Types Of Statements That Make Up An Owner 's Equity Section On A Corporate Balance Sheet

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Keeping Track The paper is to discuss some of the major types of statements that are typically used within business firms to keep track of finances. To further explore these statements, the major components will be identified. Different accounts that make up an owner’s equity section on a corporate balance sheet will also be analyzed. Furthermore three categories of ratios that firms use in analysis and their benefits will be examined. Introduction Business firms are under constant scrutiny by consumers, shareholders and even their own board of directors. Keeping track of finances is imperative, not only to please shareholders, but stay in business. There are a wide variety of statements that will enable a firm to keep track of…show more content…
This can include gross profit, operating income, income before taxes and net income. Probably the most important one would be the overall expenses. These expenses include the cost of goods sold (COGS), selling, general and marketing expenses (Melicher, 2013, p. 357). The COGS includes the expenses related to manufacturing products. This means that the cost relating to the production, such as labor and materials is included in the COGS (Melicher, 2013, p.357). These costs will fluctuate due to the level of production output; meaning one year might be significantly higher than the previous. This is contrary to the cost of selling and marketing expenses. These types of expenses are more stable and fixed. These types of cost are related to selling a product rather than production. They include salaries, advertising, promotions and even recordkeeping and accounting statements (Melicher, 2013, p. 357). Cash Flow Statement Another tool that corporations can use to track finances is a cash flow statement. According to Acerkamp (2016), the purpose of a statement of cash flow is to provide financial information regarding the gross payments and gross receipts for a specific time period. In a typical cash flow statement you will have three sections. The first section is operating activities. Operating activities can include net income, depreciation, different net adjustments (Melicher, 2013, p. 362).
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