Financial Report On Financial Statements

935 WordsDec 8, 20154 Pages
Financial statements (or reports) are extremely important for a company, and these statements need to be kept on hand to have financial information readily available to show the company’s overall financial status for each time period. A financial statement is a brief summary of the current or previous financial position and performance of a company (Kumar, 2011). The financial report is prepared to give an overall understanding of the financial status of a company without having to check through all of the company’s receipts of transactions. The four main financial statements are the balance sheet, income statement, statement of retained earnings (owner’s equity), and the statement of cash flows (Four, 2015). The balance sheet is a very detailed imagine of the overall health of a company’s financial system for a specific date or time period (i.e., quarterly, bi-annually, or semi-annually). The major types of expenses that are commonly found on a typical income statement are the assets, liabilities, and net worth of owner’s equity (i.e., stocks or stockholders). An asset is something that the business or company physically owns and also pertains to the liquid cash, accounts receivable, and inventories. A liability by definition is a legal debt or obligation that a company incurs through normal working conditions (Liability, 2015). Items that are found on this portion of the balance sheet would be the accounts payable, deferred revenues, and accrued expenses. The last
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