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Financial Statements Essay

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Financial Statements Paper
ACC/290 Principles of Accounting I
4/29/13

Financial Statements Paper
When operating a business it is important that all shareholders are informed and allowed to access financial statements. Financial Statements are the core of financial accounting and allows shareholders to view all the income and expenses going in and out of the business. There are four basic financial statements that are all important in their own ways. Each report details a certain area of the company and can be filtered to monitor specific dates in the company’s history.   The four financial statements include the income statement, the retained earnings statement, the balance sheet and the statement of cash flows.
The income statement records the success and failure of a company for a specific time period. The income statement typically lists a company’s revenue followed by its expenses.   After all the expenses and income are recorded then the company can reflect its net income or net loss by subtracting all expenses from the income. Typically investors and people outside of the company use the balance sheet to dictate future income and trends.   Future shareholders often use the balance sheet to help predict whether or not to buy into a company and become an investor in the company. Management that is inside the company also will use the balance sheet to predict future profits for the company. Balance sheets are often used in predicting and forecasting goals to be set and met. Companies always wish to exceed past profits and by using the balance sheets a company break down profit into yearly, quarterly, monthly and even weekly goals for associates inside a company.
The next financial statement is the retained earnings statement. The retained earnings statement is the report that reflects the net income that is retained for the business while showing the amounts and causes of changes occurring in a business during a given period of time. The period time is...

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