...The Four Financial Statements Daniel K. Lollis ACC/290 August 3, 2012 Sima Jalilizeinali The Four Financial Statements The four financial statements are formal records of the activities of a company, person or business entity. The four financial statements are balance sheets, income statement, statement of owner’s equity, and statement of cash flow. This paper will identify the four basic financial statements and describe the purpose for each. The balance sheet reports assets and claims to assets at a specific point in time is a statement of financial position at a given point in time (Kimmel, Chapter 1, Balance Statement, 2009). The fundamental accounting model is assets equal liabilities plus equity. A company’s assets can be put into two different classes, current assets, and fixed assets. Current assets are assets that quickly and easily can be converted into cash, most of the time it is at a discounted rate from the purchase price. A couple of things are included in current assets such as cash, accounts receivable, securities notes receivable, inventory on hand, and prepaid assets such as pre-paid insurance. A couple of the things are classified as fixed assets include land, buildings, and equipment. Such assets are recorded at historical cost, which means that the value of it is much lower than market value. Liabilities represent the port of the assets that are owned by creditors. Liabilities can be classified as short-term liabilities and...
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...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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...Lisa Clark Accounting Capstone Project March 15, 2013 Week 2 Application The four main financial statements are the balance sheet, the income statement, the cash flow statements, and the statements of shareholder’s equity. Each statement can be used to give an insight to a company’s financial activities, and can provide valuable information on said company. The balance sheet provides detailed information on a company’s assets, liabilities, and their shareholder’s equity. A company’s balance sheet has to equal out, so the assets have to equal the sum of the liabilities and the shareholder’s equity. Assets are the things that a company owns that have value, and assets are usually listed on how quickly they can be converted to cash. Liabilities are usually listed based on their due dates which can be current or long term. The shareholder’s equity is the amount of money that owners have invested (www.sec.gov). The income statement show how much revenue that a company has earned over a period of time, and it shows the costs and expenses associated with earning that revenue. The statements also show whether or not the company made money or lost money. The income statement also shows the earning per share which is the amount of money the shareholder’s would make if the money was distributed. Most of this money is reinvested in the company. The income statement will list the total amount of sales at the beginning and then certain costs are deducted to end with how...
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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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...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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...QUESTION 1 To purchase this visit here: http://www.nerdypupil.com/product/acc-290-week-1-discussion-question-1-2/ 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-1-2/ 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...
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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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...Financial Statements Paper Thomas Hastings ACC/290 April,11,2012 Rolland Roup Financial Statements Paper In the accounting world there are four different financial statements. These financial statements provide a very wide amount of information which is very valuable information to internal and external users in many different types of companies. These four financial statements are the balance sheet, income statement, retained earnings and statement of cash flow. These four financial statements form the backbone of financial accounting. (Kimmel, Weygandt, & Kieso, 2009) Each of the four financial statements has its own use’s within accounting and each provides different and very crucial information to its proper user’s. The first financial statement is the balance sheet, the balance sheet shows a picture at a point in time of what your business owns (its assets) and what it owes (its liabilities). The second financial statement is income statements show how successfully your business performed during a period of time, it reports revenues and expenses. The third financial statement is retained Earnings are used to indicate how much of the previous income was distributed to you and the owners of your business in the form of dividends, and how much was retained in the business to allow future growth. The fourth financial statements is statement of cash flow is to show where your business obtained cash during a period of time and how that cash was used. (Kimmel,...
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...Financial Statements Amber Khan University of Phoenix Principles of Accounting 1 ACC-290 Jean Balla May 9, 2012 Financial Statements Identify the four basic financial statements The four basic types of financial statements are balance sheet, income statement, statement of owner’s equity, and lastly statement of cash flow ("The Four Financial Statements", 1999-2010). Describe the purpose of each of the four financial statements. A balance sheet is used to summarize the finances of a company during a specific period of time. The sum of company’s liabilities and the owner’s equity should be equal the assets and finding the balance between the two is why this report is called a balance sheet. An explanation of the components of a balance sheet could be: Assets = Liabilities + Equity ("The Four Financial Statements", 1999-2010). An income statement is a representation of company’s profit or loss. The statement includes figures from sales and expenses. The difference between revenue and expenses is the company’s net income. An income statement is usually compiled monthly to keep track of the company’s progress. The purpose of owner’s equity statement is to compare owner’s equity from the start of the period to the end of that period. Owner’s equity combines information from both the income statement and balance sheet as an owner’s equity is determined by adding the investments and income and subtracting this figure from withdrawals...
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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 Paper April 14, 2011 Devina Stocking ACC/280 Salil Sharma Financial Statement Accounting is an essential part of the business world today. Accounting “identifies, records, and communicates the economic events of an organization to interested users” (Weygandt p. 4). Accounting shows organizations what is happening financially within the organizations. Accounting shows where the cash is going and where cash is coming from. Accountants analyze and interpret the financial information on the financial statements using ratios and graphs. The information that is being analyzed are comprised into financial statements. The four basic financial statements include; income statement, statement of retained earnings, balance sheet and statement of cash flows. The income statement “presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time” (Weygandt p. 21). The retained earnings statement “summarizes the changes in retained earnings for a specific period of time” (Weygandt p. 21). The balance statement “reports the assets, liabilities, and stockholders’ equity of a company at a specific date” (Weygandt p. 21). The statement of cash flows “summarizes information concerning the cash inflows (receipts) and outflows (payments) for a specific period of time” (Weygandt p. 21). The income statement, statement of retained earnings and statement of cash flows all depict a period of time whereas the balance sheet is...
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...accounting, identify the four basic financial statements, and explain how they are interrelated and whom they are useful to. Accounting “Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users” (Weygandt, Kimmel, & Kieso, 2008, p. 4). Economic events are accounting transactions that a company identifies and records to communicate this information to interested parties. For example, Apple computers first identifies that a computer sale is an economic event relevant to its company. An example of an economic event to Apple computers is selling an Apple iPod. When this transaction takes place, it is recorded in a systematic manner to create a chronological diary of events (Weygandt, Kimmel, & Kieso, 2008, p. 21). Four Financial Statements There are four different and interrelated basic financial statements that companies prepare from summarized accounting data. The first statement is the income statement. The income statement presents the net income (when revenues exceed expenses) or net loss (when expenses exceed revenues) of a company based on the revenues and expenses for a specific period. The next financial statement is the retained earnings statement. “A retained earnings statement summarizes the changes in retained earnings for a specific period of time” (Weygandt, Kimmel, & Kieso, 2008, p. 21). For example, if a company creates the four financial statements, and it is for the end of...
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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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...Introduction to Economics Being the manager of a financial planning business, a decision must be made concerning two of the financial planners. Phil and Francis both have the ability to produce financial statements and answering the telephone calls. Research reveals a solution to the issue of self-sufficiency or job specialization (O’Sullivan, Sheffrin, & Perez, 2010). The data is collected, processed, and analyzed for making the decision on Phil and Francis being self-sufficient or specializing to ensure greater productivity in financial planning. Phil can prepare one financial statement or answer eight telephone calls in an hour. Francis can prepare four financial statements or answer ten telephone calls in an hour. Opportunity cost is the base of specialization and trade which benefits people. As shown below, Francis has the absolute advantage in completing both tasks (O’Sullivan, Sheffrin, & Perez, 2010). The opportunity cost for Phil is eight telephone calls for 1/8 financial statements. The opportunity cost for Francis is giving up two and one-half telephone calls for 2/5 financial statements. | Phil | Francis | | Fin. Stmt. | Ph. calls | Fin. Stmt. | Ph. Calls | Output per hour | 1 | 8 | 4 | 10 | Opportunity Cost | 8 phone calls | 1/8 financial statement | 2 1/2 phone calls | 2/5 financial statements | If Phil and Francis were to specialize they would be more productive, a gain for the financial planning business. When analyzing why the specialization...
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...Financial Statements in Business Bethany Herman ACC/561 July 13, 2015 Tom Myers Financial Statements in Business Businesses review and use four primary types of financial statements to reflect their financial position. The four primary types of financial statements businesses use are the balance sheet, income statements, statements of equity, and the statement of cash flow. The financial statements used to display financial information to the public are all incorporated with showing a full financial picture of a company. Each of the four financial statements interacts with one another to give investors and the public a good insight into the overall finances of a company. “Financial statements, which are accounting reports, serve as the principal method of communicating financial information about a business entity or an individual to outside parties such as banks and investors. In a technical sense, financial statements summarize the accounting process and provide a tabulation of account titles and amounts of money. Furthermore, financial statements report the financial position or financial status of a business or an individual as well as financial changes at a particular time or during a period of time. The basic purpose of financial statements is to communicate to external and internal parties information about financial decisions that have been made.” According to Referenceforbusiness.com (2015). The balance sheet is used to show a company’s financial standing...
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