Financial Statement Differentiation Paper

Abstract

Balance sheet contains company/organization's liabilities, assets, and shareholders equity up-to-date. An income statement is a statement that reports how much revenue a company made in a specific period (Quarterly or annually). Cash flow statement reports how the cash is coming in and going out. It will indicate how much cash we have on hand. The main objective of this paper is to cover the details of different financial statements and their content and how they can be used by investors, creditors and management.

Balance Sheet: A statement, which provides detailed information about a company/organization's liabilities, assets, and shareholders equity up-to-date, is balance sheet. Whatever company owns is an asset, which has a value and sold or can be used to produce products or services. Physical properties, trademarks, patents, Cash, and Investments Company made. Liabilities are amounts of money that a company owes to others. Money borrowed from banks, money owed to suppliers, payroll, taxes, etc. Shareholders are owners of a company; any money that can distribute to shareholders when its sold is Shareholders equity. A simple Equation would be ASSETS=LIABILITIES + SHAREHOLDER"S EQUITY.

On the left side of the balance sheet, companies list their assets. On the right side, they list their liabilities and shareholders’ equity.

A balance sheet is a snapshot of a company's liabilities, shareholder's equity and assets for a reporting period. It does not show how the money was flowing in or out in that period.

Income Statement: An income statement is a statement that reports how much revenue a company made in a specific period (Quarterly or annually). This report also provides details on expenses, occurred to earn revenue. It provides company's earnings or losses over the period. This statement includes total amount of money brought in as sales, services as gross revenue and total expenses. Finally the statement arrives to net profit or net...