Financial Statements
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- Category: English
- Date Submitted: 11/12/2011 08:44 AM
- Pages: 3
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Anne Brown
University of Phoenix-MBA program
The four different types of financial statements are the income statement, the retained earnings statement, the balance sheet, and the statement of cash flows. All these statements assist managers, investors, and creditors make important business decisions.
The income statement reports the revenue and expenses of a company for a specific period of time for example quarterly, semiannually, or yearly. The expenses of the company will be deducted from the company’s revenue to arrive at a net income or net loss. If revenue exceeds expenses there will be a net income. If expenses exceed revenue the company will have a net loss. For example if company A’s revenue for the month ended June 30, 2011 was $ 950,000 and its total expenses for the same period was $750,000 then the company had a net income of $ 200,000 for the period.
The retained earnings statement summarizes the changes in retained earnings that have occurred for a specific period of time for example quarterly, semiannually, or yearly. The retained earnings statement is prepared after the income statement because the net income will be added to the opening retained earnings to arrive at an amount which management will use to decide whether to pay dividends or not.
The balance sheet reports the assets, liabilities, and stockholders’ equity of a business at a specific date for example end of the year. The assets are the company’s resources. Assets may include plant and machinery, office equipment, cash, and accounts receivable. Liabilities and stockholders’ equity are claims to the company’s resources. Liabilities may include accounts payable, salaries payable, notes payable, and interest payable. Stockholders’ equity may include common stock and amount of retained earnings. The balance sheet has to balance. That means total assets must be equal to total liabilities plus stockholders’ equity.
The statement of cash flows provides financial...
University of Phoenix-MBA program
The four different types of financial statements are the income statement, the retained earnings statement, the balance sheet, and the statement of cash flows. All these statements assist managers, investors, and creditors make important business decisions.
The income statement reports the revenue and expenses of a company for a specific period of time for example quarterly, semiannually, or yearly. The expenses of the company will be deducted from the company’s revenue to arrive at a net income or net loss. If revenue exceeds expenses there will be a net income. If expenses exceed revenue the company will have a net loss. For example if company A’s revenue for the month ended June 30, 2011 was $ 950,000 and its total expenses for the same period was $750,000 then the company had a net income of $ 200,000 for the period.
The retained earnings statement summarizes the changes in retained earnings that have occurred for a specific period of time for example quarterly, semiannually, or yearly. The retained earnings statement is prepared after the income statement because the net income will be added to the opening retained earnings to arrive at an amount which management will use to decide whether to pay dividends or not.
The balance sheet reports the assets, liabilities, and stockholders’ equity of a business at a specific date for example end of the year. The assets are the company’s resources. Assets may include plant and machinery, office equipment, cash, and accounts receivable. Liabilities and stockholders’ equity are claims to the company’s resources. Liabilities may include accounts payable, salaries payable, notes payable, and interest payable. Stockholders’ equity may include common stock and amount of retained earnings. The balance sheet has to balance. That means total assets must be equal to total liabilities plus stockholders’ equity.
The statement of cash flows provides financial...