ACC 290 Week 2 Individual Financial Statement

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Financial Statements Paper James Palmer July 16, 2012 University of Phoenix ACC/290 Lee Guillory, Faculty Financial Statements Paper One of the first steps in the creation of a financial management system is to create financial statements. Financial statements come in four basic forms: balance sheets, income statements, statement of retained earnings, and statement of cash flows. A balance sheet is used to report the financial position of an accounting entity at a particular point. A balance sheet shows the liabilities, assets, and the capital of the business. A balance sheet is usually prepared at the end of an accounting period. Internally, a balance sheet helps a business check its liquidity position and the current health of the business. With the use of a balance sheet managers can check the liquidity of an organization. A balance sheet also helps in…show more content…
1). Internally, a cash flow statement helps an organization check its inflows and outflows of cash; from this the company can see if they have a shortage or surplus of cash. A cash flow statement will also help a company evaluate its ability to pay its bills in a timely manner. Managers can use cash flow statements to see whether he or she has cash available for the day-to-day expenses of the company. Employees can use this statement to estimate if the company will be able to afford compensation. Externally, investors and creditors can utilize a company’s cash flow statements to assess the liquidity position of a company and estimate the financial strength of the organization (SEC,

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