Week 1 Review Essay

Submitted By riggs1021
Words: 561
Pages: 3

Week 1 Review
Clifton Riggins, Terri Clark, Tiffany Moore
ACC/290 Principals of Accounting I
Dena Breece

There are four basic financial statements; Income statement, retained earning statement, balance sheet, and a statement of cash flow. An income statement is a statement that shows how your business is doing during a certain period of time. For instance in the month of February if your company had a gain of 2% it would be shown of the income statement, likewise if the companies’ profits were down, it would be reflected in this statement. A retained earnings statement is a financial statement that is typically used by larger companies that have shareholders and investors. This statement allows personnel with interest in a company to keep track of how the company is doing, guiding their decision to invest in a company or sell shares of a company. Balance sheets are a type of financial statement used by a wide variety of people, for instance an individual can use a balance sheet to determine their household bills vs. household income. Balance sheets help keep track of assets and liabilities. The cash flow statement is used to keep track of what revenue is being brought in and how that revenue is being used. These basic financial statements are a cornerstone of accounting used in business. In order to have a successful business you must be able to keep track of what is coming in and what is going out. These four basic financial statements are perfect for keeping track of what goes out of and comes into a business.
External users are individuals that work outside of the organization. External users are more focus on the financial part of the organization. They also use Accounting information to figure out what they want to sell or buy, hold or lend or agree. The external users consist of Institutional investors, financial Institutions, Government, vendors, general mass and media. Investors and creditors use financial statements are there to help make investment decisions for the business. The external users to help the organization. If investors want to invest in your company then financial statements are to be