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About this document
- Pages
- 3 pages
- Price
- $3 one-time, yours to keep
- Membership
- Included in every plan
- Format
- Subject
- Accounting, Business
- Module
- ACC 290
This paper explains the four main types of financial statements and how they help businesses make decisions. It covers the balance sheet, income statement, retained earnings statement, and statement of cash flow. It is useful for students of ACC 290.
What's inside
- Types of financial statements
- Purpose of each financial statement
- How managers use financial statements
- Importance of financial statements to employees, investors and creditors
- Role of financial statements in business success
Who it is for: Students of ACC 290. (Undergraduate)
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Summary
Financial statements help businesses understand their financial position and make decisions. They are also useful for managers, employees, investors and creditors. A student learns how to use financial statements in business decision making.
Financial Statements and Their Importance
Financial statements show a business's financial position. They help businesses decide whether to hire employees or get loans. Managers, employees, investors and creditors all use them.
The Four Basic Financial Statements
The four basic financial statements are the balance sheet, income statement, retained earnings statement and statement of cash flow. Each statement shows different aspects of a company's financial health.
How Managers Use Financial Statements
Managers use financial statements to decide whether to hire employees or buy equipment. They compare sales and expenses over time. They also check if changes helped the company.
Financial Statements for Investors and Creditors
Investors and creditors use financial statements to evaluate risks and estimate returns. They check the company's financial position and operational results. They decide whether to invest or lend money.
Key terms
- Balance Sheet
- A balance sheet shows what a company owns and owes at a specific time.
- Income Statement
- An income statement shows a company's revenue and expenses over a period.
- Retained Earnings Statement
- A retained earnings statement shows how much profit a company has kept for future growth.
- Statement of Cash Flow
- A statement of cash flow shows where a company got its cash and what it spent it on.
- Assets
- Assets are what a company owns, such as buildings, equipment and cash.
- Liabilities
- Liabilities are what a company owes, such as loans and bills to be paid.
Questions this document helps with
- What do financial statements show about a company?
- How do managers use financial statements?
- What do investors look for in financial statements?
Summary written with AI from the document's text.
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