Financial Statements Paper

Financial Statements Paper

Carletta Whiting

ACC/280

July 11, 2010

Steve Miles

Financial Statements Paper

Accounting is often difficult for an individual to understand because of the numerous facets involved during every activity of an organization. An organization is responsible to disclose accurate financial information to a varied group of users such as: managers, creditors, investors, and employees. The information will assist them to make well thought out business and personal decisions regarding the organizations well being, and the employees longevity with the company. In this paper we will review the purpose of accounting and identify the four basic financial statements and will explain how they are interrelated with each other and explore why they are useful to managers, creditors, investors, and employees.

According to Financial Accounting (2008), “accounting is an information system that identifies, records, and communicates the economic events (salaries payable, payments received for goods sold to a consumer) of an organization to interested users” (p. 4). For instance, a company like home depot the financial personnel will identify the financial transactions business related and then record those transactions to give a record of financial events that took place. Once the information is recorded personnel can communicate the information through financial reporting statement. Financial accounting has drawn more attention with the misrepresentation of company assets and stocks with companies like Enron and WorldCom. Corporate public scandals such as these caught the attention of public officials; therefore, launching an investigation into the situation.

The concern surrounding the economy grew because companies may loss investors if no one can trust the financial information provided by these organizations regarding the profitability of the establishment. Since, attention continued to build concerning the misrepresentation of company...