Examining Financial Statements

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Date Submitted: 08/24/2010 05:12 PM

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Examining Financial Statements


By Desertflower24


Financial statements report the results of past performance and the current financial position of a firm. Three main financial statements are usually included in annual reports: 1) Balance Sheet 2) Income Statement and 3) Statement of Changes in Financial Position. These three financial statements present a snapshot of a company's financial position and activities. Financial statements are useful to the extent that they aid users in assessing or predicting variables of interest in the investment decision. Data from financial statements are especially useful to creditors and investors interested in the expected future performance and financial position of a company or firm. (Logue, 2009) In this paper, team (A) plans to examine and define the financial statements of the Laundry Restaurant Company.

Net Income

Net income is equal to revenues and gains minus expenses and losses. Appendix (A) of the text, Fundamentals of Financial Accounting 1st ed., by Phillips, Libby, and Libby presents an Income statement for Landry's Restaurant. For the year ended December 31, 2003, Landry's Restaurant produced a net income of $45, 901, 1054; this was a 4,379,439 increase from the previous year ended 2002, which is located on Landry's financial income statement. The income statement illustrates the amount of revenue and expenses Landry has produced over the past three years. As a measure of operating performance, revenues reflect the services rendered by Landry's, and expenses indicate the efforts required or expended.

Components of Financial Statements

The components of Landry's financial statement include revenues (sales); expenses (operating) and earnings (net income).There are three basic principles of financial statements. The first principle is the balance sheet, which presents a snapshot of the resources (assets) of a company...