Financial Statement Differentation

Financial Statement Differentiation

Susan J. Schunke

Dale E. Stoeber

Acc/561

May 2, 2013

The difference of these four financial statements the balance sheet, cash flows, retained earnings, and income statement, which are important in the world of finance will be discussed . Each statement is important and contains information needed for financial records. Each statement will be analyzed and the information documented. What information these statements contain and how they are used by investors, creditors, and management will be examined and reported.

The companies’ assets minus the liabilities are documented on the balance sheet. Leftover assets are given to the owner or retained for company use, they are listed as liabilities. “In business the balance sheet contains the overall financial worth of the company — the value of all its various components and the extent of all its obligations,” (Abrams, 2003, p. 259).

Long-term and short-term notes payable, shareholders’ equity, and retained earnings are also reported on the balance sheet. Whereas entrepreneurs do not focus on the balance sheet, investors, and creditors rely on it to show the company’s value, including any land, buildings, raw or finished materials as well as stock.

The cash flow statement records net income, depreciation, and income tax deducted from profits. “On the statement of cash flows there are more than just the firms inflows and outflows from its operations, there are investments and financing activities,” (Brealey, Myers, & Marcus, 1999, p. 39)....