Memo to Dan Brown

Internal Memorandum

To : Mr . Dan Brown

From

Subject : Financial Statements and their users

Every business require to keep records of the transactions it has conducted over the period of time in to determine the overall financial health and viability of the business . In other words , the going concern ability of an enterprise is largely depends upon how an enterprise performs and that performance is assessed through preparing financial statements . Besides determining the financial performance of the firm , financial statements are also prepared in to secure financing from different

lenders as most of them would require analyzing the financial strengths of the firm before lending (Cleaves , 2005

Types of financial statements

There are four types of financial statements which a firm prepares to assess its financial performance . These financial statements are

Balance Sheet

Income Statement

Cash Flow Statement

Changes in Owner 's equity

Balance Sheet

If a person wants to know what is the exact financial position or health of an organization , Balance sheet is the Statement which provides that answer . Balance sheet present the equity of the owner at a given point in time mostly at the end of financial year . A typical balance sheet is divided into two parts i .e Assets and Liabilities . On the assets side of the balance sheet , all the assets of a firm are accounted for at their historical value . The assets shown are however , divided into two broad categories of Fixed assets and Current Assets . Fixed assets...