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Financial Statement Report

Financial statements is used to determine statements created upon the completion of the office period, consisting of the revenue statement, cash flow, balance sheet, and the statement report of owner’s impartiality with the organization. These are the four basic financial statements involved with the closing accounts, which the business arranges.

The income statement is an important financial statement involving the calculation of the net profit and the gross profit of a business for that year. Businesses usually organize the income statement by using the revenues with costs to measure the company’s performance. If the expenses surpass the revenue, the business loses profits and fails to achieve expectations. The information used in the income statement report is required for the internal users of the organization, known as the owners and managers convoluted with the company but nevertheless it is beneficial for the outer users such as creditors and stockholders.

Intended for internal users, revenue statement supports the effectiveness of the organization. Proprietors invest their time and money simply to receive more income and consequently it is required for them to constantly check the amount of money they have earned during an accounting period. Similarly, manager’s status is linked with the profitability of their business.

If the organization is able to reach higher earnings, manager’s wages usually increases. Revenue statements also verify the expenses and profits of the business and managers can reduce their avoidable expenses to gain more income. Stockholders check the revenue statements of the business to verify the past financial stability of the organization and to evaluate the competency of generating prospective cash flows. Additionally, creditors also use the support from the revenue statement to check if the business has enough income to pay its fees on time. The government also plays an important role with income...