Financial Statements Essay

979 WordsNov 4, 20124 Pages
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 external users for example. This explanation is found in the glossary of our textbook, (p.31). Kimmel, P., Weygandt, J., & Kieso, D. (2003). Essentials of accounting: Tools for business decision making (2nd Ed.). Hoboken, NJ: Wiley. The balance sheet contains the assets, Liabilities and the stockholders’ equity. 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

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