ACC/280 Financial Statements, Questions And Answers

732 Words3 Pages
Financial Statements ACC/280 Financial Statements Paper Accounting is an important part to any organization. It communicates the financial state of any organization. Accounting has three basic activities: identify, record, and communicate. There are four basic financial statements which are useful to managers, investors, creditors, and employees. These four basic financial statements are interrelated and consist of: income statement, retained earnings statement, balance sheet, and statement of cash flows. Accounting is an information system using three basics activities which are identify, record, and communicate economic events to interested users. Companies identify economic events relevant to its business. Financial activities are recorded systematically in a chronological order of events to provide history. Recording also will classify and summarize economic events. The bookkeeping function is included in the recording of economic events. Accounting reports are then communicated to interested internal and external users by means of financial statements. Internal interested users are individuals inside the company who plan, organize and run the business. These users can be comprised of finance directors, marketing managers, human resources, or management. External…show more content…
These four financial statements are interrelated and prepared in a certain sequence. The net income on the income statement is added to the beginning of the retained earnings statement, the retained earnings is reported on the balance sheet, the amount on the balance sheet is then reported on the statement of cash flows. The balance sheets report for a specific point in time, while income statement, retained earnings statement and statement of cash flows report for a specific period of time. Each statement identifies the company, the specific period of time, and the type of financial
Open Document