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Business Accounting Financial Accounting: Information for Decisions

Financial statements show the financial health of the company which helps to make important decisions. It also shows that whether company is capable of meeting short term and long-term obligations. To Determine: Memorandum on the importance of Financial Statements Date: XXX To:Ms. C, an entrepreneur From: Accountant Subject: Importance of financial statements and their link across time Financial statements are useful for various people related to the company which is as follows: Managers: Mangers use it for analyzing company’s financial position and take important decisions. Shareholders: They use it to analyze company’s return on investment and their risks related to investment. Government: Government use it for analyzing the economic power of the country. Creditors: They use it to analyze whether company is capable of paying loans and other short-term credits. Suppliers: To verify the credit worthiness of the company and take decision to supply the material/goods accordingly. There are four types of financial statements which are as follows: Income Statement : Shows the net earnings of the company of a particular period. Statement of retained earnings : It is also called as statement of shareholder’s equity which shows capital invested by the shareholders and the earnings retained by the company till date. Statement of cash flow : It shows the cash generated and utilized by the company. Balance sheet : It is the final statement showing balances of various long term and short-term Assets and Liabilities of the company including net worth. All the above statements are interlinked because the net income from the income statement is used in retained earnings statement and the closing balance from retained earnings statement and closing balance of cash flow statement is used in balance sheet. Thus, all the financial statements are very much useful and interlinked.

Financial statements show the financial health of the company which helps to make important decisions. It also shows that whether company is capable of meeting short term and long-term obligations. To Determine: Memorandum on the importance of Financial Statements Date: XXX To:Ms. C, an entrepreneur From: Accountant Subject: Importance of financial statements and their link across time Financial statements are useful for various people related to the company which is as follows: Managers: Mangers use it for analyzing company’s financial position and take important decisions. Shareholders: They use it to analyze company’s return on investment and their risks related to investment. Government: Government use it for analyzing the economic power of the country. Creditors: They use it to analyze whether company is capable of paying loans and other short-term credits. Suppliers: To verify the credit worthiness of the company and take decision to supply the material/goods accordingly. There are four types of financial statements which are as follows: Income Statement : Shows the net earnings of the company of a particular period. Statement of retained earnings : It is also called as statement of shareholder’s equity which shows capital invested by the shareholders and the earnings retained by the company till date. Statement of cash flow : It shows the cash generated and utilized by the company. Balance sheet : It is the final statement showing balances of various long term and short-term Assets and Liabilities of the company including net worth. All the above statements are interlinked because the net income from the income statement is used in retained earnings statement and the closing balance from retained earnings statement and closing balance of cash flow statement is used in balance sheet. Thus, all the financial statements are very much useful and interlinked.

Solution Summary: The author explains the importance of financial statements and their link across time.

Financial Accounting: Information for Decisions

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

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Financial Accounting: Information for Decisions

Ch. 2 - Provide the names of two (a) asset accounts, (b)...Ch. 2 - What is the difference between a note payable and...Ch. 2 - Prob. 3DQ Ch. 2 - Prob. 4DQ Ch. 2 - Prob. 5DQ Ch. 2 - Should a transaction be recorded first in a...Ch. 2 - Prob. 7DQ Ch. 2 - Why does the recordkeeper prepare a trial balance?Ch. 2 - Prob. 9DQ Ch. 2 - Prob. 10DQ

Ch. 2 - Prob. 11DQ Ch. 2 - Prob. 12DQ Ch. 2 - Prob. 13DQ Ch. 2 - Prob. 14DQ Ch. 2 - Prob. 15DQ Ch. 2 - Review the Apple balance sheet in Appendix A....Ch. 2 - Prob. 17DQ Ch. 2 - Prob. 18DQ Ch. 2 - Identify the items from the following list that...Ch. 2 - Prob. 2QS Ch. 2 - Prob. 3QS Ch. 2 - Prob. 4QS Ch. 2 - Prob. 5QS Ch. 2 - Prob. 6QS Ch. 2 - Prob. 7QS Ch. 2 - Prob. 8QS Ch. 2 - Prob. 9QS Ch. 2 - Prob. 11QS Ch. 2 - Prob. 1E Ch. 2 - Prob. 2E Ch. 2 - Prob. 3E Ch. 2 - Prob. 4E Ch. 2 - Prob. 5E Ch. 2 - Prob. 6E Ch. 2 - Prob. 7E Ch. 2 - Prob. 9E Ch. 2 - Prob. 11E Ch. 2 - Prob. 12E Ch. 2 - Prob. 13E Ch. 2 - Prob. 14E Ch. 2 - A corporation had the following assets and...Ch. 2 - Prob. 16E Ch. 2 - Prob. 17E Ch. 2 - Prob. 18E Ch. 2 - Prob. 19E Ch. 2 - Prob. 20E Ch. 2 - Prob. 21E Ch. 2 - Prob. 22E Ch. 2 - Prob. 1PSA Ch. 2 - Prob. 2PSA Ch. 2 - Prob. 3PSA Ch. 2 - Prob. 4PSA Ch. 2 - Prob. 5PSA Ch. 2 - Prob. 1PSB Ch. 2 - Prob. 2PSB Ch. 2 - Prob. 3PSB Ch. 2 - Nuncio Consulting complete the following...Ch. 2 - Prob. 5PSB Ch. 2 - Prob. 2SP Ch. 2 - Prob. 1BTN Ch. 2 - Key comparative figures for Apple and Google...Ch. 2 - Assume that you are a cashier and your manager...Ch. 2 - Prob. 4BTN Ch. 2 - Prob. 6BTN Ch. 2 - Prob. 7BTN Ch. 2 - Prob. 8BTN Ch. 2 - Samsung (www.Samsung.com) is a market leader in...

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