StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

FOUR BASIC FINANCIAL STATEMENTS - Essay Example

Comments (0) Cite this document
Summary
Financial statements (or Financial Reports) are formal records of a business' financial activities. Accounting involves collection, classification, summarisation, and presentation of data pertaining to the financial position and performance of an organisation…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER99% of users find it useful
FOUR BASIC FINANCIAL STATEMENTS
Read TextPreview

Extract of sample "FOUR BASIC FINANCIAL STATEMENTS"

Download file to see previous pages 2. Balance Sheet: The balance sheet, sometimes called the statement of financial condition, shows the financial condition of the company. It reflects both long- and short-term assets and liabilities of the company at a given point in time.
3. Cash Flow Statement: shows the cash inflows and outflows of the company. Cash outflows are subtracted from cash inflows to derive the net change in cash for the period, the statement shows how much excess cash was generated by the business after meeting all cash expenses for the period.
4. Statement of Retained Earnings: Also known as the 'reconciliation of net worth statement', shows the changes that have taken place in the company's retained earnings over the reporting period. How the total profit was used - to distribute among shareholders as dividend and how much was retained to increase net worth.
Financial Statements report a company's past financial performance and current financial position. They are designed to provide information on four primary business activities: Planning, financing, investing, and operations (Bernstein & Wild, 2000). These statements provide an overview of a business' profitability and financial condition for the period in review and over along term through comparison with the earlier statements. All these statements provide the figures for the previous comparable period. For example the annual balance sheet will show the information of the previous year also. Presentation of the statements is so organised that anyone, studying the reported data, can readily determine what action should be taken, from that individual's point of view and need.
Elements of financial statements are of two types; those that constitute financial position or status at a moment in time and those that represent changes in financial position over a period of time. Assets, liabilities, and equity or net assets describe levels or amounts of resources or claims to or interests in resources at a moment of time. All other elements - revenues, expenses, gains, and losses - describe the effects of transactions and other events and circumstances that affect an entity over a period of time. The interrelation between the two types of elements is called articulation:
Each statement serves a specific purpose, and all four statements have an interlocking financial relationship.The two types of elements are related in such a way that (a) assets, liabilities, and equity (net assets) are changed by the elements of the other type and at any time are their cumulative result and (b) an increase or decrease in an asset cannot occur without a corresponding decrease or increase in another asset or a corresponding increase or decrease in a liability or equity. These relationships are collectively referred to as "articulation". They result in financial statements that are fundamentally interrelated so that statements that show elements of the first type depend on statements that show elements of the second type and vice versa (Carmichael, 2003).
Financial statements of companies are complex documents and other essential information such as the comments of the management of the company (Directors Report); its Auditors certification that the accounts have been prepared faithfully and represent the true picture of the position and transactions of the company; and, a series of notes which detail individual ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“FOUR BASIC FINANCIAL STATEMENTS Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
FOUR BASIC FINANCIAL STATEMENTS Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/miscellaneous/1507871-four-basic-financial-statements
(FOUR BASIC FINANCIAL STATEMENTS Essay Example | Topics and Well Written Essays - 750 Words)
FOUR BASIC FINANCIAL STATEMENTS Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/miscellaneous/1507871-four-basic-financial-statements.
“FOUR BASIC FINANCIAL STATEMENTS Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/miscellaneous/1507871-four-basic-financial-statements.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF FOUR BASIC FINANCIAL STATEMENTS

Financial statements

.... The financial statements of a company are a set of reports that provide information about the financial condition of a company. The four major financial statements are the income statement, balance sheet, statement of cash flow and the statement of retained earnings. The income statement provides information regarding the profitability of a company. The statement is divided into two parts. The top part shows the revenues of the company, while the bottom portion illustrated the expenses of the enterprise. The income statement is prepared for a period of time. The normal accounting period is one year. The data that is used to generate the income statement is obtained by having an accounting system in place that records the economic activity...
3 Pages(750 words)Essay

Define the purpose of accounting and identify the four basic financial statements

... information varies from one user to another user as financial information plays a key role in making economic decisions. Four basic financial statements The four basic financial statements are: the statement of comprehensive income, the statement of financial position, the statement of changes in equity and the statement of cash flow, normally they are identified as income statement, balance sheet, statement of changes in equity and cash flow statement respectively. The income statement is consisted of elements such as revenues, expenses; interest paid or received; administration and maintenance expenses. On the other hand, the balance sheet is made of two elements such as total assets and total liabilities and shareholders’ equity...
3 Pages(750 words)Essay

Financial Statements

...? ACCT CASE 2: Financial ments October 14, Part I. • Generally Accepted Accounting Principles (US GAAP); Generally Accepted Accounting Principles are basically rules and concepts. The principles ensure that companies prepare their financial statements by complying with relevance, reliability, comparability and other related generally accepted accounting principles. The principles increase communication of financial data from the makers to the users of the financial statements within the United States (Wild, Shaw, Chiappetta, 2011). • International Accounting Standards (IFRS); The International Accounting Standards (IFRS) present globally preferred accounting principles. The principles are issues by the International Accounting Standard...
4 Pages(1000 words)Essay

Financial Statements

...?Financial ments 8th, January, Introduction A financial ment can be defined as a record that shows the financial activities of a business, individual, or other entity. Financial statements act as indicators of the financial position of a company and are useful to different users wishing to make financial decisions. The four basic financial statements are balance sheet, income statement, statement of changes in equity, and cash flow statement. Financial statements are important and used by different individuals or groups such as managers, employees, suppliers, creditors, government agencies, and the public. However, the different groups use the various financial statements for different purposes. This essay focuses on the four types...
4 Pages(1000 words)Essay

Financial statements

... to take place in a later date, as opposed to the income statement and the cash flow statement, which records transactions that have taken place. References Penner, S. J. (2004). Introduction to health care economics & financial management: Fundamental concepts with practical applications. Philadelphia, Penns: Lippincott Williams & Wilkins. Sinha, G. (2009). Financial statment analysis. New Delhi: PHI Learning Pvt Ltd. US Securities and Exchange Commission. (2007). Beginners' Guide to Financial Statements: The Basics. http://www.sec.gov/investor/pubs/begfinstmtguide.htm Wahlen, J. M., Bradshaw, M., Baginski, S. P., & Stickney, C. P. (2010). Financial reporting, financial statement analysis, and valuation. Mason, Ohio: South-Western....
4 Pages(1000 words)Research Paper

Financial Statements

...Financial ments: Fact or Fiction Financial ments are one of the primary ways that a company communicates its financial health to the public and its stakeholders. These statements may be used by auditors, tax revenue institutions, internal analysis, or evaluated for investment possibilities. The critical nature of the information demands that it be accurate and truthful. They are formatted and calculated using Generally Accepted Accounting Practices (GAAP). They must adhere to standards set by a government controlling body such as the Financial Reporting Council (FRC), the Accounting Standards Board (ASB), and the International Accounting Standards Board (IASB). Yet, as much as they try to be absolutely accurate, the American Institute...
4 Pages(1000 words)Essay

Financial statements

...FINANCIAL MENTS Analysis of Financial ments and key components of Capital Project …………………………….. ……………………… Analysis of Financial Statements The fundamental goal of accounting information is to provide organizational and economic decision makers with useful information, because, financial statements are designed to assist the users in identifying key relationships and trends (William, Haka and Bettner, 2004, p. p. 602). This paper presents an analysis of various items found in the financial statements and it discusses key components of the capital project. The three key financial statements are Income Statement, Balance Sheet, and Statement of Cash flow. The Income Statement is an Accounting report that measures the success of the company...
2 Pages(500 words)Essay

Financial Statements

...I. Essential financial information on the management of the enterprise The memo to the board will inform them that basic financial information will be submitted through the four financial statements that include income statement, balance sheet, statement of stockholders’ equity, and cash flow statement. The financial statements will provide the overall performance of the company, and where financial ratios can be derived and computed to analyze company performance. The introduction of the new spark plug manufacturing process in the Unites States, which is said to be very successful, will be confirmed and validated by the financial statements to be presented. While the financial statements will provide the overall financial health...
8 Pages(2000 words)Essay

Financial Statements

...Company Google Source: http finance.yahoo.com/q/is?s=GOOG+Income ment&annual I. Gross profit margin Formula: gross profit total profit = gross profit margin expressed in percentage Year 2010 (number in thousands) Gross profit: 18,904,000 Total Profit: 29,321,000 18,904,000/29,321,000=.64 Gross profit margin : 64% Year 2011 Gross profit: 24,717,000 Total profit: 37,905,000 24,717,000/37,905,000 = .65 Gross profit margin: 65% Year 2012 Gross profit: 29,541,000  Total Profit: 50,175,000   29,541,000 / 50,175,000  = .588 Gross profit margin = 58% II. Operating income margin Formula: operating income/revenue Year 2010 (number in thousands) Operating income: 10,381,000   Revenue: 29,321,000  10,381,000  / 29,321,000 = .35 Operating... Google...
2 Pages(500 words)Essay

Financial statements

...Financial ments Exposure to financial ments Being the employee of a large textile entity, I have experienced a relatively greater exposure to the financial statements. My job is related to the sale of yarn for which I have to check out the financial statements of the previous periods. The reason behind checking the financial statements is to make a comparison of the existing sales performance with the previous period’s performance. Not only this, I also need to know the costs associated with yarn sales. Role for preparation of financial statements Due to integration of various departments in my organization, I closely work with accounts and finance department which is mainly responsible for the preparation of financial statements...
1 Pages(250 words)Essay

Service Management in Financial Services

 Measurement of quality is the result of the services provided to the customer with a prompt response based on the requirements and expectations. Quality of various processes must be managed so as to provide the customer with consistent, accurate and timely results. These results must be of high quality because various other factors pertaining to a business deal are dependent on them. Quality assures the customer of an appropriate service that includes an error-free transaction, access to accurate data pertaining to the specific schemes and services, transfer of credits, changes concerned with the membership and account details and an undoubted trust that helps in attaining the services time and again.

Financial se...
11 Pages(2750 words)Case Study

How Four Years Old Children Differentiate between Animate between Inanimate Entities

In this study, 15 children aged between 4 and 5 years were shown the pictures of a dog, bush, tree, and rock. They were also asked to identify their logic if they think these were alive and if it is not alive what are the reason behind their conclusion. In this context, Piaget argued that children belonging to the age of 7 or 8 are able to correctly distinguish between animate and inanimate entities. But recent studies have shown that children at a much younger age can correctly identify living and nonliving objects.

The first question to be answered is when do children become capable of differentiating between animate and inanimate objects. Recent studies have shown that children possess the ability to distinguish betw...
11 Pages(2750 words)Research Paper

Corporate Financial Analysis: HBG UK Limited

Analyzing a company’s financial performance is crucial in determining the actual performance and investment potential of a business within the industry. The financial analysis not only gauges the internal but also the external aspects of a company.

Specifically, the use of financial ratios is considered as efficient indicators of a company’s financial situation and overall performance. Most of these financial ratios are calculated from the data provided within the financial statements of the company. Financial ratios are not used only in determining the performance of the company but also in comparison to other competitors’ financial status and the possibility of future bankruptcy.

HBG UK Li...
14 Pages(3500 words)Case Study

Marketing, Financial and Production Analysis of Vail Resorts

Finally, in 1966, the town of Vail was established. By 1985, George Gillett purchased Vail Associates and high-speed quad chairlifts were established to help the skiers get to higher elevations on the mountain. In 1992 Apollo Partners purchased Vail Associates, which in turn became Vail Resorts Inc., which was followed by the acquisition of ski resorts Keystone and Breckenridge. The acquisition of these ski resorts was a major change that helped Vail succeed in the long run by appealing to a broader market. Both Keystone and Breckenridge have lower prices than Vail Mountain and attract more single- and college-aged customers (Vail Resorts).

The company then added the Real Estate segment which comprised 6 percent of the...
9 Pages(2250 words)Case Study

Unmarried Parents: Financial Provisions

There was no evidence before the court to suggest otherwise. I would, therefore, suggest that the child be examined by an expert in child welfare to first determine whether or not the mother is ultimately right in her assessment that the disparity in the value of her parent’s home causes her some concern. It is also important to determine via a welfare expert whether or not relocating to one of the properties suggested by the father would adversely impact upon the child’s wellbeing. If an expert agrees that relocating and the disparity in the value of the parents’ homes are not matters of concern for the child then an appeal would be likely to succeed. I would go further to predict that the father’s origina...
6 Pages(1500 words)Case Study

Accounting & Financial Management

AWB’s operations can be categorized into areas ranging from ‘pool management services’ to ‘harvest financing’, and ‘International commodity management’. Only a company with such a big range of activities and financial outlays can become the benchmark for an equally big company like ‘Woolworth Limited’.

The performance of an entity can be better analyzed through its profitability analyses. The profitability ratios like Gross Profit ratio, Net Profit Margins, Return on assets (ROA), and Return on Equity (ROE). The calculations of such ratios are shown in the attached annexure. The Gross Profit ratio measures the percentage of each pound or dollar of sales remaining aft...
10 Pages(2500 words)Assignment

Financial Management Analysis of Rio Tinto Plc

Taking into consideration that Harmony is the sixth-largest in the world in the gold mining industry, the choice of Harmony God Mining Co. as a benchmark company is the most suitable and justifiable. Moreover, Harmony has also some investment stake in Rio Tinto, and this situation makes the company more suitable for the choice. At places, the benchmark company’s performances have been better than Rio Tinto, and thus Harmony has a competitive edge as well over Rio Tinto.

Profitability ratios like Operating Margin Ratio, Net Margin Ratio, Return on Assets (ROA), and Return on Equity (ROE) are the performance analyzer of any company. Profit Margin ratios show the relationship between profit and sales. Since profit ca...
8 Pages(2000 words)Case Study

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages(2500 words)Research Paper

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

Management of Financial Institutions

The first paper is about International Banking Regulation. For banks that may want to spread across borders, the study gives an explanation of how the various policies and laws may affect its operations. The second paper in the study gives the various restrictions on the development of Pan-European bank mergers. It shows how regional liquidity shocks limit cross-border bank mergers. Thirdly, the study shows the various methods banks use in risk assessment when lending to less developed countries’ sovereign governments. It gives a topology that can help banks efficiently assess risks. An explanation of the multi-nationalization that is given in this paper comes with a model showing how applicable the profit maximization hypot...
8 Pages(2000 words)Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic FOUR BASIC FINANCIAL STATEMENTS for FREE!

Contact Us