The Four Types of Financial Statements

Financial statements (also known as pro-forma statements) have a forecast balance sheet, income statement and statement of cash flows. Financial statements are used to summarize the different events projected for the future. They are very important in the planning process. The balance sheet is what this research is concerned about. Financial statements are evaluated for performance, for example organizations with multiple divisions compare the performance of the divisions using financial statements. Secondly they help plan for the future.

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

The balance sheet is one of four types of financial statements that are analyzed to determine the well being of the firm. The balance sheet is also known as the Statement of Financial Position. The balance sheet provides the detailed information needed to determine the financial condition of the firm on a specific date, which is usually December 31. The balance sheet depicts what the firm owns (assets), owes (liabilities), and how much capital (shareholders’ equity) it has. “The name, balance sheet, is derived from the fact that these accounts must always be in balance. Assets

Several companies use the balance sheet to make sound business decisions. The balance sheet is like a quantitative summary of a company’s financial condition at a specific point in time, including the assets, liabilities,

The balance sheet (BS) is significant to a business due to its ability to provide a “snapshot” of a company’s assets and liabilities at any given time. This financial document is a cursory representation of a business’s health. The use of comparative BS whether it be yearly, quarterly, or monthly provides the interested parties a tool to observe trends that are positive, negative, or neutral to a company’s financial health (Finkler, Jones, and Koyner,2013) .

The four primary financial statements found in annual reports include the income statement, balance sheet, statement of retained earnings and statement of cash flows. The data in each statement includes results from the most recent fiscal year-end, as well as historic data that stakeholders use in identifying trends from year to year. The financial statements include data required for stakeholders to calculate a variety of ratios and analysis which are critical in determining corporate levels of efficiency, profitability, liquidity, debt and sustainability. Since financial statements of public corporations are audited by independent firms, the financial data is typically accurate and generally reflects a standardized format following Generally Accepted Accounting Principles

The balance sheet is created to present the distribution and flow of funds by categorizing values by assets, liabilities, both current and long-term, and owners or the shareholders equity. The current assets in a balance sheet indicates the amount the company can liquidate in a very short amount of time. The Liabilities include debts and payables, while the equity totals the company’s worth by calculating the

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Balance Sheets: It provides the financial situation of the company as a whole. It records the tangible and intangible goods that the company owes or owns. The three categories in a balance sheet are assets, liabilities and shareholders’ equity. The assets are basically categorised in to current assets, fixed assets and other assets. The liabilities section of the balance sheet consists of current liabilities and long term liabilities. The shareholders equity represents the net worth of the company. In balance sheet, the shareholder’s equity is calculated as the sum of liabilities and net worth.

The balance sheet is basically all about assets, liabilities and the equity of the business. The information in the balance sheet will be especially interesting for current and potential investors of the business. The balance sheet tells to investors how much money business has, and how much money it owes and the amount of equity. At the same time it shows to managers whether the business doing well or not and for suppliers it shows whether the business is

The balance sheet of a company reflects exactly what a company owns and what it owes to others, making it a very important thing to be considered for stock investment.

This essay will begin to look at the main financial statements used by decision makers in businesses today. This essay will go into detail about the income statement and statement of financial position and whether these two statements provide decision makers with their financial information adequately. This essay will also include the various advantages and disadvantages of each financial statement as well as describing whom the decision makers are and why financial statements are important to them. A conclusion will be present at the end of this essay to demonstrate an overall view of whether financial statements are beneficial to decision makers.

Financial statements play a vital role in revealing the financial position of an organization so it is made sure that they are presented in an appropriate and understandable manner. They provide business stakeholders both inside and outside a clear picture of the current financial standing of the business enterprise. Preparing these financial statements in not an easy task and requires professional judgement so prudence is a key accounting principle which makes sure that assets and income are not overstated and liabilities and expenses are not understated. Most businesses produce three major financial

The balance sheet is centered on the assets, liabilities and stockholders’ equity of an organization. The assets show what the company owns (cash, accounts receivable, inventory, etc.), the liabilities show what the company owes (salaries payable, notes payable, etc.), and the stockholders’ equity show the amount of money the company has left to reinvest. The balance sheet is important because it provides those who may be interested with information that tells the financial condition of a company. If the balance sheet presents that the company has a minimal amount of liabilities and a large amount of money left over, then it most likely is an organization worth investing in. But, if the company has more liabilities than it can handle, then maybe it is best for investors to steer clear and find a more dependable and successful company (Financial Accounting).

Businesses all over the world use financial statements to get an idea of how their business is operating. It is important for accountants and Chief Financial Officers within the organization to come up with statements that enable business leaders and shareholder with an idea of how the business is doing for a certain time. Financial statements can be uses for auditing purposes and provide the business leader with the information needed to make decisions in reference to the company. There are different types of financial statements and there will be brief overview of how these statements benefit a company as a whole. Income statements, balance sheets, owner’ equity and statement of cash flows all reflect and provide information to business leaders that can aid with making the best decisions concerning goods and services they provide to consumers.