Financial Statements Essay

443 WordsDec 3, 20132 Pages
Financial Statements Paper ACC/290 The four basic financial statements are statement of financial position, income statement, cash flow statement, and statement of changes in equity. These four financial statements give a formal record to all financial activities of an entity. The reports are in written documents demonstrating the performances, strength, and liquidity. The statements show the effects for financial transactions and the financial statement history. The statements of financial position is structured through three economic concepts , the assets, liabilities and net worth , each developed in account groups representing different assets. The assets include all accounts that reflect the values available to the entity. All assets are likely to bring the company money in the future, either through use, sale or exchange. By contrasting, passive displays all certain obligations of the agency and contingencies to be recorded. These obligations are, of course, economic like loans, purchases with preferred payment. Income statements show in order and detail showing how profit or loss as obtained during a given period. Income statements have two variables, the income and the expenses. Financial status is dynamic, because it covers a period during which they must fully identify the costs and expenses that gave rise to the same income. Therefore it must be applied perfectly to the top of the reporting period for which the information presented is useful and reliable for decision making. Cash Flow Statement is a basic financial statement reporting the movements of cash and cash equivalents, divided into three categories operating, investing, and financing. Cash flows are mostly useful to find the users of financial statements. Economic decisions, users must assess the ability of the enterprise to generate cash and cash equivalents. The Statement of

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