In order for a company to survive, their balance sheets, income statements, retained earnings statement and their statement of cash flows must be properly accounted and up held in the most important of standards.
Balance sheets are a statement in which shows the financial position of a certain company. Balance sheets are also known as “a statement of financial position. They go on to reveal companies assets, liabilities, and owner’s net worth or equity. Importantly, assets are what the company owns. Also important, liabilities are the legal debts and or obligations to other firms and or companies. Basically bills in which a company is to pay. Finally, balance sheets are vital in planning for the future steps a company must take to survive.
Another very important accounting statement is the income statement. An income statement is also referred to as a statement of revenue and expense. This document is basically a performance report on the company throughout an accounting period. This combined with the balance sheet and cash flow statement make up the building blocks for a company’s financial stability. Finally, these income statements or profit and loss statements are extremely important to the future decisions of a successful company.
Another accounting statement that is very important is the retained earnings statement. Not always printed as a document but always accounted for. Another name for the retained earnings is retained surplus. These are deducted amounts of money, automatically taken out for the growth and development of a company. These retained earnings are vital and very important in the future of a company. Stockholders equity is the sole owner of a firm or company and their net worth or in other words ...