Financial Statement Paper

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Desmond Steele Financial Statement Paper January 9, 2012 University of Phoenix Financial Statement Paper The four basic financial statements a company uses is the income statement, statement of retained earnings, balance sheet, and the statement of cash flows. Companies prepare all these statements for a specific period of time, which is usually on a quarterly, monthly, or annual basis. Identify the four basic financial statements The income statement is a document that a company generates monthly and/or annually that reports the earnings that a company has by reporting all relevant income and all the expenses that have been incurred in order to generate that income. The income statement shows a company’s net income after it pays out expenses such as wages, product acquisition, taxes, capital losses, and advertising. Gross income is listed on the first line of the income statement and the last line of the income statement consists of the net income, with the expenses listed in the middle of the income statement. The statement of retained earnings is also referred to as the statement of owner’s equity. The statement of retained earnings is a financial statement that shows a company’s net income that is set aside as a reserve, which is paid out to the shareholders and is also consumed by the company’s losses. The statement of retained earnings is also prepared within the guidelines of the generally accepted accounting principles (GAAP). The balance sheet is a financial statement that summarizes a company’s liabilities, assets, and shareholder’s equity as a specific point of time. The beginning of the balance sheet shows all of the company’s productive assets. The second part of the balance sheet shows all of the company’s financing methods such as shareholders’ equity and liabilities. The balance sheet has three segments and each segment has many accounts

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