Uses Of Financial Statements : A Profit And Loss Account

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Uses of Financial Statements Income Statements Also referred to as a Profit and Loss (P&L) statement, income statements illustrate a company’s revenues and expense, operating and non-operating income and expense, which is generated and incurred within an accounting period. “The analysis of income can create a picture of the quality of operations in the composed profit and loss account period” (Jeletic, 2012, pg. 325). In addition, income statements also inform external users of net profits or losses from the corporation 's equity position during an accounting period. These data are valuable to a company’s stakeholders, respectively. Some external stakeholders may utilize this information to highlight potential risks, financial strength, the yield on investment and operational abilities of a company (Carrahera & Auken, 2013). Shareholders’ Equity Statement A shareholders’ equity statement or statement of changes in equity, provide external shareholders with an in-depth overall view of changes in equity from the beginning of an accounting period to the end of the accounting period. External stakeholders also review shareholders’ equity statement to attain information on a number of stock sales and repurchased during an accounting period. Some of these equity activities include begging and ending balances of common stock, net income, and dividends. For example, J&J Furniture Company began its operations at the beginning of fiscal year, 2015. J&J 's original investment in
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