Finance Paper

Financial Statement Differentiation Paper

Financial Statement Differentiation Paper
The first financial statement is the balance sheet. The balance sheet illustrates the company’s financial state at the end of a period of time. It is majorly used by accountants and business owners because it is a statement of financial position for them. A balance sheet would be of most interest to creditors because it clarifies what a company owns and what they owe to other parties. These facts are valuable to a banker because it allows them to determine whether or not they would give the company loans or if the company qualified for additional credit. A balance sheet consists of assets, liabilities, and owner’s equity so this financial statement would also attract investors and management because it displays a company’s net worth
The retained earnings statement is the second financial statement. It outlines the retained earnings during a certain period of time. Starting off with the beginning balance, the retained earnings account could be either added to or subtracted from profits or dividend payments that might arise at the end of the retained earnings balance. There is a simple calculation used to discover the end result. You add the beginning retained earnings to the net income and then subtract the dividends which equal the ending retained earnings.
The income statement is the third financial statement that is heavily used by accountants and business owners. It is also known as the profit and loss statement because it displays a company’s profitability during a specific timed interval. However, it doesn’t reveal cash receipts or cash disbursements so it does not spell out what a company receives or pays out. But, it can still indicate a company’s financial position and performance.
The last financial statement is the cash flow statement. It organizes and reports cash produced from operating activities, investing activities, financing activities, and...