Financial

Financial Statement Paper

Dorothy Hines

January 16, 2013

In the following Financial Statement Paper, It will identify the four basic financial statements. Describe the purpose of each of the Statements. Discuss how the statements would be useful to both internal and external are essential to users such as managers, employees, investor, and creditors. The four basic financial statements are the balance sheet, income statement, retained earnings statement, and statement of cash flow.

The balance sheet is used to present a picture of what a company owns and will also show the company’s overall liquidity. The balance sheet reports the amount of assets and claims to assets within a period of time.  Assets can be listed as items the company owns that could be used if needed to retain cash. The claims to assets are either creditor or owner, which shows up on the stockholders equity section. The creditor would be the individual or company that is using the asset as collateral to a debt. Once debt is paid the creditor releases asset back to owner.

The income statement is used to report the financial health of a company in a certain time frame. The income statement provides the revenues and expenses in the set time frame. The revenue is the income funds, and expenses that are outgoing funds from the company.

The retained earnings statements show how previous income was distributed to owners in the form of dividends. The retained earnings statements give the business the ability to review how much has acquired and the changes to the earnings. The time period used to calculate retained earnings will be same as reported on the income statements.

The statement of cash flow reports the cash obtained and used during a period of time. The cash receipts and payments shows a business cash position....