Financial Statement Paper

The purpose of accounting is to leave the info that is needed to develop civilized economic decisions. According to Ismail (2002) ?Accounting is the process of bring in and analyzing cost and revenue information?. (p. 211) The focal purpose of pecuniary accounting is to plan a fiscal report that provides information ab by a firm?s performance to removed parties such as investors, creditors, and tax authorities. The four basic financial statements include the vestibular sense yellow journalism, income statement, statement of retained earnings, and statement of interchange flows.

The purpose of the balance tabloid is very simple; it allows managers, investors, creditors, and employees to experience the organizations assets, liabilities, and stockholder?s equity. The asset portion of the balance sheet illustrates the amount of cash in the company?s vernacular account and amounts owed by customers from prior sales. The liabilities portion of the balance sheet generally shows amounts owed to suppliers for prior purchases and notes payable. The stockholder?s equity branch of the balance report sheet normally shows amounts invested in the pedigree by stockholder?s and past earnings not distributed to stockholders. Interpreting the assets, liabilities, and stockholder?s equity on the balance sheet assets are important for creditors and investors or prospective investors because the assets provide a base to determine whether the company has adequate resources accessible to operate.



Assets are also important because they can be change in the event if a company were to go out of business. They are also interested with the liability aspect, to make indisputable whether the company has sufficient sources of cash to pay its debts.

The income statement reports a company?s revenue, expenses, pretax income, and net income. According to Shoaf (2001) ?The income statement, also know as the statement of profit and loss, the earnings statement, or the operations statement, presents the details of...

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