...Financial Statement Differentiation Paper Set Jardine Acc 561 Financial Statement Differentiation Paper Financial statements are prepared by every public company according to the generally accepted accounting principles adapted by the United States to ensure accounting accuracy within the investment community. These accounting standards are used to prepare the balance statement, the income statement, the shareholders’ equity statement, and the cash flow statement. This paper will discuss the differences between each of these statements. Balance Sheet Shareholders’ equity, liabilities, and assets are items listed on the balance sheet. Assets are the items that the company owns that have value. Liabilities are debts that the company is obligated to pay. Shareholders’ equity is the net worth of the company. The balance sheet is an overview of the company’s accounts during the financial period depicted on the statement. Income Statement The income statement is the company’s statement of profit and loss. This statement will show the company where money was either gained or lost during operations. There are several versions of the income statement, depending on the size of the company. Generally, though, the sections in the income statement consist of revenue, cost of goods sold, operating income minus expenses, pretax income, extraordinary items, income available for common stockholders, adjusted net income, and earnings per share. Cash Flow Statement ...
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...Financial Statement Differentiation Paper Name ACC/561 Date Instructor Financial Statement Differentiation Paper Financial statements arrange financial information into statements that prove to be the financial accounting backbone. The income statement, statement of cash flows, retained earnings statement, and balance sheet arrange the expenses, liabilities, revenues, and assets of a company into formats that provide a clear view of different areas of interest. These areas are of interest to the investors, creditors, and management of the company (Kimmel, 2011). All four of these financial statements prove to be of interest to all three financial statement users in multiple ways. The Four Financial Statements Each of these four financial statements provide insight necessary to keep a company fully functional and profitable. An income statement provides a clear view of how successful the performance of a company was within a period of time through reporting the revenues and expenses within that period. The net income, which is determined through use of the income statement, proves to be valuable information in many different areas of financial interest. The statement of cash flows presents where cash was obtained within a time period and how it was used within the company during that time. This shows how the investing, financing, and operating activities of the company effects the amount of cash at the period’s end. To determine the amount of previous income...
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...Financial Statement Differentiation Paper Jason Raines ACC/561 January 9, 2012 Cathleen Davis Financial Statement Differentiation Paper There are four basic financial statements that help business keep track of what is coming and going on a daily basis. “They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity” (Beginner’s, 2007). Each one of these statements has it own unique way of showing where the company’s money came from, where went, and where it is now. This is why it is important to have better understanding how each statement can help keep accurate financial records for the business. Balance Sheet A balance sheet is really an easy concept to understand because when it comes to the balance sheet company’s use them to balance out there financials. This financial statement shows a company’s “assets, liabilities, and share holders equity at certain point of time in a business cycle” (Balance Sheet, 2011). There is a simple equation that can describe the balance sheet which is Assets = Liabilities + Shareholder’s Equity, using this equation company’s should be able to keep accurate records of their finances. Although investors, creditors, and management all look at the balance sheet for reassurance it would seem that the creditors would more interested in the balance sheet because creditors can look at the balance sheet and make a determination on whether or not they are going...
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...561 Financial Statement Differentiation Paper Financial statements provide crucial information to management, investors, and creditors. These statements include four documented forms cash flow statement, balance sheet, retained earnings, and income statement. The information contained in the reports provides a detailed picture to the condition of any business. A business evaluation containing all four documents is essential to form an accurate forecast in past and future objectives. Each document allows creditors, investors, and managers’ ability to further understand the financial workings of an individual company. Balance Sheet A balance sheet shows the dollar value at a specific time of the assets and liabilities of the company. The formula for this is Assets = Liabilities + Stockholders Equity. Assets are any resource in which a company posses such as cash, equipment and property. Liabilities are shown as amounts or payables owed to the owner or creditor. Balance sheets for most companies are available to the public. By publishing this report lenders and investors can review the data and decide whether the company is worth the investment. Both investors and lenders can also determine if the company has the ability to repay a debt (Kimmel et al., 2009). Income Statement The income statement shows if a company has reported a profit or loss for a specific period. This statement is also referred to as a profit and loss statement. The items...
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...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 help us comprehend the past and forthcoming financial situation of a company. According to Sherlock and Reuvid, a balance sheet indicates assets, liabilities and equity balances of a company at any given point in time. The balance sheet will show short and long term liquidity and commitments of the company, also the control of the corporation and capital organization. The income statement indicates the elements of earnings and loss of any specified time frame. Also it will usually display subtotals for gross revenue, net income after taxes, and operating income. The reconciliation statement, “Supplies investors and analysts more information for predicting future cash flows” (McClain). It also displays any changes in depreciation of equipment, acquisitions of property, and other changes in corporate operational resources and liabilities. The cash flow statement indicates the cash influxes and losses of the corporation at any specified time frame. There are two approaches for formulating the cash flow statement. The direct process displays...
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...Financial Statement Differentiation Paper Jasmine Unger ACC/561 April 8, 2013 Professor Timothy Jared Financial Statement Differentiation Paper Financial statements provide documentation of a company’s financial history for a set timeframe. One of the financial statement used by investors, creditors, and mangers is the balance sheet. The second statement used by accountant’s income statement, which is also important to shareholders. The third statement is the retained earnings statement, and the fourth financial statement is the statement of cash flows. Each financial statement has a different purpose and shows different aspects of the company’s finances. However, these financial statements are integrated and work together to provide shareholders financial information. This paper will defines the four financial statements while explaining the financial statement most suitable for either an investor, creditor, or management. The Four Financial Statements The first financial statement is the balance sheet. The balance sheet provides a portrait of the company’s assets and liabilities. The balance sheet is the statement of financial position at a given point (Quick MBA, 2010). The second financial statement, the income statement, reports the revenues, and expenses during the same timeframe as the balance sheet. Revenue is the monies the company is gaining after expenses. The third statement is called the retained earnings statement, which explains changed in retained earnings...
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...Financial Statement Differentiation Paper Financial Statement Differentiation Paper ACC/561 The Four Financial Statements consist of income statement, balance sheet, statement of cash flow, and statement of owner’s equity. The progress with the income statement, states gross revenues, minus the goods sold would give the gross profit of the company. Balance sheet consists of long term assets and long term liabilities that are current issues. The cash flow would be recognized by the money the company has coming in, to where the money goes out, and the statement of owner equity gives details of the account over a period of time. Income Statement have a different description that contains expenses of Revenue during a time period, minus cost of goods sold, which would then give the gross profit. Once the net income would be figured out, the net income would be transferred over to the balance sheet. Balance sheet would consist of any assets and liabilities that are current and long term. The balance sheet has to make sure both ends balance out the same. Statement of cash flow gives the direction of company of where money is taken in from and to give ideas where the money is going to. This would consist of cash and payments. The statement of Owner Equity gives details that have taken place over course of one year of the owners’ equity account. The financial statement that would be of interest to investors would consist of income statement, balance sheet...
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...Financial Statement Differentiation – Individual Paper Mary Lou Gasca Accounting ACCT/561 March 18, 2013 Moises Rodriguez Financial Statement Differentiation – Individual Paper Financial statements are tools that people use to evaluate the potential of a business’ organization. There are four types of financial statements for two main types of users (internal and external), which is beneficial, depending on the type of business (sole proprietorship, partnership, and corporation). Regardless of the type of business, financial statements assist in making business decisions for internal and external users. Internal users are the business managers, owners, and an organization’s personnel who contribute to the operations of the business. External users are creditors, investors, and individuals of interest for the business (customers, for example). Financial statements also assist in identifying, depending on the nature of the business, an organization’s resources, profits, debts, business creditability, and financial health of business activities. The four types financial statements, which report financing, investing, and operating...
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...Financial Statement Differentiation Paper Cara Hawkins ACC/561 November 16, 2011 Carl Upthegrove Abstract Financial statements are an important tool management and assessment tool. When correctly prepared and properly used, they contribute to an understanding to the financial condition, problems and possibilities of a company. Financial Statement Differentiation Paper Financial statements are the report card of businesses. whether you are a new investor a small business owner, a manager, an executive, a non-profit, or just trying to keep track of your personal finances, understanding how financial statement are used is very important There are five financial statements. They are; (1) income statement; (2) retained earnings statement; (3) balance sheet; (4) statement of cash flow; (5) interrelationships of statements. An income statement is a report that shows how much revenue a company earned over a specific time period (usually for a year or some portion of a year). An income statement also shows the costs and expenses associated with earning that revenue. The literal “bottom Line” of the statement usually shows the company’s net earnings or losses. Investors are interested in income statement because it provides useful information or predicting future net incomes. Creditors also use this type of statement to also predict future earnings. Banks lend monies on the promise they will paid back. The income statement tells banks if there is enough profit being...
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...Financial Statement Differentiation Financial Statement Differentiation In our text Accounting: Tools for business decision making authors Kimmel, Weygandt, and Kieso (2009) stated that “Success in business requires making countless decisions, and decisions require financial information.” This reflects the perfect definition for financial statements and what their sole purpose is. Financial Statements summarize the financial condition or health of a company. For this paper, one will look at each of the four financial statements and discuss the information they provide. Then the internal and external users of financial statements will be addressed along with the main interests of each of these users. Income Statement An income statement is used to report whether a company is making a profit or loss. This is the determining factor in a company being successful or not. The income statement reports the company’s revenues and expenses over a specific period of time. The format of the income statement begins with the time period listed, and then the revenues and expenses are listed. The net income for the company is then determined by subtracting the expenses from the revenues. (Kimmel, Weygandt, & Kieso, 2009) Balance Sheet The balance sheet illustrates the company’s assets and liabilities. That is, what the company owns and owes. It also shows the stockholders’ equity. The balance sheet, as its name suggests must have the same balance for assets and liabilities...
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...Financial Statement Differentiation Sha'ron Burton ACC/561 April 3, 2012 Greg MacNaughton Financial Statement Differentiation When putting together a balance sheet, retained earnings, income statement, and cash flow statement one has just created a financial statement. These four documents together give everyone involved in a business an accurate and solid outlook on the business. This statement gives creditors, investors, and management a good look at what they are getting in to. It is essential that all four pieces are included in the statement, or it will not be accurate. They depend on one another. This paper will look at what financial statements are of interest to management, creditors, and investors. Balance Sheet Investors and management would be interested in a balance sheet. According to "Businessdictionary.com" (2012), " A balance sheet states what assets the entity owns, how it paid for them, what it owes (it’s liabilities), and what is the amount left after satisfying the liabilities” (Balance Sheet). It also includes a company’s assets, and shareholders’ equity. A company can evaluate these items and gauge what the company owes and owns. The equation for the balance sheet is assets = liabilities + shareholders’ equity. The balance sheet is a long-term view of how the company is doing. Retained Earnings Retained earnings is comes into play after the income statement, it should be done before the balance sheet. It covers...
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...Financial Statement Differentiation Raven Vaughn Accounting 561 November 7, 2011 George Bray Financial Statement Differentiation This paper briefly introduces the four types of documents in a financial statement, the information they contain, and their importance to investors, managers, and creditors. Financial Statements Four documents make up a complete financial statement: income statement, statement of retained earnings, balance sheet, and statement of cash flow (Kimmel, 2011). Income Statement An income statement details the company’s revenues and expenses for a specified time (month, quarter, or year). The items found on this statement are revenues, expenses (salaries, supplies, rent/mortgage, insurance, interest, depreciation), and either net income or net loss. A net loss will show here if the company is spending more than it makes, and visa versa. Investors use the income statement to calculate financial ratios to show the rate of return and viability of the business (Sanco, 2011). Managers use this document to evaluate where the money is going. Statement of Retained Earnings Each financial statement ties into the next, for instance: the retained earnings statement requires the net income from the income statement. Retained earnings are calculated using the amount of dividends paid and the investment income generated. This statement reflects changes in ownership, retained earning balances, and covers the same date range as...
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...Financial Statement Differentiation ACC/561: Accounting March 2013 Financial Statement Differentiation It is difficult to envision investors, creditors, and management making informed decisions sans accurate financial information. Consequently, organizations should use financial statements to communicate their financial stability, cash flows, and operational results with external and internal users. The purpose of this paper is to explain information contained in each of the four financial statements and discuss reasons each statement is of interest to investors, creditors, and management. Literature Review Literature review identified four primary financial statements the accounting process creates. They are the income, retained earnings, balance sheet, and cash flow statement (Kimmel, Weygandt, & Kieso, 2009). According to Albrecht, Stice, Stice, and Swain, (2008), each statement has a unique purpose and interrelates with the others. To decipher a company’s complete financial picture, stakeholders should understand how each statement influences the next (Financial Accounting, 2011). The Four Types of Financial Statements Generally accepted accounting principles (GAAP) require publicly held organizations show their earnings, owner investments - distributions to owners, financial position, and cash flow for a given period (Financial Accounting, 2011). The financial statement that satisfies each of the aforementioned (in order) is the income statement, retained...
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...Financial Statement Differentiation Paper Abstract Considering the rapid globalization and expansion of business activities today, the importance of the four different financial statements; balance sheet, income statement, retained earnings statement and the statement of cash flows cannot be over-emphasized. This paper covers the four different types of financial statements, the information each one of it contains, and which statement is of most interest to investors, creditors, and management. Income Statement The Income Statement according to John Wiley & Sons modestly “reports the success or failure of the company’s operations for a period of time”. (Kimmel, P.D., Weygandt, J.J., & Kieso, D. E.,2009) The Income Statement shows Revenue minus Expenses which gives us the Total Net Income. Revenues are considered any type of revenue you get from the Service. Expenses on the other hand are salaries, supplies, rent, insurance, interest and depreciation. Investors are interested in the Income statement specifically the net income “because it provides useful information for predicting future net income.” (Kimmel, P.D., Weygandt, J.J., & Kieso, D. E. ,2009). Creditors as well are interested in utilizing the income statement because it assists them in predicting future earnings. Retained Earnings Statement The Retained Earnings Statement “shows the amounts and causes of changes in retained earnings during the period in this case the period would be “the...
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...IMPLEMENTING A CUSTOMER RELATIONSHIP IMPLEMENTING A CUSTOMER RELATIONSHIP MANAGEMENT PROGRAMME IN AN EMERGING MARKET Adele Berndt, Frikkie Herbst, and Lindie Roux1 ABSTRACT Retail financial services in all markets, including emerging markets, are undergoing major transformation, driven by change, deregulation and customer sophistication. Customer service and specifically relationship management, in particular, are crucial to attaining a sustainable competitive advantage in the marketplace. The implementation of a one-to-one programme within an emerging economy is the focus of this paper, specifically in the financial services environment. The steps in the implementation of CRM as proposed by Peppers, Rogers and Dorf (1999b) are examined and the effect on customer service in an emerging market is investigated. The findings indicate that there are positive associations with these steps and customer service. INTRODUCTION Changes in customer expectations can be identified throughout the world. Customer relationship management (CRM) strategies have become increasingly important worldwide due to these changes in expectations from customers as well as changes in the nature of markets. Changes have been noted across the world, but opportunities present themselves in South Africa and other developing countries for CRM strategies. Customer Relationship Management (CRM) is a managerial philosophy that seeks to build long term relationships with customers. CRM can be defined as...
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