The Importance Of Financial Statement

According to Hill (2003-2016) Asset is one of the three categories that show in the balance sheet. It considers the first convertible of the underling accounting. I chose this topic because I want to know more about assets and how it works. Each company must understand the importance of financial statement. Therefore, in this assignment, I will cover the most fundamental things related to financial statement and its types, assets such as types of assets, two more balance sheet sections like liability and equity.

As Bragg (2016) cited, there is something called financial statement. It is a group of reports of a company’s financial final results. A financial statement is divided in four categories. Balance sheet, income statement, funds flow

Abdul Naser Noor & Jaffarulla. A (2001)has cited that it shows what an owner of a business has and owes of the financial position at a specific date. It covers three elements. It also represents an image of the buying and financing activities of an organization. It represents the business assets as I will mention it, liability, and equity. According to Ammar Ali, Abdul Majid (2010) Balance sheet may assist users of the financial statements to appreciate the financial integrity of a structure in expression of liquidity peril, or business peril. (UK essays, 2013) has shown in their page the importance of the financial statements to the stakeholders. By managing business, you can earn profits, comparing assets with liabilities, the way that can make advantages from using the money, did the company invested all its profits or still they have any, finally having expectation in which their capital will stay enough in the

It’s a report of revenue, and expenses earned during the accounting time period. Abdul Naser Noor & Jaffarulla. A (2001) said that Revenue defined as assets of a company from giving or making goods, services. However, expenses are the cash that is going outside the company for making goods or services. Income recognized mostly when it earned rather than when receipts are appeared. On the contrary, expenses are recognized in the profit and loss account when they are appeared even if they are repaid before or after the period. Moreover, this account can be arranged to follow up the net profit of any business. It is opened by one of two, the shift of the gross profit to its credit or the gross loss to its debit sidelong. The profit and loss account has another name knows as income statements.

Gitman (2003) had mentioned in his own book about the third type of financial statements called Cash Flow statement. It is an overview of the business’s work over a specific period. This statement equips perception into the company’s operating, buying, and financing the cash flow. Moreover, it considers as lifeblood of a business. The thing that effects on the cash flow is depreciation. To add in, there are three types of cash flow. Operating flows, investment flows, financing