Consequently, after reviewing week one reading, I learned that there are four main financial statements. They are balance sheets, income statements, cash flow statements, and statements of shareholders’ equity (Bethel University, 2017). The balance sheets show what a company actually owns and what it really owes at a certain point in time. Income statements show how much money a company has made and spent over a matter of time. A cash flow statement explains the give-and-take of money between a company and the outside world also over periods of time. The fourth and final financial statement is called a statement of shareholders’ equity it shows changes in the interests of the company’s shareholders over time. A balance sheet offers detailed …show more content…
First, start with the total amount of sales made during the accounting period known as gross revenue. A gross revenues or sale is the total amount of money brought in from sales of products or services it’s known as gross because expenses have not been deducted from it yet (Bethel University, 2017). Next, make a deduction for certain costs and other operating costs connected with producing the revenue. This would include, sales discounts or merchandise returns this would be an expense because they do not expect compensation for these types of expenses. Finally, after deducting all of the expenses, the company knows how much the company actually made or lost during the accounting …show more content…
A cash flow statement can tell if the company is generating money a company has to have enough money available to pay expenses and purchase necessary assets. Cash flow statement reflects the variations over time instead of complete dollar amounts at a point in time. At the end of a cash flow statement, it indicates the net increase or decrease in cash for the period. Cash flow statements are divided into three key parts which are operating activities, investing activities, and financing activities (Bethel University, 2017). The first part of a cash flow statement evaluates a company’s cash flow from net income or losses. However, this portion of the cash flow statement should reconcile the net income for the real cash the company received from or used in its operating activities. By adjusting net income for any non-cash items and adjusting for any cash that has been used or provided by other operating assets and liabilities (Huang,