Wk 1 Ac362

Week One Individual

Patrick Kemp

ACC 362-Financial Accounting 1

Introduction

There are several types of financial statements and there are many uses for these statements that make them particularly useful in business. The many different types show information that is pertinent to the way that each report is used. The four types of statements are; income statements, retained earnings statement, balance sheet, and statement of cash flow. Most of these statements are very important because of the information that they possess. All of these statements are crucial to the ability of a business to function.

Income Statements

The income statements are just that, statements that show the income of a company. This statement shows the profitability or lack thereof of a company. This statement shows the specific information via a specific set time period. According to U.S. Securities and Exchange Commission (2007), “An income statement is a report that shows how much revenue a company earned over a specific time period (usually for a year or some portion of a year). An income statement also shows the costs and expenses associated with earning that revenue. The literal “bottom line” of the statement usually shows the company’s net earnings or losses. This tells you how much the company earned or lost over the period.” This allows for the information to be gathered like a snap shot or moving picture depending on how the user wants to depict the information.

Balance Sheets

The balance sheet shows the ending of the month as a snap shot of the financials of a company. This statement shows the liabilities, assets, and what is remaining after the liabilities and the assets are balanced out. This can show whether the company is actually making ends meet. This is also a way that shows how long the company can continue at current expenditure rate to asset acquiring rate.

Retained Earnings Statement

The retained earnings statement basically uses information...