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Application of Financial Statements-the Balance Sheet (Assignment 1 Week 8)

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Application of Financial Statements: The Balance Sheet

Tonesha Gadson

Strayer University

Financial Accounting (ACC 557)

Professor Mary Johnson

May 27th, 2012

Abstract

Many people may ask why Financial Accounting is needed and is so prevalent in the business world and in personal living. What is its importance and activities involved? Why is it so crucial in commerce performance and individual responsibilities? Most significantly, which financial statements are of great magnitude in work and life? To the point, financial accounting is the process of summarizing financial data taken from an organization's accounting records and publishing in the form of annual (or more frequent) reports for the benefit of people outside the organization. This financial data are then entered into financial statements, which is based on the main accounting equation: Assets = Liabilities + Owners’ Equity. Financial statements show you the money and show you where a company’s money came from, where it went, and where it is now (U.S. Securities and Exchange Commission, 2007). With that said, there are four basic financial statements in calculating an organization’s and one’s own financial stability: -Balance Sheet -Income Statement -Cash Flow Statement -Statement of Owners’ Equity In this report, a major emphasis will be placed on the initial basic financial statements and how it’s applied in the business world and personal use-the Balance Sheet. Not only is the Balance Sheet a foremost requirement in gaining a company’s snapshot of its state of financial affairs, but it also serves as a means of collecting a picture of economic conditions of one’s own personal financial solidity. Keywords: Balance Sheet, Personal Utilization, Organization, Financial Solidity

Example of the Balance Sheet and How It’s Applied to Everyday Life

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