Triple entry accounting and financial statements - Assignment Example

Due Triple Entry Accounting Human business transactions, of one kind or another, have been happening since the beginning of civilization. As the business industry became more and more complex it became more and more necessary to establish means of properly keeping financial records, thus single –entry accounting was formed. When business became more complex, then double-entry accounting was implemented; firstly, to avoid mistakes in the monies, but, also, to detect and prevent any fraudulent activity that may be occurring.

Today there is far more elements within business finances that must be accounted for. Today many companies often use statements from previous periods or years in order to project the likely outcomes of current finances. This method is not always accurate. Triple-entry accounting is intended to provide predictive accounting that is more accurate than basing results solely on previous outcomes.(Henke)The process of triple-entry accounting is a complex process. It is believed that these methods may be able to predict the future of the business and, even allow, for unforeseen expenditures and happenings.

The intention of the triple-entry accounting is to give businesses a clearer view of financial earnings based on an equation that takes into consideration the past, present and future; not just historical data.(Henke)This could be considered a great improvement over current financial statement methodology. ReferenceHenke, Warren. "Triple Entry Accounting." Warren Henke. Warren Henke, 1994. Web. Web. 7 Nov. 2012. http://www.warrenhenke.com/writing/essays/triple-entry-accountingYour NameInstructor’s NameCourse NameDue DateFour Financial Statements Articulated Essentially the articulation of the four relevant financial statements simply means that the numbers in the statements among all the statements provided are in agreement with one another.

However, there is a lot that goes along with that simple definition The four statements that need to articulate properly are the balance sheet, income statement, Statement of Stockholder Equity, and the Statement of Cash Flow. The balance sheet, is divided into three sections: assets, liabilities, and stockholders’ equity, provides the information concerning the available resources the resources to management and any claims against those resources by present creditors and shareholders. ("Cambridge Publications") All the gains and losses are recorded and then transferred to the income sheet as necessary.

The Stockholders Equity reflects the all of the financing provided by the company’s owners. The stockholders hold a claim on residual interest which is accrued via, common stock, preferred stock, treasury stock, retained earnings, additional paid capital, any other accumulated income or loss. the statement of cash flows provides information about the company’s ability to generate cash from those same transactions. ("Cambridge Publications") This helps the businesses determine if the cash flow is persistent or just transatroy.

The linkage of the four financial statements results in articulation. It is also very important that the statements be prepared in the order that they are listed so that the most current and accurate information is being shared and there is more likely to be successful articulation of the given company’s finances.Reference"Introducing Financial Statements and Transaction Analysis." Cambridge Publications. N.p., n.d. Web. 7 Nov 2012. http://www.cambridgepub.com/mbafinancialaccounting_ed4/03_FAMBA_4e_mod02_LowRes.pdf