Financial Statement Paper
may 11th 2012
Professor Rhonda Smith Lyttle
The goal of this financial statement paper is to cover the fundamentals of financial accounting and to define accounting and what it means to an organization. The second goal of this financial statement paper is to identify the four basic financial statements, describe the purpose of each of the four financial statements, discuss how the financial statements would be useful to internal users, such as to managers and employees, and then finally discuss how the financial statements would be useful to external users such as investors and creditors.
What is accounting? Accounting per the text is defined as “Accounting is the system of collecting and processing transaction data and communicating financial information to decision makers is known as the accounting information systems. Factors that shape these systems include: the nature of the company's business, the types of transactions, the size of the company, the volume of data, and the information demands of management and others”(Wiley, John). Accounting is the ability of a company to keep track of their financial records and being able to retrieve them if any questions or concerns are brought up into questioning order to make money you have to put in money and in order to get people to invest in you, you must present organization and financial plans that will ensure a financial gain and return for all.
The four basic financial statements are the Balance sheet, Income statement, retained earnings statement and statement of cash flows. The purpose of each of these vary optimally the goal is that they each work like a puzzle where at the end they all come together to form a cohesive and productive company.
The balance sheets purpose is to calculate assets, liabilities and assign ownership, the balance sheet is beneficial to managers because it allows them to see how well their company is doing...