Accounting and Financial Statements   Term Paper ID:43702 Click to get this paper

Essay Subject: This paper defines the purpose of accounting and identifies the four basic financial statements ...... More...

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Paper Abstract: This paper defines the purpose of accounting and identifies the four basic financial statements, explaining how they are interrelated and why they are useful. Paper Introduction: Accounting and Financial Statements The purpose of accounting is to identify and record all activitiesthat impact the organization financially which would include suchactivities as sales and purchases interest earned and other monetarytransactions Karimi n d Accounting provides the information needed tomake sound financial decisions Financial Accounting n d Accountingenables a business to track its income and outflow in a systematic mannerand identify shortfalls and trends as well as determining how much cash ison hand and available Accounting is accomplished through the use Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Accounting is accomplished through the use of fourbasic financial statements-the balance sheet, the income statement, thestatement of retained earnings, and the statement of cash flows ("The FourBasic Financial Statements-An Overview," 2 7). The statement of retained earnings reports on how the company'sfinancial position was affected by net income and the distribution ofdividends during the reporting period ("The Four Basic Financial Statements-An Overview," 2 7). (n.d.). Accounting and Financial Statements The purpose of accounting is "to identify and record all activitiesthat impact the organization financially," which would include suchactivities as sales and purchases, interest earned, and other monetarytransactions (Karimi, n.d.). The four types of financial statements can benefit managers,investors, creditors, and employees in a variety of ways. BusinessWorks. The cash flow statement shows how the company'soperating , investing, and financing activities impacted the balancesheet's cash balance ("The Four Basic Financial Statements-An Overview,"2 7). In addition, an adjustment to one report can result in a change inanother report, as when the income statement's net income causes the endingretained earnings on the statement of retained earnings to change ("TheFour Basic Financial Statements-An Overview," 2 7). The statement of cash flows categorizes the company's receipts andpayments by source-either operating, investing, or financing activities("The Four Basic Financial Statements-An Overview," 2 7). The cash flowstatement is another statement that captures the financial position at aparticular point in time ("The Four Basic Financial Statements-AnOverview," 2 7). It is similar to a snapshot in time in that the company's financialposition changes constantly with each new transaction, and the balancesheet captures the company's financial position at a particular moment intime ("The Four Basic Financial Statements-An Overview," 2 7). Theincome statement, for example, uses the statement of retained earnings toexplain how the company's operations either helped or harmed its financialposition throughout the year ("The Four Basic Financial Statements-AnOverview," 2 7). The balance of retained earnings is increased by netincome, while the retained earnings are decreased by declaration ofdividends to the stockholders ("The Four Basic Financial Statements-AnOverview," 2 7). Theincome statement is essentially a statement of the company's profit ("TheFour Basic Financial Statements-An Overview," 2 7). Retrieved on August 17, 2 9 from: http://www.profit-improvement-advisors.com/four-basic- financial-statements.htmlKarimi, S. What Is the Purpose of Accounting? Retrieved on August 17, 2 9 from: http://www.quickmba.com/accounting/fin/Financial Statements: Four basic financial statements that can be the early detectors of decay. Retrieved on August 17, 2 9 from: http://www.ehow.com/about_4679149_what-purpose- accounting.htmlThe Four Basic Financial Statements-An Overview. When the change in cash on the cash flow statement isadded to the beginning-of-the-year balance is equivalent to the balancesheet's end-of-year cash balance ("The Four Basic Financial Statements-AnOverview," 2 7). Retrieved on August 17, 2 9 from: http://highered.mcgraw- hill.com/sites/ 72931175/student_view /ebook/chapter1/chbody1/the_four _basic_financial_statements_-_an_overview.html Accounting provides the information needed tomake sound financial decisions ("Financial Accounting," n.d.). Creditors can use them to determine whether it makes sense to extendcredit to the company and how great the risk is in doing so. (n.d.). These four financial statements are interrelated with each other. The balance sheet provides the company's financial position asindicated by the amount of its assets, its liabilities, and the amount ofstockholders' equity ("The Four Basic Financial Statements-An Overview,"2 7). Investors can use them to determine howwell a company is performing and how great a risk investing in it might be. Accountingenables a business to track its income and outflow in a systematic mannerand identify shortfalls and trends, as well as determining how much cash ison hand and available. The income statement reports on the company's performance in terms ofits revenues minus its expenses that have occurred during the accountingperiod ("The Four Basic Financial Statements-An Overview," 2 7). (n.d.). Employees canuse them to monitor the health of the company and thus the stability oftheir jobs, as well as to determine how to negotiate their salary and payraises. McGraw-Hill. ReferencesFinancial Accounting. Managers can usethem to identify whether they have an imbalance in inventory, unpaid bills,or other potential "pitfalls and negative trends;" monitor cash flowrequirements; watch the company's financial health; and check to see howthe company is performing with respect to its financial plan ("FinancialStatements: Four Basic," n.d.). eHow. QuickMBA. The statement ofretained earnings' ending retained earnings is a component of the balancesheet's stockholders' equity ("The Four Basic Financial Statements-AnOverview," 2 7). (2 7). If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.