Financial Statement

Financial Statements are ways that businesses report their information and released periodically. The four types of financial statements are balance sheets, income statements, statement of owner's equity, and statements of cash flow. A balance sheet informs prospective stockholders and banks, exactly how a corporation is financially doing. It is a financial Polaroid of a corporation's Assets, ownership equity and liabilities a company has at the specified time of the balance sheet. Assets could be cash, quantities due to the corporation or large portions of equipment they possess. A liability is what that the corporation owes other people; for example, a loan reimbursement or their accounts billed. Owner's Equity is what goes to the venders or stockholders after the liabilities are paid. The income statement describes the presentation of a corporation by exposing the revenues received and the incurred expenses. "Auditors subtract the expenses from the revenues to show either a net income or a net loss" (Miller, 1991) Income statement offers information concerning to an object's profitability and the relative to expenses to revenues. A statement of owner's equity is a financial statement displaying the beginning balance, add-ons to and subtractions from, and the resulting balance of the stockholders equity account during stated period. The statement of owner's equity is also called a statement of shareholders equity. The purpose of the statement of owner's equity is to state the definite asset value of a corporation to a holder if he or she were to use it as collateral. Statement of cash flow reports information about an individual's cash income and cash deductions for a period of time when related to operating, benefiting, and financing events. Cash flow statements are required annual reports.

Various types of people use financial statements for different purposes. There are internal users and external users. The internal users are people who have absolute support with the business. Managers and owners are included as internal users: For easy procedures of the business, the owners and managers essentially need the financial reports to make the proper business decisions. To offer a more comprehensive outlook of the financial situation of a business, financial examination is executed with the information stated in the financial statements. Financial statements are used to express contractual terms amongst the business and other corporations. An adjustment of the financial statement similar to present debt to equity proportion is essential in determining the amount of long term investment that would be mandatory to be raised. The financial statements of other businesses can give investment resolutions to different businesses also. Occasionally it becomes hard to choose the proper area in which financial properties can be channelized. The financial information or the financial statements