Accounting: The Four Types of Financial Statements Essay

Accounting: The Four Types of Financial Statements Essay

Length: 661 words (1.9 double-spaced pages)

Rating: Good Essays

Open Document

Essay Preview

When it comes to Accounting, there are four types of financial statements. These statements are critical when managing a business. The four types of financial statements are Statement of Financial Position, Income Statement, Statement of Changes in Equity, and Cash Flow Statement. Statement of Financial Position is the company’s financial position of an entity at any given time. The Statement of financial Position is composed of three things, which are assets, equity, and liabilities. Income Statement is also known as “The Profit and Loss Statement,” is a report that underlines the company’s financial performance. It puts the report in terms of net profit or a company’s loss over a specified time period. Statement of changes in Equity records the movement in the owners’ equity over a period of time. To determine the owner’s movement, data is derived from the dividend payments, gains or losses recognized directly in equity, shared capital matters reimbursed during the time period, and Net Profit or loss during the period as stated in the income statement. Cash flow statement is the movement in bank and cash balances over a period. This movement is broken down into sections. These sections are the Investing Activities, Operations Activities, and Financing Activities. I believe that the cash flow statement is most effective in communicating the financial health of an organization. Think about it. This statement shows the cash flow from the projects of your business. The cash flow statement shows the flow of money in your inventory and it shows the activities when rising and repaying capital and shared debt composed with payments of interest and dividends. The overview of where your money is going and how it’s doing is more import...

... middle of paper ...

...implement internal controls to sort out who can access what. It would be strictly on a need to know and if you don’t have access you would need to have your supervisor request a form to change your rights. Implementing back ground checks for all employees that are hired into my company. There would also be a drug test screen at random for my employees. This would be my preventive measures to prevent theft or fraud.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on Financial Statements Of A Company 's Annual Performance

- “Companies’ Annual Reports have become increasingly complex over the years, sacrificing understandability for complexity”. An annual report is a detailed report for shareholders and other business partners on a company’s activities throughout the year. It is a legal requirement from the Companies Act 1985/9 that requires companies to publish their annual report and accounts. Its purpose is to present a true and fair view of the company’s annual performance and provide financial statements that are useful to existing and potential investors, shareholders, lenders and other creditors....   [tags: Financial statements]

Good Essays
1067 words (3 pages)

Essay on Financial Statement Analysis And Analysis

- Financial statements are formal reports which show the current financial position of an entity. There are three main types of financial statements; the balance sheet, the income statement and the cash flow statement (Business Dictionary, 2016). Financial statement analysis refers to the analysis and interpretation of those three main financial statements. It can also be defined as understanding the risk and profitability of an entity (Ready Ratios, 2013). There are different techniques of financial statement analysis including ratio analysis, vertical or common size analysis and horizontal analysis or trend analysis....   [tags: Financial statements, Balance sheet, Ratio]

Good Essays
1022 words (2.9 pages)

Examining Financial Statements - Landry's Restaurants Essay

- Examining Financial Statements - Landry's Restaurants Financial statement users around the globe use financial statements to evaluate the performance of companies (Fundamentals of Financial Accounting, 2006). In order to locate a company’s reported assets, liabilities, expenses and revenues, statement users rely on four types of financial statements. The four financial statements include: Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Cash Flows (Fundamentals of Financial Accounting, 2006, p....   [tags: Business Accounting]

Good Essays
1117 words (3.2 pages)

Essay on The Reason Of The Firm 's Financial Statements

- Introduction Financial statements are very important to a company because they measure a company’s performance. This performance statement can be viewed by the owners, possible investors, and lenders. This statement can make or break a company and is important that it is completed correctly. A Financial statement includes income statement, balance sheet, and statement of cash flows. In this essay I will describes the reason of the firm’s financial statements. Income Statement Purpose The income statement is the one of the most important and a large part if the financial statement....   [tags: Generally Accepted Accounting Principles]

Good Essays
732 words (2.1 pages)

Financial Statements Provide Investors And Creditors With Relevant Essays

- Financial statements provide investors and creditors with relevant and representationally faithful information about “the results of operations, financial position, and cash flows” of an organization that helps them make decisions regarding the allocation of resources. However, by adopting the “off-balance-sheet” treatment, a growing number of companies conceal the nature of transactions in which they purchased the assets in the form of leases instead of loans, in order to keep assets and liabilities off the books, resulting in understating costs, lowered debt to equity ratio and boosted earnings....   [tags: Balance sheet, Liability, Asset, Lease]

Good Essays
782 words (2.2 pages)

Financial Analysis : The General Electric Company Essay

- Introduction Financial analysis gives the clear outlook of the performance parameters of an organization. It helps in evaluating and comparing the present as well past performance. This analysis is an important tool for the management, investors as well as the outsiders who deal with organization. This analysis presents the way of functioning and the direction in which an organization is moving. The analysis is done with the help of common size analysis, comparative analysis and Ratio Analysis. The analysis is done with the help of respective annual reports of the companies....   [tags: Balance sheet, Asset, Financial ratio, Revenue]

Good Essays
1636 words (4.7 pages)

Financial and Managerial Accounting: What's The Difference? Essay

- Financial and Managerial Accounting: What's The Difference. Whether it is a sole proprietorship, partnership, corporation, or a limited liability company, all businesses survive on the buying/selling of goods and services for cash or credit. They may buy land and build office complexes, stores, or factories. They may buy supplies, equipment, merchandise to sell, and/or the raw materials required to manufacture goods. They hire employees, pay salaries and benefits. All of these "business" activities need to be measured, analyzed, and recorded....   [tags: Financial Managerial Accounting Compare contrast]

Good Essays
1929 words (5.5 pages)

The Basic Financial Statement Analysis Essay

- The four basic financial statement analysis procedures are horizontal, percentage, vertical, and ratio (Edmonds, Tsay, & Olds, 2011). The first basic financial statement analysis procedure is horizontal analysis or also referred to as trend analysis. Horizontal analysis is used to study the behavior of individual financial statement items over several accounting periods. Likewise, horizontal analysis is the comparison of financial information of a company with past financial information of the same company over a number of reporting periods (Edmonds, Tsay, & Olds, 2011)....   [tags: Balance sheet, Income statement]

Good Essays
915 words (2.6 pages)

Financial Report On Financial Reports Essay

- Financial reports are virtual part of any kind of business field. They are used for to keep track on the business progress, and conditions. Without having knowledge of how much money was spent, how much money is in currently in use and how much money will be needed in the future, any organization will be in a big trouble. These troubles do not only concern the owners of the business but also everyone related to the business. For example, employees, customers, suppliers, etc. In general, financial reports are made up of different types of reports....   [tags: Generally Accepted Accounting Principles]

Good Essays
779 words (2.2 pages)

Financial Accounting: Essay

- Introduction Financial accounting that is about reporting and summarizing the transactions of business and provide an accurate financial reports or financial statements such comprehensive income and finacial position (Averkamp, 2014). However, if investing in a business and want to acquire more profit, the financial statemnet of company is must be analysed before taking a decision. This essay will explains that financial statements between two companies about four years comprehensive income statements and four years statements of financial position....   [tags: comprehensive income and finacial position]

Good Essays
1001 words (2.9 pages)