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Balance sheet and Income statement

Balance Sheet and Income Statement Commentary

Balance Sheet and Income Statement Commentary

There are three areas to an accounting system. These areas include inputs, processing, and outputs. The inputs to an accounting system include sales, purchasing, and shipping documents. Inputs also include payroll, bank, travel, and entertainment records. This information is processed by recording, classifying, and summarizing the data. After imputing and processing the information, the data is placed into financial statements. The most common financial statements the data is put into are income statements and balance sheets.

A balance sheet is a statement of a business or organization that lists the assets, debts, and owners' investment as of a specified date. These three balance sheet pieces give stockholders an idea regarding what the company holds, in debt, and the amount financed by the stockholders. An income statement is a summary of a company’s income or cost during a fiscal year. The income statement keeps track of profits and expenses for a company during the particular period. Income statements are used to determine the operating performance of a business over a certain period of time.

Income statements and balance sheets are the most simple and important components necessary to acquire possible financiers. These financiers may include banks, investors, and vendors. It is very important to provide and format these components suitable to the business that is established.

Balance sheets and income statements are used within every company. There are four examples of publicly traded companies that will help explain and identify the way balance sheets and income statements are used within a business. These four publicly traded companies are in the same industry as Riordan Manufacturing, Kudler Fine Foods, McBride Financial Services, and Huffman Trucking.

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