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Financial statements analysis

Financial statements analysis - F inancial statements 1...

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Financial statements 1 Financial Statements Analysis Justin Grunigen ACC280 Harri Eloranta University of Phoenix – North Florida Campus Thursday, April 15, 2010
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Financial statements 2 Financial statements analysis Accounting is a field of specialization critical to the functioning of all types of organizations (Hendrickson, 2007). It has a set of standards that are accepted and universally practiced. They are called generally accepted accounting principles (GAAP) (Weygandt, Kimmel, & Kieso, 2007). This set of standards indicates how to report economic events. The U.S. agency that oversees U.S. financial markets and accounting standard-setting bodies is the Securities and Exchange Commission (SEC). The Financial Accounting Standards Board (FASB) is the primary accounting standard- setting body in the U.S. Outside the U.S. is the International Accounting Standards Board (IASB), which has worked closely with the FASB lately in an attempt to minimize their differences (Weygandt, 2007). The following will define the purpose of accounting, and identify the four basic financial statements: income statements, retained earnings statement, balance sheet, and statement of cash flows. Following this will be an explanation of how these statements interrelate with each other, as well as how they are useful managers, investors, creditors, and employees. Accounting consists of three activities. It identifies, communicates, and records economic events of an organization (Weygandt, 2007). This is so interested users can look at what is happening, financially, within a company. Identifying economic events is the first activity to discuss. Economic events could be sales, services provided or rendered, or payment
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