Financial Statements Essay

724 WordsDec 2, 20123 Pages
Financial Statements Companies create and distribute financial statements each period. The four most important accounting statement reports are used by company leaders, employees, analysts, creditors and investors to consider a company's current financial position and project its prospect for success. These simple financial statements consist of the income statement, the balance sheet, the retained earnings statement, and the cash flow statement. Managers, employees, investors and, creditors use these financial statements to consider the financial strength of the company and make future decisions. Every financial statement user contemplates different aspects of the financial statements centered on their individual perspective. The balance sheet delivers full information of a company’s resources, liabilities, and stockholders' equity. Resources are what a company owns that values. Resources can be sold or used by the company to create products or develop services that can also be sold. A liability is money that a company owes to others. This may include all types of obligations. Stockholders' equity is amounts of money left if a company retailed all of its resources and paid off all of its liabilities. This excess money goes to the shareholders, or the company’s owners. The income statement displays the accountant's measure of performance of a business, revenues minus expenses during the accounting period. This statement allows visibility of the company’s net earnings and losses. This states the amount of money that the company had earned or lost over each period. This statement is usually separated into two sections: the operating and non-operating divisions. The operating items are important to investors and analysts because this section releases information about profits and costs that are a direct outcome of the regular business operations. The

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