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Acc 5561 Aspects of business - Statement of Cash Flows, Income Statement, Retained Earnings Stateme

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Acc 5561 Aspects of business - Statement of Cash Flows,
Income Statement, Retained Earnings Statement,Balance sheet
Week 1 Assignment
ACC/561-Accounting
When it comes to documenting financial statements, it is vital that they
are clear, based on specific data, and can be used for the decision
making process to be effective. In this case, there are four financial
statements that will be reviewed; the balance sheet, the statement of
cash flows, the income statement, and the retained earnings. These four
all prove to be important in different aspects of business as it relates to
“the numbers” game. The questions that are to be addressed in this
paper is which of these statements will appeal to the likes of creditors,
interested investors, and management.
Income Statement
The income statement takes into account the expenses and revenue.
The income statement is also known as the profit loss statement is
exactly what it says. The records from these numbers can be linked to
how successful a company has been. The use of the income statement
is to reveal to investors and management the monetary gains and losses
in a certain window of time. This proves the saying that “Time Is Money”
to be somewhat of the essence. When expense comes into play, the
focus is profit. According to "Investopedia" (2011) “A company’s expense
is the costs “economically” that it assumes through the process of trying
to gain revenue.” The key is to minimize or reduce expenses without
relying on revenues which in turn will yield positive profits. This would be
a good focal point that would peak the interest of investors because their
main goal is to make smart investments that will yield a positive profit.
Creditors could look the income statement to see if it would benefit them
to lend to the company. Managers would benefit from the income
statement because it would allow them to see where they stand as far as
making changes in order to increase profits. They can pin point the

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financial needs and set backs of the company and make the necessary
adjustments in order to cut costs.
Retained Earnings Statement
According to "The Four Financial Statements" (1999-2010) “The retained
earnings statement or the statement of owners equity illustrates the
changes in earnings retained in the company.” Management uses this to
verify the amount of profit paid by the company to shareholders.
Creditors could use the retained earnings judge the ability to pay back a
debt. This document is also important to investors because it helps
investors to choose which company in which they can make an
investment.
Balance Sheet
The balance sheet is a vital part of the businesses records because it
reveals the liabilities and the assets they have. A balance sheet consists
of Current Assets, Accounts Receivable, Inventory, Depreciations,
Liabilities, Accounts Payable, Short-term Debt, Investments,
Stockholder’s equity, retained Earnings etc. The balance sheet allows
investors to form an idea as to what the company owns and debts
incurred. Creditors could find this useful by viewing the liabilities of the
company. Managers could use the info from the balance sheet to design
a strategy to improve on debt and cut spending.
Statement of Cash Flows
Cash flows provide statements that involve the amount of cash that is
received and dispersed from the company in a particular time frame. The
statement of cash flows summarizes the company’s operating activities.
Operating activities uses sales revenue, services, sales, marketing, and
many other expenses. Investing activities uses the acquisition of needed
resources. Financing activities include any action involving borrowing
money from creditors, debt securities sold to investors, or issuing shares
of stock to investors. Investors, Creditors, , and managers would all
benefit from the statement of cash flows because it is a combination of
the company’s asset.
These four all prove to be important in different aspects of business as it
relates to “the numbers” game. Creditors, investors, and managers can
benefit from some if not all of the Financial statements provided by a

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company that influence purchasing, profits, assets, liabilities and overall
company’s
References
Investopedia. (2011). Retrieved from
http://www.investopedia.com/terms/e/expense.asp#axzz1ZwCWRRQh
The Four Financial Statements. (1999-2010). Retrieved from
http://www.quickmba.com/accounting/fin/statements/

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Anonymous
Just what I was looking for! Super helpful.

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