ACC 290 Financial Statements Essay

Financial biddings be a means of communication numbers within a barter. Without proper numbers your business could be a advantage or a big failure. You will depone on them to make decisions, and managers will use them to evaluate your performance. That is true whether your crease involves marketing, production, management, or information systems (Kimmel, 2009). The mo realizeary statements shows the business fiscal standpoint at a given time consummation, and it alike helps the business to understand what they make to do to improve.A associations livelihood depends greatly on their fiscal statement because it determines if the business is successful, idler it hire new employees, or fag end it receive any more supernumerary loans. A financial standpoint of the company is monitored by its financial statements. The four basic financial statements are bear simoleons statement, balance sheet, income statement, and statement of cash strike. During a certain time period pr esenting a snapshot of what your business owns (its assets) and what it owes (its liabilities), you micturate a balance sheet.To show how successfully your business performed during a period of time, you report its revenues and expenses in an income statement (Kimmel, 2009). Specifying how much of prior income was dispersed to you and the otherwise owners of your business in the form of dividends and how much was reserved in the business to allow for future growth a retained earnings statement is presented. Showing where your business obtained cash during period of time you would prompt a statement of cash flow.The purpose of balance sheet it to show the core of assets a company has obtained by evaluating the claims of creditors and the claims of owners. This type of relationship abide be shown in an equation assets equal liabilities plus stockholders equity. A company success or failure is monitored by its income statement because it shows a companys revenue monitored by its ex penses. The sack income is obtained through the income statement by deducting its expenses from its revenues. The retained earnings statements are different because retained earnings are the net income retained in the corporation.Dividend payment practices are assessed because the amount of the retained earnings statements is deducted or added by the companys dividends. The statement of cash flow shows the company direct, investing, and financing doings. It shows the company cash position and what is happening to its around important source. Managers use financial statements for several purposes. If a company necessarily to meet labor demands and need to hire new employees the financial statements helps in cogniseing how many employees they can afford to hire.On the income statement, management compares gross sales and expenses of a period of time with recent events to notice if there is a big change. They can identify likely problems and investigate the cause however, they ca n regulate if they can afford new equipment, merchandise, and other operating expenses. utilize the balance sheet managers can determine if a change use helped the company or delayed it. Employees look at financial statements to know if the company is managing their money well and can meet payroll obligations.Employees also can gain knowledge of potential bonuses or layoffs based of the net income that is reported on the income statement. Financial statements are useful to investors and creditors because it shows the companys financial position and allows them to make better decisions concerning the company. For the investors and creditors financial statements helps to evaluate the risks cerebrate to the possible investment or loans issued as well as aim returns from the money invested.Investors and creditors analyzes companys financial position, operational results, cash generated by different activities before making investment decisions. If the company owes more than it owns t han creditors whitethorn not allow that company to receive additional loans. To investors it shows if the company is operating profitably. Financial statements are vital to the success of a business. They can be used as a roadmap to direct you in the correct charge and help you avoid costly failures.Maintaining financial statements for a company can only help a company. Improper financial statements put a company in jeopardy. The different statements show if a company can afford to hire new employees or if they need to do nearly lay-offs. To determine if a company can be approved for additional loans or if it is expected to fail you must rely on the financial statements. In general financial shows the financial standpoint of a company and decisions a company has to make cannot be made if there are no financial statements.