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Primary Financial Statements

942 Words4 Pages

This paper will discuss the primary financial statements that organizations prepare for the use of stakeholder, creditors, and any other decision-making division. This paper will explain the information that will be found on each of the financial statements. This paper will describe the users who use each financial statement and explain why each statement data is useful material for the stakeholder and those who makes decision for the organization’s. The primary financial statements are the balance sheet, income statement, statement of stockholders’ equity, and the statement of cash flows. The balance sheet also called a net worth statement or a statement of financial position. The balance sheet is a picture of all things that an organization …show more content…

The balance sheet offers assets, liabilities, and stockholders’ equity. The assets include cash, inventory, investments, land, buildings, equipment, some tangible assets, and accounts receivable which are money that a company has a right to receive because it had provided customers with goods and services. The liabilities are the obligations of the company which insist of loans payable, accounts payable, taxes payable, warranty obligations and much more. The stockholders’ equity is the amount of possessions that came from the owners and not from the creditors. The information on the income statement includes revenues, which is the sale of goods and services provided by the organizations. The expense shows how much it costs to do business, outside of what an organization spend to produce products. This may include salaries, benefits, and taxes. The net income or earning which is the bottom line of the revenues and the expense (Bethel University, …show more content…

The current year’s net income is added to the current year dividends subtracted from this amount. Which then gives the total of the retained year earnings. The information on the statement of cash flows consist of money from operating activities which includes cash from related to earning income. It also includes cash flow from investing operation which consist of money earned from the sale of the organization equipment and investments. Also, it represents the cash flows from financing activities which is money directly from its enterprise to pay investors and creditors (Bethel University,

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