Finanacial Statement Paper

Financial Statements Paper

Robert Morrison

ACC/280

April 17, 2011

Robert Gordon

Financial Statements Paper

Accounting is the practice of recording debit and credit exchanges between individuals, company, vendors, and shows past performance of sales, purchase, payments, assets, and liabilities. The function of accounting is to provide useful financial information for making decisions. Another purpose of accounting is to record economic events that provide a history of financial activities.

Accounting

Accounting information is recorded and presented in the form of financial statements. The financial statements have a title: Income statement, Balance sheet, Retained earnings statement, , and Statement of cash flows. Weygandt, J. J. (2008). The income statement is first because the information in the rest of the financial statements is derived from the income statement. In the income statement a list of all revenues and expenses are recorded. The expenses are deducted from the revenues to show the net income balance. The balance from the income statement is transferred to the Retained Earnings statement. Dividends are subtracted from the net income creating the Retained Earnings balance. The Retained Earnings balance is transferred to the Balance sheet and placed under the liabilities and stockholders equity column. The Retained earnings sheet contains the assets of cash, supplies, accounts receivable, , and equipment. It also lists the cash assets, which are transferred to the Statement of cash flows sheet. The statement of cash flows sheet provides reasons for the retained earnings decrease or increase during the certain period. Weygandt, J.J (2008). The statement of cash flows reports the cash effects of a company’s operations during a period, its financing transactions, investing transactions, the cash amount at the end of the period, the net increase or decrease in cash during the period, and the cash amount at the end of the period....