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Week 1 Paper - Financial Statements The American Accounting...

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Financial Statements The American Accounting Association (AAA) defines accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments
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Financial Statements 2 and decisions by users of the information (Weyganet,Kimmel,&Kieso, 2008). Accounting is about providing information to others. Economic information relates to the financial or economic activities of the business. The information must be identified and measured. This is done by a “set of accounts”, based on a system of accounting known as double-entry bookkeeping. The accounting system identifies and records “accounting transactions” (Weyganet,Kimmel,&Kieso, 2008). Communication is a crucial part in accounting information. Forms are one of the ways communication is achieved, such as annual report and accounts and management accounting reports. The ability to report on the financial position of an entity and the ability to show how the entity has performed (financially) over a particular period of time is communicated through financial statements. Income statement, retained earnings statement, balance sheet, and a statement of cash flows are the four basic financial statements.
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