U2 L13 The Uses and Importance of Formal Financial Statements

U2 L13 The Uses and Importance of Formal Financial Statements

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
The Uses and Importance of Formal Financial Statements Up to this point, the two financial statements that you have become familiar with are the income statement and the balance sheet. An income statement summarizes a company's revenues and expenses and, therefore, enables owners and managers to examine the profitability of a business. A balance sheet, on the other hand, outlines the financial position of a business on a specific date. The type of balance sheet that we have learned so far will evolve at this point. We will now learn how to create a new, classified balance sheet, and discover how this new type of balance sheet reveals even more information about the company's financial position. An income statement is a financial statement that shows a company's revenue and expenses for a period of time, whether it be for a month, for three months (quarter), or for a year. A formal income statement should look like the one that appears below. Notice a few features on the above income statement : the income statement is shown for a period of time (one year ended December 31, 20-8) the first money column (inner column) is used to subtotal a list of numbers
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
the second money column (outer) is used to record totals (total revenue , total expenses , and net income /net loss) final total is double underlined A balance sheet is a financial statement that shows the financial position of a business, as determined by its assets , liabilities , and equity, on a specific date. Recall that the form of balance sheet that we have worked on so far is an account form balance sheet , which shows assets on the left side, and
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/15/2011 for the course AFM 102 taught by Professor Aa during the Summer '07 term at Court Reporting Institute of Dallas.

Page1 / 8

U2 L13 The Uses and Importance of Formal Financial Statements

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online