Examining Financial Statements Paper

Examining Financial Statements Paper - Examining Financial...

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E x a m i n i n g F i n a n c i a l S t a t e m e n t s P a g e | 1 Examining Financial Statements Paper University of Phoenix Week 3 Introduction In the business world, there are multiple financial transactions that take place. People buy from businesses, businesses buy supplies from suppliers and suppliers buy from manufacturers. Whatever the transaction, an organization must keep track of these transactions and try to constantly evaluate what exactly is going on in the business and find out whether things are
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E x a m i n i n g F i n a n c i a l S t a t e m e n t s P a g e | 2 being done properly in order to make the business as successful as it can be. It is also important to keep track of this information in order to allow investors to see what is going on within the business and be able to decide whether or not they want to invest in the organization. For these reasons, the business world has come up with some standard practices which help take the guess work out of how to keep track of this information. These standard practices have been in place for a very long time and are crucial for both internal and external stakeholders to make decisions. These practices are called GAAP (Generally Accepted Accounting Practices). These guidelines help organizations to organize the data and put it in the right financial statements so that it is understandable to the lay person. If it weren’t for these standard practices, investors could lose a lot of money and many business owners could take advantage of the situation and cheat on their finances. Within these standards are four financial statements that most organizations produce. These are the Balance Sheet, the Income Statement, the Statement of Retained Earnings, and Statement of Cashflows. One organization that is a good example on using these standards is Landry’s Restaurants. There is a lot of information that is shown in a financial statement. There
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