Description
There are 4 primary financial statements used in financial statement analysis. They are the balance sheet (or statement of financial position), the income statement (or the statement of operations), the statement of changes in shareholders' equity, and the statement of cash flows. For this activity, you should choose at least 2 of these statements and discuss the following.
- What is the purpose of this financial statement?
- What are its primary components, and what do they represent?
- Who are the primary users of this statement, and how is it generally used?
- What GAAP (Generally Accepted Accounting Principles) are employed in its construction?
- How does this financial statement relate to the other financial statements?
Be sure to document your statements with credible sources, in-text citations, and references using proper APA format. Minimum of 550 words
Explanation & Answer
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Running head: BALANCE VERSUS INCOME STATEMENTS
Topic: Balance versus Income Statements
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Balance Versus Income Statements
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Purpose
The balance sheets generate a blueprint of a firm’s accounts explaining the liabilities,
assets and equities of shareholders. Balance sheets provide users with a picture of the
organizational financial statements and make them aware of the firm’s financial position,
distinguishing what the company owns from what owes to others. Similarly, income statements
enable the stakeholders to determine whether the company makes profits or loss in the period
that stipulated.
Components and what they represent
Bose, (2012) opines that ...
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