Financial Statement Paper 1

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Financial Statement Paper
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Financial Statement Paper
In this paper I will define accounting, and I will identify the four basic financial statements. I will also discuss how the four financial statements interrelate with one another, and why financial statements are important to managers, investors, creditors and employees. Users of financial statement information do not necessarily need to know everything about accounting to use the information in basic statements. However, to effectively use financial statement information, it is helpful to know a few simple concepts and to be familiar with some of the fundamental characteristics of basic financial statements (Bizzer Professional Training, 2011). The intention of accounting is to give a resource of reporting, recording, summarizing, and interpreting economic data within an organization. In some form or another, everyone one uses accounting in everyday life. Having a basic understanding of accounting is beneficial for everyone that deals with money. In an organization, accounting will include sales, expenses, taxes and other financial figures. Obtaining and using this vital data will direct an organization and stakeholders to formulate better decisions on the foundation of the organization’s financial future. Organizations use accounting to provide helpful information regarding the financial background of a business to assorted internal and external parties. In the accounting division, four essential financial statements aid in the compilation and recording of data for an organization. The four different financial statements include income statements, retained earnings statements, balance sheets, and statements of cash flows. The end result of knowing the numbers of an organization will give individuals a better perceptive of an organization’s financial strength.

The income statement is the primary measurement of performance for an organization. An income statement or other name, profit and loss...
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