This paper is about the importance of financial statements and their application in everyday life. Financial statements help determine the financial status of any individual or business. For example, a business manager uses financial statements to make important decisions regarding their business. Individuals on the other hand use financial statements as a way to budget their finances and allowing them to make major decisions such as buying a house or purchasing a new car. The main purpose of this paper is to show how a balance sheet is important for an individual and a business.
* Select either the balance sheet or income statement and explain how the use of it may be ...view middle of the document...
* Using the same concept selected above, discuss how a business manager may benefit from an understanding of this statement.
Business managers will be able to make important and better business decisions using the balance sheet. The balance sheet for a business is the same as a personal balance sheet. It includes the assets, liabilities, and equity of the business. Improvements can be determined depending on the outcome of the balance sheet.
The balance sheet for the business can show accounts receivables decreasing and sales are not increasing, and then the business manager can determine what needs to be done to change this. Another result of the balance sheet is if deposits are decreasing and accounts receivables are increasing, this means that some improvements need to be made to correct this. Therefore, an understanding of the balance sheet is a great benefit to business managers. This benefit can give reasons as to why the company is losing money and keep track of changes.
* Discuss how your understanding of the balance sheet and income statement may be...