Accounting Capstone Project
March 15, 2013
Week 2 Application
The four main financial statements are the balance sheet, the income statement, the cash flow statements, and the statements of shareholder’s equity. Each statement can be used to give an insight to a company’s financial activities, and can provide valuable information on said company.
The balance sheet provides detailed information on a company’s assets, liabilities, and their shareholder’s equity. A company’s balance sheet has to equal out, so the assets have to equal the sum of the liabilities and the shareholder’s equity. Assets are the things that a company owns that have value, and assets are usually ...view middle of the document...
The operating activities show the cash flow of the company meaning from sales of a company. The investing activities show money generated or loss from the company’s investments. Lastly the financing activities cans show revenue from selling of stocks and bonds (www.sec.gov).
The statement of shareholder’s equity shows the changes on a balance sheet on equity. This statement is intended to show additional information of the financial statements involving equity related activity during the period (www.accountingtools.com).
A balance sheet details the assets liabilities and shareholder’s equity, and this is useful not only for investors or potential investors but also to management of a company. Since the balance sheet gives an overall number each can see it the company is on the right track. Of course the company’s accountants and auditors would require this information as well. Now we come to the income statements. This will give the reader a more detailed explanation of the numbers. Management can use these numbers to see where improvements can be made. Shareholders can also see how much money they are making in this investment. The cash flow statements can also assist management...