Four financial statements-meaning & uses
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Question:
Provide a detailed description of the four financial statements including the different parts of each statement, the uses of each, and how the three tie together. Include definitions of assets, liabilities and stockholders' equity.
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Solution Summary
The answer contains 1. the meaning,importance and uses of four financial statements and 2. Definitions of assets,liabilities and stockholders' equity
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1. Balance sheet shows the financial position of the company on a particular date usually at the end of the particular financial year. Balance sheet informs us the amount of fixed assets, current assets, investments made, amount of shareholders' equity, long term debt and current liabilities of the company.
2. Income statement shows the financial results of the company for the particular financial year. It shows the profit or loss of the company for the particular financial period. It shows the operational efficiency of the company.
3. Statement of retained earnings shows the amount of profit accumulated during previous years which are retained in the business, the amount of profit earned during the particular financial year and the amount of dividend paid during the year. It is the part of shareholders' ...
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