Internal Financial Statements For Business Performance And Support The Decision Making Process

A balance sheet gives an overall picture of a company's financial situation by showing the total assets of a business, including liabilities plus equity. Current assets can include cash, accounts receivable, inventory and prepayments for insurance. The balance sheet is used by investors to get an idea of what the shareholders have invested, including

* An income statement is a report that contains information in regards to an organizations’ assets and financing in order to obtain those assets that is collected over a certain period of time

Another important aspect of business that owners must understand is what assets and liabilities are, and also the stockholders equity. These are all shown in detail on the balance sheet which is discussed in the next paragraph. An asset in its simplest form is a resource owned by a business. This could be anything from cash and equipment, to patents and trademarks. Liabilities are debts or other payments that the company owes. These can range from notes and bonds payable to deferred taxes and accrued liabilities from the past. The last thing an owner must understand is the stockholders equity. This is the claim that the owner has to the assets. These are all related and shown in detail on a balance sheet. As the name implies, the assets must equal the liabilities plus the stockholders equity. These three things are used to determine many things including assets to debt ratio which can help determine

The cash flow (CFS) statement represenst revenue and expenses for a specific period of time (Sticker, 2012). . The CFS details exactly where cash is being derived and spent and may be generated at any time for analysis (Finkler, Jones, and Koyner, 2013).

Income statements generally report on a period matching the standard accounting periods of the business, or may cover a specific period as defined for research purposes. At the core, the income statement provides a key measure of the profitability of a business. This differs from the liquidity or cash on hand of a business, but instead examines the business’ ability to bring in revenues that exceed expenses over a given period of time (Hofstrand, 2009).

Feedback: The income statement is a dynamic statement showing changes or accumulated totals oveover a period of time, such as one month, one quarter, or one year. P2

Ans: The income statement lists the revenues minus expenses or costs of goods sold and operating expenses and will reveal a net income or net loss (Revenues – Expenses = Net Profit or Net Loss). Income statements show how much money a company made and spent over a period of time. Income Statements cover a specified period of time usually annually or quarterly. An Income Statement represents only one limited view of the companies’ net profits or net loss after all revenues are listed while expenses (costs) and taxes are subtracted. The Income

Small business owners use these statements to find out what areas of their business are over budget or under budget. Specific items that are causing unexpected expenditures can be pinpointed, such as phone, fax, mail, or supply expenses. Income statements can also track dramatic increases in product returns or cost of goods sold as a percentage of sales. They also can be used to determine income tax liability.

Balance Sheet reports the financial position (economic resources and sources of financing) of an accounting entity at a point in time.

A Balance Sheet is a snapshot of an organization’s assets, liabilities, and owners’ equity at any given time. It allows the stakeholder’s to see the company's financial condition, as well as, presenting what is owned and owed. Assets are the things that are owned, and are referred to as capital. Liabilities are the amounts owed to others. In order to get an accurate picture, one must look at the whole document, and make comparisons amongst different line items.

It is important to understand that any business needs from an income statement and a cash flow statement to succeed and there are many reasons behind it. According to Southern New Hampshire University (2015), “Cash flow is the lifeblood of any business…it can reveal important clues about a company’s financial health that are not as readily apparent on the balance sheet or income statement. (p. 1)

The cash flow statement is similar to your checkbook. You deposit the value of your paycheck after expenses into your

The Cash flow statement is based on cash receipts and cash payments, so it excludes non-cash expenses eg depreciation and adjusts for changes in debtors, creditors and inventory to reflect income and expenses that have not yet been received or paid. Cash flow also shows items not included in income Statement eg capital expenditure, debt repayments, borrowings, etc.

The first of the financial statements is the income statement. The income statement states the revenues and expenses in an understandable way that shows a clear picture of net income or net loss for the

Assets, liabilities, expenses, and revenues are the four areas that are tracked on the four basic financial statements. To start tracking these four areas, an accountant would start with the balance sheet. The balance sheet is used to give a preview of a particular time period of how much a company owns and what it owes. The balance sheet details the balance of the company’s income and expenditure over the specific time period. Assets such as cash, property, and inventory are detailed on one side while liabilities such as accounts payable and long-term debt are listed on the opposite side of the balance sheet (Kimmel & Weygandt, ,2010). The income statement measures a company’s financial performance over a specific period of time. Revenues and expenses are assessed with a summary through operating and non-operating expenses. A net profit or loss is also shown on the balance sheet and is typically shown for a fiscal quarter or year (Kimmel & Weygandt,