Accounting: The Four Types of Financial Statements

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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...

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...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.

References:

http://www.allbusiness.com/prevent-employee-theft-fraud/16704398-4.html

http://www.docfinity.com/save-time-money-and-aggravation-six-benefits-of-automating-your-payables-process/

http://smallbusiness.chron.com/four-financial-statements-typically-produced-company-20725.html

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