acc_557_week_1_dq_2.doc

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acc_557_week_1_dq_2.doc

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Financial Statement DifferentiationNameACC 561-AccountingDateInstructorFinancial Statement DifferentiationBusinesses use four types of financial statements in order to display to the public their financial standings which include; balance sheet, income statement, statement of equity, and statement of cash flow. The purpose of this paper is to discuss each financial statement and their correlation which each other. Within this paper I will be discussing; 1) which financial statement, or statements, would be of most interest to investors? 2) Which financial statement, or statements, would be of most interest to creditors? 3) Which financial statement, or statements, would be of most interest to management?Each of the four financial statements interacts with each other. Each one affects or is affected by the other in one-way or another. Even though they each serve a unique purpose, they all have one common goal: to evaluate the health of a business (The Business Plan n.d.). The balance sheet shows a companys financial standing at any given point of time throughout the operations of the business. The statement of equity, which is also known as the retained earnings, gives an outline of the companys prior year earnings. The cash flow statement, states a companys on hand cash at anytime. The cash flow statement also allows for investors to see if the company has enough cash on hand for its every day operations. Finally the income statement shows r

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