Financial Statements Paper
June 27, 2013
A financial Statement means an authorized documentation of the financial actions of an individual. These are reports that have been written that measure the financial depth, routine and cash flow of a business. Financial Statements reveal the financial results of business connections and procedures on the individual businesses. There are four types of financial statements that business can use to make records of business earnings and loses when making or receiving transactions from other business.
The four basic financial statements are the followings; balance sheet, ...view middle of the document...
The purpose of the income statement is to show the flow of transactions between the distributions of funds both gain and lost to produce an income report. The statement of owners’ equity purpose retains the earnings that show up on a balance sheet and can be influences by the income and the dividends because it uses the figures from the income statement and offers figures to a balance sheet. The purpose of the statement of cash flows is to show individuals whether or not they can pay a bill.
The financial statements would be useful to internal users, also known as the primary users are the managers and employees. The managers are known to investigate the performance of an organization and what would be the appropriate measures to take to improve the business outcomes were as the employees are useful to identify a business success and its outcome on their upcoming remuneration and job safety. In order for an organization to operate smoothly, both internal users need the financial report to make business vital decisions. These reports offer a more thorough observation of the financial position of an organization. The breakdown of a business financial is done with the information that is provided within an issued statement. These statements are used to put into words to suggest the standings between the business and other groups. As for the internal users such as the employees use the financial statements to make combined bargaining tool to arrange agreements between both businesses, in which these statements can also be used for considering the complications that may take place in advertising in making a deal, the ranking of situations and whether there should be a change in wages.
The financial statements would be useful to external users such as investors and creditors. Investors would use a financial statement to be able to evaluate the probability...