Financial Statements And The Financial Status Of A Company Essay

1130 Words Nov 1st, 2015 null Page
Financial statements can be referred to as the financial status of a company in a concise documented form. There are different types of financial statements. Financial statements, are required to be audited by audit firms to avoid manipulation of numbers. Statements are usually audited by the accounting firms after a thorough study of the company records. The accounting and the audit firms make sure that the company is obeying and operating under the rules laid down by the Generally Accepted Accounting Principles or GAAP (Types of Financial Statements). There are four different types of financial statements that can be prepared. They include: Income Statement, Retained Earnings Statement, Balance Sheet, and Statement of Cash Flows. The income statement is one of the major financial statements used by accountants and business owners. The income statement is important because it shows the amount of profit a company earns during the time interval specified in its heading. The period of time that the statement covers is chosen by the business and will vary. The heading of the income statement conveys information imperative to the income statement. “The name of the company appears first, followed by the title "Income Statement." The third line tells the reader the time interval reported on the profit and loss statement. Since income statements can be prepared for any period of time, you must inform the reader of the precise period of time being covered (Averkamp, Harold).”…

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