Home of the Brave
The income statement basically shows the revenues and expenses of any business (Kimmel, Weygandt, & Kieso, 2011). After the income statement there is the retained earnings statement. This statement indicates how much of a business’s previous income is distributed to owners by way of dividends. It also shows how much income was retained within the organization to allot for future growth (Kimmel, Weygandt, & Kieso, 2011).
The first of these financial statement is Balance sheets. The balance sheet is used to represent an illustration at a point of what a business owns and owes; these are also known as assets and liabilities (Kimmel, Weygandt, & Kieso, 2011). balance sheets is essentially a financial snapshot of the entity . The next statement is the income statement, this statement reports revenues and expenses a company occurs during a specific period of time. The result of an organization’s revenue versus its expenses will provide either a net income or net loss. A net income results when revenues exceed expenses, and a net loss results when revenue is less that expenditures. Those results may be interpreted as a period of financial success or failure for the company. Internal users such as managers, production supervisors, and other company employees will examine the income statement and review the amount of money spent during a specific period of time on such operating activities like salaries, supplies, cost of materials, and other operating expenses. For example, a production supervisor can review income statements over several periods of time and notice if the cost of material is consistent with revenue. If discrepancies are found, management can conduct an audit to correct the situation. Likewise, external users such as investors, creditors, and taxing agencies review income statements with the purpose of examining a company’s financial pattern of financial success. The next statement is the cash flow statement. This