Financial Statement Differentiation
- Submitted by: teena137
- Views: 478
- Category: Other
- Date Submitted: 11/04/2012 05:47 PM
- Pages: 3
- Report this Essay
Financial Statement Differentiation
There are four main types of financial statements used by companies and investors to determine how a company is doing financially. The four financial statements are the balance sheets, income statements, cash flow statements, and statements of shareholders’ equity. An explanation of each of the four main financial statements will be given. Determining which financial statement or statements would be of most interest to investors, creditors, and management will be made.
“A balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity” (Beginners' Guide to Financial Statements, 2007). Balance sheets show what exactly the company owns and owes at any given time. Assets are anything of value that the company owns that can be sold to make a profit or can be used to make something that can be sold to make a profit. Liabilities are any type of money that the company owes to another company or person. The shareholders’ equity is the net worth of the company. A company’s balance sheet lists the company’s assets on one side of it and the company’s liabilities and shareholders’ equity on the other side. Both sides of the balance sheet should be equal to one another. This statement would be of most interest to management (Beginners' Guide to Financial Statements, 2007).
“An income statement is a report that shows how much revenue a company earned over a specific time period” (Beginners' Guide to Financial Statements, 2007). An income statement can also include how much money a company spent along with how much the company made. On an income statement the company will start with the gross revenue and show each amount that will be subtracted from that amount and list what was spent on. After all subtractions or deductions have been taken from the gross revenue one can reach what is termed the net profit. The net profit is what the company actually made for the given period of...
There are four main types of financial statements used by companies and investors to determine how a company is doing financially. The four financial statements are the balance sheets, income statements, cash flow statements, and statements of shareholders’ equity. An explanation of each of the four main financial statements will be given. Determining which financial statement or statements would be of most interest to investors, creditors, and management will be made.
“A balance sheet provides detailed information about a company’s assets, liabilities and shareholders’ equity” (Beginners' Guide to Financial Statements, 2007). Balance sheets show what exactly the company owns and owes at any given time. Assets are anything of value that the company owns that can be sold to make a profit or can be used to make something that can be sold to make a profit. Liabilities are any type of money that the company owes to another company or person. The shareholders’ equity is the net worth of the company. A company’s balance sheet lists the company’s assets on one side of it and the company’s liabilities and shareholders’ equity on the other side. Both sides of the balance sheet should be equal to one another. This statement would be of most interest to management (Beginners' Guide to Financial Statements, 2007).
“An income statement is a report that shows how much revenue a company earned over a specific time period” (Beginners' Guide to Financial Statements, 2007). An income statement can also include how much money a company spent along with how much the company made. On an income statement the company will start with the gross revenue and show each amount that will be subtracted from that amount and list what was spent on. After all subtractions or deductions have been taken from the gross revenue one can reach what is termed the net profit. The net profit is what the company actually made for the given period of...