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Financial Statement Differential

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Financial Statement Differential
Olga Belteton
ACC/561
7.2.2012
Instructor: Tom Myers, CPA
Financial Statement Differential There are four financial statements that companies refer to or should refer to when running their business; the balance sheet, the income statement, the statement of cash flows and the statement of owner’s equity also called the retained earnings statement. The balance sheet is the financial statement that lets the business know if it will meet their billing deadlines. It give insight to management on whether buy more capital, and if the company will be able to pay dividends to the owners of the business. The balance sheet shows the assets of the company, the liabilities that will be paid by the assets and presents the shareholders equity that is left when the liabilities are paid from the assets. The Income Statement is sometimes referred to as the profit and loss statement will show what the company has earned and how profitable the company is during a period. An income statement could be viewed during a given month or a specific quarter or a particular year. The income statement is revenue minus expenses, which gives the net income of the business. The Statement of Cash Flow shows a business what the money is used for and where it is coming from during a period of time. The company will see how the cash flows from the operating stance, any purchasing and, selling done and will see any common stock sold as well as long-term debts paid. The company will also be able to see the net increase or decrease in cash and what they started with and ended with. The cash flow statement is created from both the balance sheet and the income statement for the period in question. The Statement of Owners Equity or Retained earnings statement basically allows the company to understand any changes to retained…...

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