2013 Financial Statements   In any business, the financial statements are the backbone of the financial accounting reporting within the business. The four financial statements include the income statement, balance sheet, retained earnings statement and the statement of cash flows (Kimmel, Weygandt & Kieso, 2010). These four statements provide a summary picture of the

The Four Financial Statements

798 words - 4 pages The Four Financial Statements Daniel K. Lollis ACC/290 August 3, 2012 Sima Jalilizeinali The Four Financial Statements The four financial statements are formal records of the activities of a company, person or business entity.  The four financial statements are balance sheets, income statement, statement of owner’s equity, and statement of cash flow. This paper will identify the four basic financial statements and describe the

Financial Statements Review

630 words - 3 pages Financial Statements Review Ashley Dunn HCS/405 November 14, 2013 Robert McDaniel Financial Statements Review The Patton-Fuller Community Hospital is a full-service, for-profit hospital with 600-beds. Since 1975, the hospital has made every effort to provide advanced patient care for both inpatient and outpatient treatment in Northwest valley. The Patton-Fuller Community Hospital is owned by a 14 person board, in which 12

Examining Financial Statements Paper

1302 words - 6 pages financial statements are prepared using accrual-basis accounting which matches revenues with the associated expenses. The cash flow statement is not based on accrual accounting, but instead is a cash-basis report focusing on inflows and outflows of cash. The cash flow statement allows investors to understand how a company's operations are running, where the cash is coming from and how it is being spent. The main purpose of the above financial

Related Essays

Financial Statements Essay 781 Words

781 words - 4 pages Financial Statements Genesis Ruiz Acc/290 June 14, 2012 Mary Larsen Financial statements When people think of business they think of money. Business is not about just money there is a lot more to it. Money is business but what happen when you go deeper into financial statements. Financial statements are a collection of reports about an organization's financial results and condition. Financial statements

Financial Statements Essay 944 Words

944 words - 4 pages Financial Statements In accounting there are four basic financial statements that are considered standard practice by the generally accepted accounting principles (GAAP). These are the income statement, the retained earnings statement, the balance sheet and the statement of cash flows. While each of these reports is very important in its own regard, they are also intermingled and depend on each other to represent a complete unbiased view of

Financial Statements Essay 595 Words

595 words - 3 pages Financial Statement Relationships Interpreting the results from the financial statements is critical. However, understanding how the financial statements are linked, and how a set of numbers from one statement can change the set of numbers from another statement is fundamental to the success of the company. Interrelationships The four financial statements income statement, retained earnings statement, balance sheet, and statement of cash

Financial Statements Essay 2347 Words

2347 words - 10 pages This paper is all about financial statements. An introduction to financial statements is presented to give a background to the reader. In the introductory part, the fundamental accounting concepts used in the preparation of financial statements are included together with the explanation of their basis. Examples are also given as an illustration of its application. This consist the first part. On the other hand, the second part is about the