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MGT 311 Discussion

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Question:
What are the main financial statements? In order of importance, list
the statements. Why did you rank the statements in the order you
did? Why does GAAP require all statements? Why is it necessary to
prepare the formal financial statements if all the data are on the
adjusted trial balance?
There are four main financial statements. The consist of:
BALANCE SHEETS
INCOME STATEMENTS
CASH FLOW STATEMENTS
STATEMENT OF SHAREHOLDERS' EQUITY
Balance sheets show what a company owns and what it owes at a fixed
point of time. Income statements show how much money a company made
and spent over a period of time. Cash flow statements show the exchange
of money between a company and the outside world also over a period of
time. The fourth financial statement called statement of shareholders'
equity, it shows changes in the interests of the company's shareholders
over time.
ORDER of IMPORTANCE
Income statement, balance sheets, cash flow, stockholders' equity. I think
the order depends on who you are. Stock price tend to function of earnings
so in the income statement would be first. A bank look at the balance sheet
for liabilities and cash flow for ability to get paid.
GAAP require statements so there is one set of methods to summarize
information, without the statements the companies would give whatever
information they wanted. The adjusted trial balance only has account
balances. The following is lacking from the adjusted trial balance. Income
statement- gross profit, operating income, earnings per share. Balance
Sheet- current assets, total assets, current liabilities, total liabilities, and
total equity.
Cash Flow- cash from operating, cash from investing, cash from fiancing.
Equity- shares issues purchases and for how much.

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Question: What are the main financial statements? In order of importance, list the statements. Why did you rank the statements in the order you did? Why does GAAP require all statements? Why is it necessary to prepare the formal financial statements if all the data are on the adjusted trial bala ...
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