Question and answer
What do each of the four financial statements tell you about a company? How do companies use financial statements? Which financial statement do you think is the most useful and why?
The four statements in the U.S. are the Balance Sheet, Income Statement, Changes in Financial Position and Statement of Retained Earnings. The B/S tells you the cost of the company's assets and the amount of money the company owes. [ The difference is the retained earnings left in the company by its owners. The B/S is very important to the banks and creditors because it gives them an
understanding of what a company owes and coverage of the assets in case things go bad for the company. The I/S is most useful to the managers and investors and somewhat to the creditors and employees. With the I/S, managers can gauge how well they are doing against prior periods and years. It shows how much they are spending and for what. The investors look at the I/S to see if the is growing, which is something they are looking for. The Cash Flow Statement is one of the statements that links the I/S and B/S. It shows what the sources and uses of funds have been for the company. In the real world it is not frequently referred to unless you have specific questions like how much new equipment the business purchased or where the business is getting its money or repaying its money. The Statement of Retained Earnings (where required like the SEC) tells you how the Stock Ownership (assuming its a corporation) is coming from. This makes the statement useful to owners, investors and employees with stock options in the business. All statements are used by all four classes of interested parties, as are the footnotes to the financial statements. The notes, as they are called, really tell you a lot about a business. For example, its debt, who does it owe it to, at what rate of interest, when does it have to be paid back. Debt footnotes are extremely useful to banks thinking about lending money to the business. The Stock Options footnote is very useful to investors and employees because it tells how much future stock the company has promised to others and what is the conversion price. The Employee Stock Option footnote is useful to all four classes. It tells how much the company owes to its employees in the future and whether those obligations have been fully paid. ]
Expert answered|jher000|Points 7423|
Question
Asked 6/22/2012 12:05:26 PM
0 Answers/Comments
Get an answer
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
In your own words, how would you describe financial accounting? Select two users, one internal and one external, who you think benefit the most from accounting. Explain why and how you think they benefit.
Weegy: I would describe financial accounting as the process of collecting, recording, summarizing, and presenting an entity’s financial transactions and other pertinent financial information to internal and external users of that information, [ usually in accordance with generally accepted accounting principles. Two users, one internal and one external, who I think benefit most from accounting are managers and investors, respectively. Among internal users, managers benefit most from accounting in many ways. First, it provides them with the basis to make informed business decisions. Managers are better equipped to direct the various aspects of the firm for which they are responsible when they have access to relevant, timely accounting information. Business decisions include, but are not limited to, purchasing new equipment or facilities, expanding existing operations, and utilizing different economic resources. Similarly, accounting can help managers make investment decisions. Second, managers often use accounting information to create budgets. Historical financial information is a great source of information when companies are developing their financial road map for the future. Third, accounting can help managers measure the performance of a firm’s operations. A detailed analysis allows management to compare current performance indicators against those of previous accounting periods, and against those of its industry and its competitors. Investors benefit most from accounting in much the same way that managers do. By and large, it provides them with the basis to make informed investment decisions. First, investors use accounting information to ascertain a firm’s financial health and operational profitability, and, ultimately, to determine its value. Investors tend to shy away from investment options that are grossly overpriced. Second, investors can utilize financial information to compare an entity’s current performance against its past performance, and against ... (More)
Question
Expert Answered
Asked 6/22/2012 11:17:04 AM
0 Answers/Comments
In your own words, how would you describe financial accounting? Select two users, one internal and one external, who you think benefit the most from accounting. Explain why and how you think they benefit.
Weegy: Financial accounting is focused on providing accounting reports and analysis to other areas of the business. [ Financial accountants are responsible for the creation and issuing of the company's financial statements, providing accurate and timely information to management and ensuring that all regulatory reporting requirements are met. In financial accounting, the goal is to consistently provide the valuable, accurate and reliable information. The issuing of the financial statements is the responsibility of the financial accounting department. These statements summarize the business's activities for the year and are used by shareholders, banks, employee bargaining units, and the general public to evaluate the financial worth of the company. The statements are audited by independent accountants to validate the information and provide assurance to readers. The financial statements are comprised of five documents; balance sheet, income statement; cash flow and owners or shareholders equity and notes. Notes to the financial statement are written explanations of items in the financial statements. Any unusual items or change in procedure that has impact on the financial statements are detailed here. The balance sheet is a summary of all the assets and liabilities at year's end. The accounts reflect the total amount of cash and liquid assets on hand, the amount of debt the company is carrying, and how much money was spend in various categories. Financial accounting firms perform analysis of these values using ratios and other calculations to determine the financial health of the company. ] (More)
Question
Expert Answered
Asked 6/22/2012 11:36:33 AM
0 Answers/Comments
17,589,406 questions answered
Popular Conversations
A list of potential sources of information for a paper is a(n) ...
Weegy: A list of potential sources of information for a paper in annotated bibliography. User: An index to ...
9/29/2014 2:50:04 PM| 4 Answers
You've settled on an idea for an essay to write. What should you do ...
Weegy: D.) Conduct interviews, do some research, ask questions, and make a plan. User: To make sure your reader ...
9/29/2014 5:55:28 PM| 4 Answers
What is the square root of 6000?
9/29/2014 2:39:45 PM| 3 Answers
Because the subject of a composition is like a crystal with many ...
Weegy: Because the subject of a composition is like a crystal with many facets, you should A. offer your reader ideas ...
9/29/2014 7:06:34 PM| 3 Answers
The densest ocean water is generally found a. in the surface ...
Weegy: A. in the surface zone User: In which zone is ocean temperature most affected by the weather? a. transition ...
9/30/2014 6:07:25 AM| 3 Answers
The pressure of ocean water increases as depth increases. User: The ...
Weegy: It originates in the Gulf of Mexico and, as the Florida Current, passes through the Straits of Florida and then ...
9/30/2014 6:27:02 AM| 3 Answers
In the Roman Republic, ____________ did not have power in the ...
Weegy: In the Roman Republic,non-citizens did not have power in the government.
9/29/2014 5:48:03 AM| 2 Answers
Weegy Stuff
S
R
L
1
1
P
C
1
P
1
1
L
P
C
P
C
1
P
C
L
P
C
1
P
C
P
C
P
C
L
Points 3249 [Total 27647]| Ratings 8| Comments 3169| Invitations 0|Offline
S
L
1
L
P
C
1
Points 2934 [Total 9465]| Ratings 12| Comments 2814| Invitations 0|Offline
S
L
C
P
C
1
L
L
P
C
1
Points 2732 [Total 18671]| Ratings 18| Comments 2552| Invitations 0|Offline
S
L
P
C
L
P
C
P
C
L
P
C
P
C
P
C
Points 2664 [Total 19836]| Ratings 12| Comments 2544| Invitations 0|Offline
S
L
1
1
1
1
L
1
L
Points 2548 [Total 12328]| Ratings 0| Comments 2548| Invitations 0|Offline
S
1
L
1
L
P
P
L
Points 917 [Total 12163]| Ratings 0| Comments 917| Invitations 0|Offline
S
L
P
C
P
C
1
L
P
C
L
P
C
P
C
P
C
P
C
Points 864 [Total 19395]| Ratings 2| Comments 844| Invitations 0|Offline
S
L
Points 733 [Total 1402]| Ratings 0| Comments 733| Invitations 0|Offline
S
1
L
L
Points 632 [Total 5755]| Ratings 4| Comments 592| Invitations 0|Offline
S
P
C
L
P
L
1
Points 176 [Total 6233]| Ratings 2| Comments 156| Invitations 0|Offline
Home | Contact | Blog | About | Terms | Privacy | Social | ©2014 Purple Inc.