Financial Statements PaperDefine the purpose of accounting and identify the four basic financial statements. Explain how they are interrelated with each other, and why they are useful to managers, investors, creditors, and employees.

Financial Statements Paper

One of the primary message of measuring success in a business is profit. invoice provides the means to measure the various factors that affect the pays of a business by identifying, recording, and communicating economic events that affect a company (Weygandt, 2008). Because various factors can influence an organizations financial situation, the determination of accounting is vital in which these three activities ar conducted.

Four Basic Financial Statements

The quartet basic financial statements are: income statement, retain earnings statement, rest period sheet, and statement of cash flows. Companies typically produce different forms appoint upon the information needs of the end drug user. Marketing managers, production supervisors, finance directors, and executives use internal reports for managerial accounting purposes. External reports are used for financial accounting for company investors, creditors, tax auditors, restrictive agencies, unions, and customers who use the information to determine if the company is making a profit and able to fulfill its financial obligations (Lewis, 2009).

To organize and minimize the amount of information a user needs to determine a companys health, an organization provides a sectionalisation based on the type of financial statement. The income statement reflects the companys tax and expenditures resulting in a sugar profit or net loss for a specified date range (Weygandt, 2008).



Of the four statements, the income statement is the simplest; it merely reflects the difference between income and expenses, not former(a) financial factors such as assets and liabilities. These items can be found on other financial statements.

The summarized retained earnings changes during a specific time are reflected on the retained earnings statement (Weygandt, 2008). Net income is one of the components infallible to compute the retained earnings that come from the income statement. In addition, the preceding retained earnings that are added to the net income and dividends deducted...

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