Financial Statement Paper

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Financial Statement Paper

Sharon Smith

University of Phoenix

In this paper the steps and purposes of the financial statement would be discussed. We will be discussing what does the steps of a financial statement tell about a company, why are they important, what decisions could be made using the income statement, balance sheet, and statement of cash flows. All of these steps are very important in a financial statement and play a key role in a company when they are done correctly.

Income statement is a company's financial statement that indicates how the revenue is transformed into the net income. The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. The important thing to remember about an income statement is that it represents a period of time. This differs with the balance sheet, which represents a single moment in time. Charitable organizations that are required to publish financial statements do not produce an income statement. Instead, they produce a similar statement that reflects funding sources compared against program expenses, administrative costs, and other operating commitments. The income statement can be prepared in one of two methods. ("Accounting, four financial," 2007).

According to the income statement the sales had increases from 1999 to 2003. The sales were $438,986 in 1999, and in 2003 was $1,105,755. By this it is showing that the company is doing well and if they keep doing what they are doing then they can be able to make more money and probably open another business one day.

In financial accounting, a balance sheet basically summarizes a company’s financial position. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a snapshot of a company's financial condition. Of the four basic financial...