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Com156

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Submitted By chhustek
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Financial Statements
XACC/290
3/21/14

Every business in America wants to be successful. One part of being successful is the way they report on their earnings and keep track of their earnings. Before you can report your yearly or quarterly earners you must keep track of them. There are four basic financial statements that every business must do in order to report their earnings correctly. They are the income statement, balance sheet, retained earnings statement and the cash flow statement. Each statement has a different role in telling the complete story of a business. The income statement reports the success or failure of the company’s operations for any period of time. Most company’s run this once a year and the bigger company’s run this quarterly. The retained earnings statement shows the amounts and causes of changes in retained earnings during any period of time. The balance sheet reports assets and claims to assets at a specific point in time. The main reason for the cash flow statement is to provide financial information about all receipts and cash payments. People are interested in this statement because it shows where you’re most important resource is coming and going. All these reports break down different information for different type of people and/or departments. If a company was going to spend a million dollars in advertising they would first want to know if they could spend that money all at once or threw out the year. The financial reports could show if that money was worth the investment. That is the key to all management is how can we invest in our company and grow. Bigger companies that have stockholders need to know what their cash looks like so they can pay their shareholders or not. When a company starts to grow they tend to look outside the company for loans, investors, or just plan credit. Investors will rip these reports apart

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