Acc 290 Weekly Summary of Week One Discussion and Lesson

Weekly Summary of Week One Discussion and Lessons

This week’s discussion and lessons in accounting identified the four basic financial statements, the purpose of each of these statements and how these statements are crucial to a person, business, or company. The four financial statements are balance sheets, income statements, retained earnings statement, and statement of cash flow (Kimmel, Weygandt, & Keiseo, 2010).

A balance sheet reports assets and liabilities and is used to represent what a business owns and owes. Income statements report the revenues, expenses, performance over a length of time, and the yearly gains and losses for the person, business, or company. A retained earnings statement identifies how the net income was accumulated within the organization for future growth and how much income is dispersed or allotted to the investors. The statement of cash flow provides information on the incoming cash, expenses, and the activities of a person, business, or company. This statement indicates where the cash was obtained and how it is being used over a certain period.

Financial statements provide good information on the financial status, performance, and financial positions of a company. Managers within the company use these reports to operate a company smoothly in making important decisions based on the status of the company.

Employees use financial statements to determine job security, risk and return of their retirement, and investments with the company. Some investors can predict the financial health of the company based on the profits disclosure statement that provides a good source of information for the potential investors. Creditors can determine whether they are able to grant loans or credit based on these statements.

By the readings one can see how important these financial statements are needed, how, and why businesses conduct their day-to-day activities based on these statements. Learning how to understand financial...