Acc/220 Financial Statement Analysis

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Financial Statements Karen D. Wallace, Student/Author, University of Phoenix ACC/220 October 28, 2012 Christina Vaughn, MAcc, Faculty Financial Statements I am presenting to you a brief explanation of the statements generated in a business, the types of information you will access from them, and the decisions the information will allow a business owner to make. I have chosen this order so that one can make the decision to be able to start a company. Let’s first get an understanding of what accounting is; it is the process of identifying, recording, and communicating the economic events of a business to interested users of the information; internal and…show more content…
The assets listed on a typical balance sheet show all of a company’s revenue; such as Cash, accounts receivable, supplies, and equipment. Also a balance sheet will contain this information at a period in time (October 31, 2012). The Liabilities that are on the balance sheet would be for the same ending date and include notes payable, accounts payable, interest payable, unearned revenue and salaries payable which is equal to your total liabilities. Your stockholders’ equity, common stock and retained earnings equals your stockholder’s equity. In Sum, total liabilities plus the stockholder’s equity is equal to the total assets. The first statement to be considered in any new financial transaction would be the income statement. This statement has the most important role. Its function is to allow the viewer the actual total income by taking all of your revenue minus all of your expenses to equal your net income. This statement is as of a certain point in time, as…show more content…
In fact, it is often said that “Cash is King” because if a company can’t generate cash, it won’t survive. To aid in the analysis of cash, the statement of cash flow reports the cash effects of a company’s operating activities, investing activities and financing activities. If you knew the source of a company’s was generated from the operations of the business rather than borrowed, a cash flow statement provides that information. Similarly, net income does not tell you how much the company generated from operations. Neither the income statement, nor the balance sheet can directly answer most of the important questions about cash, but the cash flows statement

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