Acc561 Week 1

Acc561 Week 1

Financial Statement Review

ACC/561
November 11, 2013

Financial Statement Review
Financial statements are a record of financial transactions for a business. These are written reports that quantify the financial strengths and performance of a company ("Definition of Financial Statement," 2012). Balance sheets, income statements, statements of retained earnings, and statement of cash flows are four basic types of reports. Each provides valuable information to creditors, investors, and managers.
Balance sheets reports assets, liabilities, and equity. The report is a snap shot of a company’s financial position at a specific point in time ("Four Basic Financial Statements," 2012). The income statement reports performance measures of a business. The report calculates revenues less expenses to total net income ("Four Basic Financial Statements," 2012). The statement of retained earnings reports a specific period of time. The report calculates ending earnings for a specific time. It is accomplished by taking beginning earnings plus net income less dividends ("Four Basic Financial Statements," 2012). The cash flow statement also covers a specific time. The report shows cash flow during the time period it is covering and how much cash is available. The report takes beginning cash on hand plus incoming cash less expenditures to calculate cash on hand ("Four Basic Financial Statements," 2012).
Financial reports provide essential information to people who invest, loan, or manage a company. Each has different reasons for needing the various reports. Some reports are more important than others depending on who is looking at them. Managers should use all reports. They are responsible to identify the success and failures. The manager needs to be able to see what areas need improvements. The manager is responsible for developing plans for sustained success. The use of all reports provides a total view of the company and provides the information needed....

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