This website uses cookies to ensure you have the best experience. Learn more

Financial Statements Essay

1525 words - 7 pages

Financial Statements

Leslie Johnson

January 31, 2010

ACC/280 Principles of Accounting

Accounting is a systematic proocess that identifies, records, and communicates the economic events of an organization to interested users (Weygandt, 2008). The financial information gathered is used to determine a company’s financial status and provide reports and insights needed to make sound financial decisions. The purpose of accounting is to provide economic financial information for investor, creditors, and other external users. Accounting identifies and records all activities that effect the organization financially. Accounting is a means of communicating the numbers.

The ...view middle of the document...

Retained Earnings Statement – summarizes the changes in retained earnings that have occurred for a specific period of time (Weygandt, 2008).

Balance Sheet – reports the assets, liabilities, and stockholders’ equity of a business usually the month-end or year-end period (Weygandt, 2008).

Statement of Cash Flow – summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period. The statement of cash flows reports the cash effects of a company’s operations during a period, its investing transactions, its financial transactions, the net increase or decrease in cash during the period and the cash amount at the end of the period. It provides answers to important questions that investors, creditors, and others want to know regarding what is happening to a company’s most liquid resource (Weygandt, 2008).

The income statement, retained earnings statement, and statement of cash flows are all for a period of time. The balance sheet is for a point in time (Weygandt, 2008). The financial statements are all interrelated with each other by providing the necessary means of information to make decisions about their companies. Each statement provides relevant financial data for internal and external users.

Shareholders, customers, suppliers, lenders, employees, organizations, and society are potential users of accounting information. A stakeholder is a person with an interest in the performance and activities of an organization. Accounting consists of internal users and external users. Internal users are those individuals inside a company who plan, organize, and run the business. These include marketing managers, production supervisors, finance directors, and company officers.

External users are individuals and organizations outside a company who want financial information about the company. There are several types of external users. The two most common types are investors and creditors. Investors (owners) decide whether to buy, hold, or sell their financial interests on the basis of accounting data. Creditors (suppliers and bankers) evaluate the risks of granting credit or lending money on the basis of accounting information. Two broad types of accounting information are financial accounts and management accounts. Financial accounts are geared toward external users and management accounts are aimed more at internal users of accounting information.

When preparing accounting information, care should be taken to ensure that the information represents an accurate and true view of the business performance and position.

References

Abeysinge, R.L. (2010). What is the Purpose of Accounting?. Retrieved from http://accounting-support.blogspot.com/2009/10/purpose-of-accounting.html
Weygandt, J.J. (2008). Financial Accounting (6th ed.). Hoboken, , NJ: John Wiley & Sons.
What is the Purpose of Accounting? Retrieved January 28, 2011 from...

Other assignments on Financial Statements

Financial Statements Paper

789 words - 4 pages Financial Statements Paper The 4 fundamental monetary reports are the balance sheet, income Statement, retained earnings statement, as well as statement of cash flow (Kimmel, Weygandt, Kieso, 2011). The balance sheet is used to show an idea of what a business has (Kimmel, Weygandt, Kieso, 2011). The balance sheet reports the quantity of assets and claims to assets for a time period (Kimmel, Weygandt, Kieso, 2011). Assets are products the

Accounting Processes' And Financial Statements Essay

1362 words - 6 pages Accounting Processes’ and Financial Statements The purpose of this paper is to provide a foundation of knowledge for accounting and financial bookkeeping. To accomplish this, I will focus on two areas. First, I will provide some general definitions for common accounting processes and ideas; namely, generally accepted accounting principles, double entry accounting, historical cost

Case Study For Dell Inc In Appendix A

266 words - 2 pages Answer the following questions using the annual report of Dell, Inc. in Appendix A. a. Who is responsible for the preparation and integrity of Dell’s financial statements and notes? Management has the primary responsibility for the preparation and integrity of Dell’s financial statements and notes. b. In which note does Dell report its significant accounting policies used to prepare financial statements? Note 1 is where Dell report its

Hello Tomato

1296 words - 6 pages information and results of operations for the past fiscal year. The annual report includes financial statements, notes to financial statements, management's discussion and analysis of financial condition, and the auditor's report. * Financial Statements: Financial statements include four interrelated documents that present financial information about a company. They include the income statement, statement of equity (sole proprietorship &amp

Accounting

384 words - 2 pages Media Summary Paper Irene Chumo ACC/300- Principles of Accounting January 26, 2015 September Foster Media Summary Paper The media that i used was the video on financial statements, “financial statements are records that outline the financial activities of a business, an individual or any other entity. Financial statements are meant to present the financial information of the entity in question as clearly and concisely as possible for

Financial Statement Paper

824 words - 4 pages 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

Homework

280 words - 2 pages to complete the overall job. Primarily the manager is responsible for raising the funds and making the right investment calls, so it’s important the knows everything there is to know about governing a business as far as the risks and the distribution of the funds. Maximizing the shareholders is key as well. Distinguish among the types of financial information contained in the various financial statements. Which statements. Which provide

Accounting Week1

692 words - 3 pages The Importance of Financial Statements Accounting is one key function in organizations today. It is also becoming a top career students are studying. According to Weygand (2008) accounting consists of three key points –it identifies, records, and communicates the economic events of the organization. (p. 4). To grasp the concept of accounting this paper entails the purpose of accounting. The four basic financial statements are identified. The

Apollo Case

526 words - 3 pages This will confirm our understanding of the arrangements for our audit of the financial statements of Apollo Shoes, for the year ending December 31,2011. We will audit the Company's balance sheet as of December 31,2011 and the related statements of income, retained earnings, and especially cash flows for the year then ended, for the purpose of expressing an opinion on them. The financial statements are the responsibility of the Company

Lee College

483 words - 2 pages Lee College Financial Statements ACC 380: Accounting for Not-For-Profit Organizations June 4, 2012 Lee College Financial Statements Why do Not-For-Profit organizations need financial statements? The accounting system for nonprofits is designed to capture the economic activities of the firm and its financial position. The financial statements are constructed based on the “Accounting Equation” in which: Assets = Liabilities + Net Assets

Puppy

353 words - 2 pages STUDY GUIDE EXAM 1: (25 multiple choice questions worth 3 points each and 3 problems worth 45 points) 3 problems may cover following topics: journal entries, adjusting journal entries, closing entries, preparation of financial statements, multiple step income statement. Chapter 1: Purpose (objective) of financial accounting; cash vs accrual accounting (net operating cash flow vs. net income); history of standard setting – SEC, AICPA

Similar Documents

Financial Statements Essay

547 words - 3 pages Done by: Shannan T. Week 1 Assignment: Financial Statements Numbers play a major role in business and to keep track of all of those numbers, financial statements are used. Financial statements are a way of communicating those numbers within the business organization. Financial statements are used as a foundation for decisions that will impact information systems, production, management, and marketing. Any income that a company is

Financial Statements Essay

326 words - 2 pages Katrina Baron Financial Statements The four basic financial statements are the balance sheet, income statement, statement of cash flow, and the statement of retained earnings. The balance sheet depicts the current financial circumstances of the company. This reports the company’s assets, liabilities, and net equity as of a given point in time. The income statement reports the company’s cost and revenues. This reports the company’s income

Financial Statements Essay

1502 words - 7 pages Accounting and Financial Statements Vern Rennier Upper Iowa University Accounting and Financial Statements In this essay I am going to explain and identify external users of accounting information and give detail on the main characteristics and how these characteristics and the conceptual framework develop the benefits of financial statements for external users. Financial accounting includes information distributed to external users

Financial Statements Essay 1092 Words

1092 words - 5 pages Financial Statements ACC/497 January 30, 2013 Decisions are made daily by company management, lenders, and shareholders. To make informed, intelligent business decisions, there are several strategies that are used by each of the fore mentioned entities. When deciding if investing is the right choice, if a company will be able to repay a loan, or what needs to happen to make a company more efficient, the best way to get an inside look at the