Acc/290

Financial Statements

Tony Jackson

ACC/290

June 10, 2012

Debra Mulanax

Financial Statement

Financial statements are written reports of the financial condition of a firm and are the first step in developing a financial management system. Management should generate a business plan to create and administer financial statements on a monthly basis. Financial statements are very important measurements in a company and do not cover employee skill or performance and tend to neglect employees within the company. Basically, financial statements show a company how they have balanced their finances in the past, how the money was spent, and the current status of their finances. There are four main financial statements which are: balance sheets; income statements; cash flow statements; and statements of shareholders’ equity.

Balance sheets are financial statements that have give detailed information of a company and follow the fundamental accounting model Assets equal Liabilities plus Equity. Company assets are either classified as either fixed or current. Fixed assets are categorized as historical costs and are valued very low on a market scale. Examples of fixed assets include but are not limited to buildings, equipment, and land. Current assets are assets that can and are easily converted into money even at a discounted price. Examples of current assets include but are not limited to marketable securities, inventory, prepaid assets, notes receivable, accounts receivable, and cash (QuickMBA, 2012). Liabilities represent assets within a firm that are to be paid back to creditors. There are two type of classes liabilities can be filed under which are long term liabilities or non-current liabilities, and short-term liabilities or current liabilities. Long term-liabilities or non-current liabilities are bonds and mortgages that are payable. Short-term liabilities or current liabilities are the taxes, interest, wages and accounts payable. Equity is usually referred to...