Financial Statements Paper

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Date Submitted: 09/18/2012 11:06 PM

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Financial Statements Paper

Profit and Loss Statement/ Income Statement

An Income statement is a detailed report in which your income and expenses are shown for a given period of time. It shows the gross income of your business which is how much money was made and also shows how much money it took to operate the business or expenses. As well as how much net income or equity is left after you’re gross and expenses.

Balance Sheet

A balance sheet is a detailed report that breaks down all the assets, liabilities, and total equity from a given time period. The total equity can be calculated by subtracting the liability from the assets.

Statement of Cash flows

A statement of cash flows is a detailed report that tells you how much cash you had at the beginning of a certain time frame and how much is left at the end of the same time frame. It combines the information from both the balance sheet and income statement in order to breakdown how much cash comes in, where it is all going, how much of it is left, and ability to show a profit after all expenses are made.

Equity Statement

An equity statement is a report that shows what the opening equity of an accounting period and the closing equity at the end of that same accounting period.

Each of these statements is very useful in both business and personal settings. For example theses statements can be used by executives/ managers to show what the companies’ profit and loss margins are for a certain time frame. It tells you how a company is doing financially and can determine bonuses if any, for the employees. These statements are very useful to a loan officer in which it helps determine if you can qualify for a loan or not by using the information to see if you are able to pay all bills and expenses and still have enough equity left afterwards.