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Essay / Research Paper Abstract
This 4-page paper discusses the relationship between the income statement, cash flow statement, balance sheet and stockholders' equity statement. Bibliography lists 2 sources.
Page Count:
4 pages (~225 words per page)
File: AS43_MTfincstmt.rtf
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Unformatted sample text from the term paper:
"tag" it properly. But it is the financial statements of a company that provide a report on how well, financially, an organization is doing.
The four financial statements well be discussing in this paper are the income statement, the balance statement, the statement of cash flows and the statement of stockholders equity.
The income statement (also known as the profit and loss statement) shows whether the firm is making a profit (Peavler, 2009). The income
statement is developed from revenue and expense accounting entries during the accounting period (Peavler, 2009). Its probably the most basic of the four financial statements, as it has revenue
on one side and expense on the other. The accounting period can range anywhere from a week, to a quarter (though its recommended that these statements be prepared somewhat more
frequently. Income statements are typically prepared first because the other statements require information from the income statement to be calculated. The statement
of retained earnings, in the meantime, requires information from the income statement, while providing information to the balance sheet (Peavler, 2009). How does this work? The net income from the
income statement is either retained by the firm, paid out as dividends, or a combination of both (Peavler, 2009). The "retained" earnings consists of the remaining amount left after dividends
and other charges impacting earnings has been paid out. The balance sheet, in the meantime, is based on the accounting equation, which
is stated as assets = liabilities + owners equity (Peavler, 2009). Owners equity consists of revenue and expenses - revenue increases the owners equity while expenses decreases it (Peavler, 2009).
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