Assignment 2: Submission—Course Project - AU ACC201

Frequently used Financial Reports

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Frequently used Financial Reports 

On a regular basis, I would use a statement of cash flows, balance sheet, and income statement. The income statement presents an entity’s expense, losses or profits, and revenues that the business has generated over a specified period. This is a clear picture of the operating results of the business during the reporting period (accountingtools.com, 2017). It provides information on the earnings of the business such as sales revenues over a specified period. It also provides information on the costs incurred such as wages and salaries by the business over a specified period.

The balance sheet tends to be the simplest financial statement that presents the entity’s liabilities, equity, and assets at a specific period. This report gives a picture of the condition of a business at a specific time. It gives capitalization and liquidity of an organization where the total assets are equal to equity and liabilities. Information provided helps in managing the business and obtaining funds from a bank (Bangs, 2010). For instance, an organization can determine whether its assets can enable it acquire funding or how to minimize its liabilities to generate more profits.

The statement of cash flows presents an entity’s cash inflows and outflows during a specified period (Bangs, 2010). It provides information on the financing, operating, and investing activities of a business. A cash flow provides important information that can be compared to the income statement of the same period to determine whether the cash flows experienced reflect the loss or profit generated within the specified period (accountingtools.com, 2017).

References Bangs, D. (2010). A Crash Course on Financial Statements: Drive More Revenue, Make Better Business Decisions, Understand the Numbers and What They Mean. Fitch Irvine, CA: Entrepreneur Press. The four basic financial statements. (2017, August 05). Retrieved from Accounting Tools: https://www.accountingtools.com/articles/the-four-basic-financial-statements.html