I have selected Apple as the company that I will be following financially for the duration of Accounting 561. Not only am I a passionate Apple user, I also believe in how the company develops, creates, and markets their product lines for consumer use. They have created products that are so complex at their core with an extremely simple user experience, which has been nothing short of remarkable to watch from the time I was a child through adulthood. I look forward to studying the company and their financials further as we dive deeper into Accounting 561.
There are four major financial statements that investors, creditors, accountants, CEO’s, and the like study when looking at the financial health of a business. They are income statements, retained earnings statements, balance sheets, and statement of cash flow. Each financial statement has a unique use and purpose in business, which will be explained throughout the following assignment.
“Income statements report the success or failure of the company’s operations for a period of time” (Kimmel, Weygandt, & Kieso, 2009). Income statement lists the company’s revenues followed by its expenses, which results in net income (or net loss) by deducting expenses from revenues.
At the end of each earning period, a successful company must decide if they are going to pay out a dividend to their investors, which is then depicted on the retained earnings statement. “The retained earnings statement shows the amounts and causes of changes in retained earnings during the period” (Kimmel, Weygandt, & Kieso, 2009). The beginning of a retained earnings statement documents the initial revenue the company has for a specific period of time on the first line of the statement. Subsequently, “the company adds net income and deducts dividends to determine the retained earnings at the end of the period. If a company has a net loss, it deducts (rather than adds) that amount in the retained...