Working with Financial Statements Accounting is the heart and soul of executing a successful business. Accounting is used to provide record for all items that are paid and received for a business over any period of time. Within the purpose of accounting lies the need …
Primary objective
"The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions." Financial statements should be understandable, relevant, reliable and comparable.
Three categories
The balance sheet, income statement, and cash flow statementcash flow statementThe statement of cash flows, or the cash flow statement (CFS), is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. Like the income statement, it also measures the performance of a company over a period of time. Cash Flow Statement: What It Is and Examples - Investopedia each offer unique details with information that is all interconnected. Together the three statements give a comprehensive portrayal of the company's operating activities.
Elements
This chapter defines 10 elements of financial statements: assets, liabilities, equity (net assets), revenues, expenses, gains, losses, investments by owners, distributions to owners, and comprehensive income.
Basics
The four basic financial statements are the income statement, balance sheet, statement of cash flows, and statement of retained earnings. Your financial statements are dynamic reports full of insights just waiting to be extracted and used to achieve your business objectives.
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