Describe the major purpose of financial statements

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Reference no: EM133333431

Assignment: State whether agree or disagree with their explanation of the major purpose they identified in their response.

Name the four basic financial statements.

The four basic financial statements are the balance sheet, the statement of revenue and expense, the statement of fund balance or net worth, and the statement of cash flows.

Choose one of the four and evaluate its purpose for the organization, including its role in the budgeting process.

A balance sheet simply serves as a summary of the company's financial situation at a certain point in time. The balance sheet lists the company's assets (its possessions) along with its obligations (the amount of debt it is now indebted to). The sum invested in the company is also shown on the balance sheet (the businesses equity). A balance sheet gives a corporation access to its financial position, which is important to create an accurate budget.

Explain what type of information can be derived from each statement.

The assets, liabilities, and equity of the company will be displayed on the balance sheet for a given time period. The statement of revenue and expense reveals how much money a company has made and how much it has spent to operate. Your assets and liabilities are displayed in your net worth statement. The cash and cash equivalents that enter and leave the business are listed in the statement of cash flow.

Describe the major purpose of financial statements.

Financial statements serve the primary function of displaying the company's financial health. This declaration sheds light on the business' operations, financial flow, and performance. Investors, market analysts, and creditors assess a company's financial health and revenue potential using its financial statements.

Reference no: EM133333431

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