DQ3-1
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responses3-1.docxResponses
1
The four statements are balance sheet, statement of operations, statement of cash flows and statement of changes in net assets. The balance sheet represents the organizations assets, liabilities, and net assets at a point in time. The statement of operations is details of the revenue and expenses for the organization for the account period, which is usually one year. The statement of changes in net assets accounts for net assets (equity) changed during a period. The statement of cash flow defines how cash was achieved and used. The most important financial statement piece is the statement of balance sheets because it provides information about how well an organization is doing. “Balance sheet and statement of revenues and expenses, which provide a basis for most financial information (Cleverly 2018).”
Cleverley, W. O., & Cleverley, J. O. (2018). Essentials of health care finance. Burlington, MA: Jones & Bartlett Learning.
2.
Firstly, It is crucial to comprehend the use of four of the primary financial statements (balance sheet, statement of operations, the statement of changes in net assets, and the statement of cash flows) in order to describe the organization's financial performance accurately.
" Balance sheet: presents a record of an organization's assets, liabilities, and net assets (equity) at a specific point of time. In essence, it is a financial snapshot of the organization at a certain date.
Statement of operations: also known as the income statement or statement of revenues and expenses, it details the organization's revenues and expenses during the accounting period.
Statement of changes in net assets: lists how net assets (or equity) changed during the period.
Statement of cash flows: describes how cash was generated and used."
(Cleverley & Cleverley, 2018.)
After reviewing and reading all of the primary financial statements, I have come to the conclusion that the balance sheet is the most accurate, time-oriented, and realistic when it comes to knowing your finances. Being able to incorporate your assets, liabilities, and net assets, all on one page, provides business owners with a better overall understanding of their company. For people that are not familiar with this type of financial statement can be challenging to start one on their own because it counts with several features and rules that should be followed to make a realistic balance sheet.
A balance sheet count with several main components that integrates all the positive aspects of a business such as current assets, cash, cash equivalents, account receivable, prepaid expenses, PPE, other assets, current liabilities, noncurrent liabilities, and net assets, These components present a brighter and stimulated picture to continue improving processes within the organization.
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Reference
Cleverley, W. O., & Cleverley, J. O. (2018). Essentials of health care finance. Burlington, MA: Jones & Bartlett Learning.
3.
What are financial statements used for? They are written reports that convey business activities and transactions. If a business is audited all financial information is contained in these statements, also used for accounting, taxes, and investments.
Income statement is considered the most important statement because it contains the information that is pertinent to the operating of the business. It has the revenues, expenses, profits, losses, that are generated during the reporting period.
The Balance sheet, this sheet has all assets, liabilities, and equity. It is (as is the income sheet) to a specific date. It is formatted so that the total of assets and total of liabilities and equity is structured and totaled to provide information on liquidity, and capitalization of the business. (Known as the second most important statement)
Statement of cash flows. This statement contains what cash flows in and out, (during the reporting period). This statement provides a comparison to the income statement. Presents the cash inflows and outflows that occurred during the reporting period. Comparing profit and loss to the "cash flows" on the statement is useful when presenting a financial statement to an outside party.
Statement of retained earnings. This statement reflects the changes in equity (during the reporting period). This statement is least commonly used but it does reflect the sales and repurchasing of shares and profits, losses, and is generally included in the audited financial package. (Cleverley & Cleverley 2018)
