Application Of Financial Statements Essay

993 words - 4 pages

Application of Financial Statement

Angela Lance

Professor Kim Dillman

Financial Accounting-ACC557

Assignment # 1

Due Date: February 26, 2012

Application of Financial Statement

Today’s working environment displays different cultures throughout an organization. Companies need to be aware of their financial obligations and responsibilities. The opening of a business has many different perspectives that need to be addressed. Once you open a business you want to stay in business and a way you can do this is by maintaining your financial records and not overspending your earnings. Companies have to be aware and accurate of maintaining their ...view middle of the document...

Just like a balance sheet a checkbook has a debit and credit side. A debit adds money and a credit withdraws the money. Another way a balance sheet would be applied to my everyday life is through investments. Investing is something that even in difficult economic times people are thinking about doing. Using a balance sheet accounting offers investors a great way to keep track of their investments and how they are affecting their budget.3

Using the same concept selected above, discuss how a business manager may benefit from an understanding of this statement.

Financial statements are intended to be useful in decision-making and the relationship between contributed capital and retained earnings can provide insight into the firm’s success to date. The use of managerial accounting provides internal reports to help users make decisions about their companies. Management is a crucial aspect of any thriving business. As a manager you need to analyze a spreadsheet or have some form of financial recording to do as part of your job description. The financial statement contains important information about the organization’s operating results. The relationship between certain items of financial data can be used to identify areas where the company excels and, more importantly where there are opportunities for improvement.4

When a company conducts a business transaction, the status of the accounts change. The bookkeeping process keeps track of these changes in various ledgers and journals and then are used to make the financial statements. A balance sheet indicates the financial position of a business at one point in time and it displays what the business owns and owes. As a manager you should be aware of how much the business owns and how much outstanding debt is owed. A manager of a specific department has to account for all the expenses incurred for that particular department so you do not go over budget. To make good decisions, management needs accurate information and that information comes from the balance sheet within the accounting...

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