Running head: Overview of Accounting
Overview of Accounting
Kristie Richards
MBA 503
University of Phoenix
September 10, 2007
Overview of Accounting
In the following informational presentation I will be explaining the differences of financial reports. I will also explain how ethical business decision making is used in financial reporting.
Financial Statements
Accountants, shareholders, stock brokers, financial managers, and CEO's, to name a few use several financial statements to relate to how well a company is doing financially. I will share with you the most used reports and explain the purpose for each report and how it can relate to your position in the company. First is the income statement. The income statement is a major device for measuring the profitability of a company over a period. The income statement covers a defined period of time, whether it is one month, three months or a year. It is easy to read the profit or loss after the expense items are deducted. In order for managers to view gross profit you will have sales minus goods sold. With knowing gross profit you can determine the profit from operations by subtracting selling and administrative expense and depreciation from gross profit to obtain operating profit. Operating profit can measure how efficient management is generating revenue and controlling expenses. Second is the balance sheet. The balance sheet indicates what the company owns and how assets are financed in the form of liabilities or ownership interest. The balance sheet is a snapshot at that point in time of the company. It does not represent the transaction for a specific month but it shows all ...