Accounting Of Financial Records Of An Entity Essay

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A financial statement is an amalgam of financial records of an entity that comprises of a balance sheet, cash flow statement, P&L, and an income statement. There are many accounts that are present on a financial statement such as cash, liabilities (money owed), investments (passive income), expenses (past, present, and accounting for the future), etc. Each account has the potential to effect another as the individual’s financial statement is dependent on the impact of each account. The U.S. Securities and Exchange Commission (SEC) was created for the purpose of standardizing financial information that companies would report within the United States. Accounting for both internal and external users are important for the overall long term health of a company and is necessary to self-evaluate and increase public trust into investing. Managerial accounting is for internal users as the purpose of a company to evaluate itself using things such as operational reporting to determine future decisions made by the upper management individual(s). Cost accounting is a sub-category of managerial accounting as it is for the purpose of costs to the company such as labor, expenses, and overhead. According to Gordon, Ready, & Sannella, (2016) “Financial statements, along with the accompanying footnote disclosures, are the primary source of publicly available financial information for investors and creditors” (p. 3) Financial accounting is for external entities outside of the company that
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