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Four Main Financial Statements

In: Business and Management

Submitted By lisamama22001
Words 719
Pages 3
Lisa Clark
Accounting Capstone Project
March 15, 2013
Week 2 Application

The four main financial statements are the balance sheet, the income statement, the cash flow statements, and the statements of shareholder’s equity. Each statement can be used to give an insight to a company’s financial activities, and can provide valuable information on said company. The balance sheet provides detailed information on a company’s assets, liabilities, and their shareholder’s equity. A company’s balance sheet has to equal out, so the assets have to equal the sum of the liabilities and the shareholder’s equity. Assets are the things that a company owns that have value, and assets are usually listed on how quickly they can be converted to cash. Liabilities are usually listed based on their due dates which can be current or long term. The shareholder’s equity is the amount of money that owners have invested (www.sec.gov). The income statement show how much revenue that a company has earned over a period of time, and it shows the costs and expenses associated with earning that revenue. The statements also show whether or not the company made money or lost money. The income statement also shows the earning per share which is the amount of money the shareholder’s would make if the money was distributed. Most of this money is reinvested in the company. The income statement will list the total amount of sales at the beginning and then certain costs are deducted to end with how much a company made during a certain period (www.sec.gov). The statement of cash flow shows the inflows and out flows of cash for a company. The cash flow statements can show if a company is making money, and this is important because a company needs cash to pay its expenses and purchase assets. The cash flow statements show whether the cash increases or decreases for each period. The…...

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