Financial Statements - 1 Financial Statements Cathy...

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1 Financial Statements Cathy Bandelow Survey of Accounting/ACC 220 March 18, 2010 Sophia Wilks
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Accountants work with numbers on a daily basis. Statements are prepared at least once a year to provide a financial picture of a company. A financial statement can determine rate and term for loans, whether a company can obtain credit, and strength of a company. Several components make up this financial statement. A snapshot of performance at a particular point in time is called a balance sheet. A balance sheet will list a company’s assets and liabilities. Assets are what a company owns and liabilities are what a company owes. Claims are subdivided into two categories: claims of creditors and claims of owners. Claims of creditors translates into liabilities. Claims of owners are called stockholders’ equity, which translates into assets. The equation of assets equals liabilities plus stockholders’ equity is referred as the basic accounting equation. This relationship is how the name balance sheet is derived.
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