Xacc 290 Week 1 Financial Statements
Autor: Jaclyn Posoz • January 18, 2016 • Case Study • 321 Words (2 Pages) • 813 Views
Financial Statements
XACC/290
January 10, 2016
Financial Statements
The four basic financial statements are:
- Balance sheet
- Income statement
- Retained earnings statement
- Statement of cash flow
The purpose of a balance sheet is to declare the business has for assets and to compare what a business owes at a certain time period.
The purpose of an income statement is to provide a report of how much money is coming in and how much money is coming out based on the length of time of successfulness.
The purpose of a retained earning statement is the income accumulated by the business as dividends or expenses.
The purpose of a statement of cash flow shows how income is coming into the business and the expenses that uses up the funds.
Financial statements are useful to manager and employees because it is used to track overall goals. For the managers, it is to see if set monthly or yearly goals are met for the company. Also, these statements can be used to track the months that bring in the most income versus the ones that are not. This will help the company know how many employees re needed and when it is busier they can hire temporary employees.
Employees can use the financial statement to budget their money and know what they are spending their income on versus to not knowing. This is a great tool to use when anyone is trying to budget his or her money.
For investors, financial statement are useful because before investing into a company, the investor needs to know if the company they are investing in is profitable. As for creditors, they will use the financial statement to decide if the company or person is worth giving a credit for. This helps them track the spending trend for the company or person.
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