Balance Sheet Essay

607 Words3 Pages
1. Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. I am choosing the income statement since a cash flow statement was not given as an option. The reason I chose the income statement because it helps in making decisions in terms of the financial performance for both creditors and investors. The statements can also help in assessing the possibility to generate cash flows for the future and assess the capability. The income statement relates to my everyday life because I have to ensure that I pay my monthly bills on time and I have to ensure that my expenses are equal or less than my income; preferably less. The reason for this is to eliminate spending more money than I have coming in. If I choose to spend more money that I earn, than my accounts would be delinquent and I would be charge NSF fees from my bank. Furthermore, it would be categorize the same way a company would report net loss for the period , my creditors (people that I owe) would report defaults in payments to credit reporting agencies and this would have a negative impact on my credit rating and score and would possibly cause me to have credit problems in the future. It’s not recommended to inquire bad credit because this could follow me throughout my career and personal life; also, some employers check prospective applicants’ credit before they offer them a position. 2. Using the same concept selected above, discuss how a business manager may benefit from an understanding of this statement. A business manager can benefit from an understanding of the income statement by analyzing the statement in how the company is doing because the income statement shows how much money a company has made or lost over a given period. A business manager should keep an accurate account of how much their company has sold and how it

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