The main purpose for financial statements is to provide information about the results of operations, financial position, and cash flow of a company. The information is mainly used by people within a company to make decision concerning the allocation of resources. Each financial statement has its own purpose and helps provide information from different aspects of the business. For instance, the income statement informs the reader about how well a business is doing by looking at the profit of a business. An income statement also shows the volume of sales and type of expenses a business is incurring. After reviewing businesses income statement over a period of time a reviewer can find and analyze trends within an organization. Another document that serves a great outlook on a business’s assets and liabilities is the balance sheet. The information from the balance sheet is used to estimate the liquidity, funding, and debt position of an entity, and is the basis for a number of liquidity ratios. Lastly, the main function of statement of cash flows informs the reader the type of cash receipts and disbursements of cash. This statement indicates the cash coming in out of a business, which can be crucial information for a company’s shareholders. A company’s cash flows in a given period are categorized as operating, investing and financing cash flows. The statement is broken up into three different section, operating activities, investing activities and financing activities. The statement of cash flows has to adhere to the international accounting standards and international reporting standards. Companies also participate in different investing and financing activities that do not require the use of cash. Many of these non-cash investing and financing activities affect future cash flows of a company. These include the purchase of land for issuing
The main purpose for financial statements is to provide information about the results of operations, financial position, and cash flow of a company. The information is mainly used by people within a company to make decision concerning the allocation of resources. Each financial statement has its own purpose and helps provide information from different aspects of the business. For instance, the income statement informs the reader about how well a business is doing by looking at the profit of a business. An income statement also shows the volume of sales and type of expenses a business is incurring. After reviewing businesses income statement over a period of time a reviewer can find and analyze trends within an organization. Another document that serves a great outlook on a business’s assets and liabilities is the balance sheet. The information from the balance sheet is used to estimate the liquidity, funding, and debt position of an entity, and is the basis for a number of liquidity ratios. Lastly, the main function of statement of cash flows informs the reader the type of cash receipts and disbursements of cash. This statement indicates the cash coming in out of a business, which can be crucial information for a company’s shareholders. A company’s cash flows in a given period are categorized as operating, investing and financing cash flows. The statement is broken up into three different section, operating activities, investing activities and financing activities. The statement of cash flows has to adhere to the international accounting standards and international reporting standards. Companies also participate in different investing and financing activities that do not require the use of cash. Many of these non-cash investing and financing activities affect future cash flows of a company. These include the purchase of land for issuing