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Bus 601 Week 1 Financial Statement Analysis

1053 Words5 Pages

Financial Statements’ Purposes Identified
Anna Gallagher
American Public University
Masters in Accounting
BUSN 601
September 07, 2014 Abstract
Accounting is one of the three pillars of any business establishment. As long as money is involved, accounting will be riding its tailwind. In this paper, I aim to discuss the four main financial statements that companies are reporting to different users to review at the end of each period. Also, here I will discuss which financial statement measures a characteristic that a specific user is uniquely drawn into, what the importance of the four financial statements is, and how they differ from one another.

Introduction
When an entrepreneur opens his very own business and start providing products and/or services, knowing how you performed with a period is important. You want to see the numbers to …show more content…

This report represents the company’s assets, liabilities and owner’s equity. Therefore, the equation of this report is Assets = Liabilities + Owner’s Equity. The equation itself works as the format as to how the balance sheet items are being presented in the report. Assets are separated into current assets (i.e. cash, inventories, accounts receivables, prepaid asset accounts etc.), and non-current assets (i.e. property, plant & equipment, land, etc. Balance sheet gives significant information to various users and shows the company’s financial position. Creditors and lenders are interested at looking at this report because they would like to know how much the company owns and owes, before they agree to provide you a loan. For these balance sheet users, they only want to make sure that the company is capable of returning/ paying off the loan. As far as investors are concerned, balance sheet gives them an idea how stable the company’s finances and how do they finance their

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