Accounting is an training system that identifies records and communicates the economic events of an formation to concerned users (Weygant, 2006, p. 4). For accountants to relay the information wanted by interested users, they must create reports that impart give the proper information of the composition. An accountant can create many reports, but only when four major reports that are created for internal and external users. Those reports accept the income statement, a maintained earnings statement, a balance sheet, and a statement of cash flows. Each of these statements is interrelated, and an organization cant have one without the other.
Income Statement
The income statement is used to report the victor or profitability of the companys operations over a specific period of time (Weygant, 2006, p. 22). For a retail store, an income statement lists revenues minus cost of goods sold to get crying(a) profit, then minus expenses to get interlock income or net loss. Assets, liabilities and stockholders equity are not a part of this statement because no income or loss is reliable in these items unless they have already been expensed. Assets depreciation leave alone furnish up as an expense regularly, but the asset itself lead not unless it has been sold.
A liability will only head up once a payment has been made and it will be expensed out to the appropriate category. Because Stockholders equity is never expensed out, it will never show up on the income statement. Stockholders equity is normally a dividend and will be considered either an increase or decrease in maintained earnings (Weygant, 2006, p. 22). The income statement is multipurpose to external users and internal users if they would want to know how profitable the organization is at a specific period in time.
well-kept Earnings Statement
The retained earnings statement reports the changes in retained earnings for a specific period of time (Weygant, 2006, p. 22). The retained earnings statement is...If you want to get a adept essay, order it on our website: Orderessay
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