Week 2 Discussion

School: Keiser University - Course: ACCOUNTING MISC - Subject: Accounting

Week 2 List the four financial statements and explain each one. What does each statement tell us? Provide an example of each statement using the corporation you researched in Week 1. Next, explain the connections between the financial statements. Click on Create Thread. Put your name and topic so that you can easily see any response postings to you. All posts (both initial and responses) must be substantial (several paragraphs each) and each of your initial posts must be supported by3 peer reviewed authoritative sourcescited properly in APA format. Responses should have proper support with atleast 1 different sourceas applicable. Make your original post by midnightWednesdayand post your substantial responses to at least two other students' posts, with support for your opinions/comments from peer reviewed/authoritative sources, by midnight prior to the week ending. Your total of 3 posts (1 initial post and 2 responses) must be submitted on 3 different days throughout the week. If you need a little assistance locating peer reviewed articles in the KU Library please review the Library link in Getting Started. You may also want to submit your work to the Writing Studio if you need help with APA format or your writing. Hello Professor and fellow classmates, The following are the four financial statements: 1.Balance Sheet.A balance sheet provides detailed information about a company'sassets,liabilitiesandOwners' equity. A balance sheet shows a snapshot of a company's assets, liabilities and owners' equity at the end of the reporting period. It does not show the flows into and out of the accounts during the period. Assetsare generally listed based on how quickly they will be converted into cash. Currentassetsare things a company expects to convert to cash within one year. A good example of this isinventory. Most business companies expect to sell their inventory for cash within one year. Non-currentassets are things a company does not expect to convert to cash within one year or that would take longer than one year to sell. Non-current assets include fixedassets. Fixedassetsare those assets used to operate the business but that are not available for sale, such as trucks, office furniture and other property. Liabilitiesare generally listed based on their due dates. Liabilities are said to be either currentor long-

term. Currentliabilitiesare obligations a company expects to pay off within the year. Long-termliabilitiesare obligations due more than one year away. Changes in Owners' equityis the amount owners invested in the company's stock plus or minus the company's earnings or losses since inception. Sometimes companies distribute earnings, instead of retaining them. These distributions are called dividends. 2.Income Statement.This is a report that shows how much revenue a company earned over a specific time period (usually for annual period, semi, quarterly and monthly). An income statement shows the costs and expenses associated with earning that revenue. The literal "bottom line" of the statement usually shows the company's net earnings or losses. This tells you how much the company earned or lost over the period. 3.Statement of Cash flow.This is a report that shows the company's inflows and outflows of cash. A cash flow statement shows changes over time rather than absolute money amounts at a point in time. It uses and reorders the information from a company's balance sheet and income statement. Generally, statement of cash flow are divided into three main parts. Each part reviews the cash flow from one of three types of activities that includes; operating activities, investing activities and financing activities. 4.Statements of Shareholders' Equity.This reportssummarizes the items affecting the capital account of a sole proprietorship business. A sole proprietorship's capital is affected by four items: owner's contributions, owner's withdrawals, income, and expenses. This is very important in the financial statement because this is where income earned during the period is added to the beginning capital balance and owner draws are subtracted. Further, these four financial statements are connected to each other. The changes in assets and liabilities in the balance sheet are also reflected in the revenues and expenses that can see on the income statement, which result in the company's gains or losses. Cash flows provide more information about cash assets listed on a balance sheet and are related, but not equivalent, to net income shown on the income statement. And so on. No one financial statement tells the complete story. But combined, they provide very powerful information for investors.