...The Four Basic Financial Statements Marta Karina Briones ACC / 290 July 25, 2013 Professor Louann Schloss The Four Basic Financial Statements There are four basic financial statements in accounting, which are as follow: a balance sheet, an income statement, a retained earnings statements, and an income of cash flows. Each of these statements has their individual purpose in the field of accounting. According to Kimmel (2011),”…the four financial statements form the backbone of financial accounting.” The first statement is an income statement. As reported by Kimmel (2011), “an income statement reports the success or failure of the company’s operations for a period of time.” As explained in the book, the income statement lists the company’s revenues then followed by their expenses. Then, the company can determine their net income by subtracting the company’s expenses from their revenues (Kimmel, 2011, pg. 12). The second statement is the retained earnings statement. As stated by Kimmel (2011), “The retained earnings shows the amounts and causes of changes in retained earnings during the period… it is the net income retained in the corporation.” Additionally, if a corporation is successful during a certain amount of time at the end of that period the company then decides what amount of the earnings (profits) would go to pay shareholders in dividends. However, many company’s do not pay their shareholders and retain the profits within the corporation in order...
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...The Four Basic Financial Statements By Stain Baba [Course] [Instructor] [Due Date] The Four Basic Financial Statements Managers of businesses can be considered as stewards who have been entrusted with the responsibility of the day to day running of business activities. In this regard, they are expected to report back to those who appointed them and to other relevant stakeholders on how well they have executed their assigned task(s). One of the established ways of reporting to owners of the company and other stakeholders is through the use of financial statements, which can be used to ascertain the level of effectiveness and efficiency with which the managers have handled the affairs of the company and at the same time, give a concise view of the financial health of the company. Financial statements are records of the financial activities of the of a business enterprise or any other entity (Kimmel, Weygandt & Kieso, 2010). The aim of a preparing a financial statement is to track and present the financial activities of a business entity in a way that enables users of such records to as much as possible, understand the financial position of the of the company at any given time.Financial statements include; the balance sheet, income statement, cashflow statement and statements of shareholders equity. These four set of financial statements are considered to be the basic financial statements typically produced by profit making companies (U.S...
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...The four basic financial statements a company can produce are the Income Statement, Retained Earnings, Balance Sheet and Statement of Cash Flows. All these statements are prepared for a specific period in time, usually on a monthly, quarterly or annual basis. The Income Statement summarizes the fees earned, less any operating expenses to show if the company is profitable. The Income Statement uses the matching concept, which means the expenses are matched with the revenue generated in the same time period as the expenses. If the fees earned are greater than the operating expenses, then the company has generated a net profit. If the expenses are greater than the fees earned, then the company has a net loss. The Retained Earnings shows the changes in the retained earnings. The Balance Sheet displays the company’s assets, liabilities and the owner’s equity. The equation for the balance sheet to equal (balance) is asset = liabilities + OE. The Statement of Cash Flows consists of three sections, cash flow from operating activities, cash flows from investing activities, and cash flows from financing activities. Each of these statements uses information from each other. The Retained Earnings statement uses the net income from the Income Statement. The Balance Sheet uses the retained earnings ending balance. The Statement of Cash Flow ties out to the ending balance of Cash in the Balance Sheet. Any corporation or individual that has any financial ties to a company would use this...
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...QUESTION 1 To purchase this visit here: http://www.nerdypupil.com/product/acc-290-week-1-discussion-question-1/ Contact us at: nerdypupil@gmail.com ACC 290 WEEK 1 DISCUSSION QUESTION 1 ACC 290 Week One – DQ #1 What are the four basic financial statements? What is the primary purpose of each of the four basic financial statements? In your opinion, which financial statement is the most important? Explain why. How would the financial statements be useful to managers and employees? How would the financial statements be useful to investors and creditors? Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 290 Week 1 Discussion Question 1 in order to ace their studies. ACC 290 WEEK 1 DISCUSSION QUESTION 1 To purchase this visit here: http://www.nerdypupil.com/product/acc-290-week-1-discussion-question-1/ Contact us at: nerdypupil@gmail.com ACC 290 WEEK 1 DISCUSSION QUESTION 1 ACC 290 Week One – DQ #1 What are the four basic financial statements? What is the primary purpose of each of the four basic financial statements? In your opinion, which financial statement is the most important? Explain why. How would the financial statements be useful to managers and employees? How would the financial statements be useful to investors and creditors? Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 290 Week 1 Discussion Question 1 in order to ace their studies. ACC 290 WEEK 1 DISCUSSION QUESTION 1 ...
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...BUS5AFS ACCOUNTING AND FINANCE FOR SUSTAINABLE VALUE CREATION Topic 2: Principles of Accounting Semester 1, 2014 ACCOUNTING AND FINANCE FOR SUSTAINABLE VALUE CREATION TOPIC 2: PRINCIPLES OF ACCOUNTING La Trobe Business School BUS5AFS: Topic 2 – Principles of Accounting 1 Topic Learning Outcomes 2.1 2.2 2.3 2.4 2.5 Discuss the nature and purpose of accounting. Explain the five basic financial elements of a business. Explain the underlying concepts of recognising and measuring the financial elements. List the four basic financial statements used in business decision making. List the basic tools for analysing financial statements. BUS5AFS: Topic 2 – Principles of Accounting 2 La Trobe Business School Prescribed reading Hill, G. and Martin, T. Principles of Accounting and Finance Pearson Australia, 2014 Chapter 2 La Trobe Business School BUS5AFS: Topic 2 – Principles of Accounting 3 1.1 Discuss the nature and purpose of accounting. PURPOSE OF ACCOUNTING …….. to provide information to permit informed judgments and decisions regarding the allocation of resources, managing & directing those resources, custodianship (stewardship) & mandatory requirements …….. La Trobe Business School BUS5AFS: Topic 2 – Principles of Accounting 4 ACCOUNTING VALUE ADDS • • • • • • Improve quality and reduce costs Improve sharing knowledge Improve supply chain Improve efficiency and effectiveness Improve internal control Improve decision...
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...presentation of financial statements and underlines the importance of financial reporting. As of February 2010, the Chinese accounting standard systems is composed of Basic Standard, 38 specific standards and application guidance. Although China's accounting standards have not called Financial Reporting Standards, however, the concept of International Financial Reporting Standards are consistent. This revised law marked a large step forward for the continuing integration of world trade and capital markets, with China adopting a significant number of the accounting standards laid out by the International Accounting Standards Board. The old Chinese Accounting Standards (CAS) were largely replaced by the International Financial Reporting Standards (IFRS), to bring China more in line with the rest of the world. The similarity between the new Chinese accounting standards and the IFRS is almost 90–95%. Accounting Standard prescribes the behavior of accounting recognition, measurement and reporting. Auditing Standards draw up the standard of financial statement audit and identification behavior. Under the guidance of "Enterprise Accounting Standards", the preparation and presentation of financial statements could be implemented. The basic concepts of financial reporting should include the main contents, should reflect the basic requirements for information. The corporate financial reporting system consists of financial statements, accounting statements and financial situation posed...
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...Financial Statements Paper Atiya Paige ACC/290 June 27, 2013 Kofi Amoateng 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, income statement, statements of owner’s equity, and statement of cash flows ("Quickmba", 1999-2010). A balance sheet is a statement of financial statuses at a given time and period. As for an income statement is a report that shows revenues with the subtraction of payments for a set time period ending at a given period. The statement of owner’s equity is also identified as the statement of taken earnings or the equity statement ("Quickmba", 1999-2010). This is reports that give details of changes that are kept in the earnings that can be found on the balance sheets. The final basic financial statement is the statement of cash flow, which is a statement that has a full list of sources and the uses of cash proof of purchase. This statement points toward whether enough cash is presented to transmit...
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...Financial Statements Paper Angela Carson Acc/280 Principles of Accounting Stephen Willden October 4, 2010 The purpose of accounting is to help users of financial information to understand how a company or individual is functioning in the economy. Accounting takes the financial information of an organization and it identifies records and communicates its economics to the interested parties. There are four basic financial statements. The income statement shows the revenues, expenses and income of a company over a specific period of time. The retained earnings statement summarizes the changes in earnings over a specific period of time. The balance sheet shows a report of assets, liabilities and equity for an exact point in time. The last would be the statement of cash flows which summarizes cash flows in and out of a company over a specific amount of time. The four basic financial statements are interrelated with one another. They should be prepared in a specific sequence. Net income, which is the income statement, is completed first. The net income is needed to help determine the ending balance in retained earnings. The retained earnings statement provides information if there was an increase or decrease during the specific period of time. The end balance from the retained earnings statement is used to prepare the balance sheet. This is where the basic accounting equation, Assets equal Liabilities plus Equity, is used to calculate the balance sheet. The balance sheet gives...
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...Financial Statements paper . ACC/290 September 22, 2011 Financial Statements paper Accounting is an action needed by companies in business. Without accounting and the knowledge of the inner workings of financial statements, a business is doomed to failure. In accounting there are four basic financial statements used for an array of reasons. The first financial statement in accounting is the balance sheet. The balance sheet is used to represent an illustration at a point of what a business owns and owes; these are also known as assets and liabilities (Kimmel, Weygandt, & Kieso, 2011). The next statement used is the income statement. The income statement displays just how successful one’s business performance is during a certain period. The income statement basically shows the revenues and expenses of any business (Kimmel, Weygandt, & Kieso, 2011). After the income statement there is the retained earnings statement. This statement indicates how much of a business’s previous income is distributed to owners by way of dividends. It also shows how much income was retained within the organization to allot for future growth (Kimmel, Weygandt, & Kieso, 2011). The last of the four basic financial statements is the statement of cash flow. The statement of cash flow is used to indicate where a business obtained their cash during a period. This statement also shows how the obtained money is used over a particular period (Kimmel, Weygandt, & Kieso, 2011). These financial...
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...Financial Statements Patty Reagan ACC/561 September 24, 2012 Bethany Kessel Financial Statements The financial statements of a company give the reader a view of the financial health of the company. The four major reports are the income statement, balance sheet, cash flow statement, and the statement of shareholders’ equity. By understanding the statements and how they relate to one another can help any individual to understand the financial position of the company and will aid in making good decisions when relating to the company. Each report is of importance to the management, creditors, and the investors. Income Statement The gains, revenues, losses, and expenses of a company are listed on the income statement (Johnson, 2012). The money that a company earned from the usual business operations is the revenue. The costs that are associated with earning revenue are expenses. If a company were to sell an asset, it will be considered to be either a capital gain or loss. The amount of net income is found on the cash flow statement as well. This report will be important to investors, creditors, and management. All involved parties want to see if the company is making money or if it is losing money. Balance Statement The balance sheet is a summary of a company’s assets, liabilities, and shareholders’ equity for a particular period (Balance Sheet, 2012). The three segments will give an investor a view of what a company owns and owes and the amount that shareholders...
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...of Accounting and to develop in them the ability to evaluate and use accounting data as an aid to decision making. The main purpose is to assist the students in developing skills in problem solving and decision making in the financial area. Emphasis is laid on analysis and utilization of financial and accounting data for planning and control. 2. Course Duration: The course duration is of 40 sessions of 70 minutes each. 3. Course Contents: |Module No: |Module Content |No. of |70 Marks | | | |Sessions |(External | | | | |Evaluation) | |I |Fundamentals of Accounting |10 |20 | | |Basic understanding of accounting, Accounting Concepts, | | | | |Conceptual framework of financial statements, | | | | |Accounting Policies, Journal Entries and preparation of | | ...
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...Financial Statements Paper Accounting information consists several areas of interest for users looking to interact with a business. These areas include assets, liabilities, expenses and revenues. The information reflecting these areas of interest is used to populate financial statements. The backbone of financial accounting is made up of four basic financial statements. These four financial statements are a balance sheet, an income statement, a retained earnings statement, and a statement of cash flows. Users utilize these basic forms to keep track of financial areas of interest in a business such and to make decisions. The balance sheet is used to paint a current picture of what a business owns, or it’s assets. It also paints a current picture of what a business owes, or it’s liabilities. The income statement is used to show just how well or successful a business has done for a certain period of time. In this statement, a businesses revenues and expenses are reported. The retained earnings statement is used to show a couple of key things within a business. First, it is used to show how much previous income was distributed to the owners of the business in the form of dividends. It also shows how much of that previous income was retained in the business to allow for future growth. The statement of cash flows is used to show where a business obtains any cash during any given period of time. It also details how the business used these monies in that specified...
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... Department of Foreign Languages “Purpose and Principles of Accounting” “Accounting and audit” Faculty (2-2) Supervisor: Kharkiv 2012 Accountancy Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable. Accountancy is a branch of mathematical science that is useful in discovering the causes of success and failure in business. The principles of accountancy are applied to business...
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...8, 2010 Week Two Reflection Summary Section 1: No matter the size of a business, the uses of financial statements are in need. The four basic financial statements include income statement, retained earnings statement, balance sheet, and statement of cash flows (Kimmel, Weygandt, & Kieso, 2009). They are key tools in seeing and understanding the past, present, and future condition of an organization. Income statements provide a description of how profitable the business is. Retained earnings statement reports what income the stockholders/investors will reinvest in the organization and was not distributed to the stockholders. Balance sheet statements relay the assets and liabilities of the organization. Statement of cash flows shows the gross receipts and gross payments. Section 4: External users, such as investors, creditors, and taxing agencies, utilize the four basic financial statements to examine the financial patterns for success and failures of a business. The investors use the information to make decisions to buy, hold or sell stock. Creditors, like the suppliers and bankers use them to evaluate the risks of selling on credit or lending money. The taxing authorities, such as the Internal Revenue Service, want to know whether the company complies with the tax laws. (Kimmel, Weygandt, & Kieso, 2009). External users will examine the income statement to see if a company is successful. They look at the growth rate to attract different types of investors...
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...RUNNING HEAD: FINANCIAL STATEMENTS PAPER Financial Statements Paper ACC 290 Financial Statements Paper In this paper the four basic financial statements will be defined. Each of the four financial statements has its purpose for use. As part of the paper the description of the purpose of the four basic financial statements is acquired. The discussion of the financial statements would be useful to internal and external users is performed as well in this paper. The four basic financial statements are the balance sheet, income statement, retained earnings statement, and statement of cash flow (Kimmel, Weygandt, Kieso, 2011). The balance sheet is used to present a picture of what a company owns (Kimmel, Weygandt, Kieso, 2011). The balance sheet reports the amount of assets and claims to assets for a period of time (Kimmel, Weygandt, Kieso, 2011). Assets are items the company owns that could be used if needed to retain cash. The claims to assets are either creditor or owner. The creditor would be the individual or company that is using the asset as collateral to a debt. Once debt is paid the creditor releases asset back to owner. The income statement is used report the financial health of the company in a certain time frame (Kimmel, Weygandt, Kieso, 2011). The income statement provides the revenues and expenses in the time frame (Kimmel, Weygandt, Kieso, 2011). The revenue is the income funds, and expenses are the outgoing funds. The...
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