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Date Submitted: 04/17/2016 02:22 PM
Financial Statement Review
Giselle Miranda Alexander
ACC/561
April 4, 2016
Dr. Tom Myers
Introduction
There are four different types of financial statements that are made available by businesses to display to the public about their financial position. These statements are as follows: balance sheets, income statements, retained earnings statements, and statement of cash flows. The financial statements all have a correlation with one another. “Each one affects or is affected by the other in one way or another. Even though they each serve a unique purpose, they all have one common goal: to evaluate the health of a business.” (The Business Plan n.d.) The organization uses these statements because they contain a great deal of information and how they operate. The information can be extremely vital, as it makes sure that management or the owners are effective and that there is financial control. It is important to be able to read, interpret and understand all of the financial statements, especially if you are an investor, creditor, manager, or a person with financial responsibility within the business.
Financial Statements
Income statements present the financial results, or how much money a company has profited and exhausted over a period of time. An income statement will also show the costs and expenses that are connected with that earned revenue. The literal “bottom line” of the statement usually shows the company’s net revenue or loss. They are usually the first statements that are prepared. (Accounting Tools) Balance sheets are statements of the assets, liabilities, and capital of a business or other organization at a particular point in time in a detailed fashion. It shows this information at the end of a reporting period. However it does not demonstrate the flows into and out of the accounts during the period. (Accounting Tools) Cash flow statements illustrate the exchange of money between a company and the outside world also over a period of time. Cash...