Accounting Financial Statements Essay

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Running head: Financial Statements paper 1 Financial Statements Paper Financial Statements paper 2 Financial statements paper In this paper I will discuss the four basic financial statements. The four different financial statements are income statements, retained earnings statements, balance sheet, and statement of cash flows. They all are different, but equally important to businesses. I will also discuss the relationships between these statements, and there importance to one another. Income statements report success or failure of the company’s operations for a period of time. Income statements play a very important role to a company or small business because; they list the company’s revenues followed by its expenses (Kimmel, 2009 ). Income statements can be reviewed by several people within the company, but most importantly they are reviewed by the accounting department and managers. It is very important for a company to know where its money is going, and that is what an income statement provides. For internal users this is important because; managers and accounting can see if there is too much money going out on expenses than there is revenue coming in. Equally important external users such as investors and creditors want to know results of an income statement because; it will tell investors whether investing is safe or risky, and tell creditors what the chances of them getting paid back are (Kimmel, 2009 ). Retained earnings statement shows the amounts and causes of changes in retained earnings during a certain period of time (Kimmel, 2009 ). The retained earnings statements reports the same dates that your income statement will. Dividends are payments made to stockholders, and play a big role in retained earnings statement. In a retained earnings statement Financial Statements paper
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