Financial Statements

Running head : FINANCIAL STATEMENT

Financial statement

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Institution

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Course code

Financial Statement

Accounting mainly involves analyzing , interpretation and reporting of business transaction records . Accounting provides information for decision making to the management . The purpose of accounting is to maintain proper control of finances of an organization . In other words accounting is an information system whose purpose is to provide essential information about business financial activities . It is primarily involves design of record keeping system , summarized reports based on the recorded data and eventually interpretation of

the reports (Duane and Charles 1991 Martin Fernando 2002

Four basic financial statements are

Balance sheet

This records assets and liabilities as well as owner 's equity of a business entity . Assets include current assets such as cash , debtors securities , and prepayments . Long term assets include land , machineries plants , and furniture . On the T account liabilities are recorded on the right hand side . They include current liabilities and long term liabilities and owners equity

Sample

Current assets : Current liabilities

Cash xx Accounts payable xx

Accounts receivable xx Long term liabilities

Marketable securities xx loans xx

Inventory xx bonds payable xx

Prepayments xx

Long term assets : retained earnings xx

Land xx Plant and equipment xx Machinery xx Other assets

Goodwill xx

Intangible assets xx The income statement

This records revenue and expenses of a...