Date: 16 April 2014
Financial Accounting writing Assignment
Accounting systems is very important tool for any type business such as corporation, Partnership, and Sole proprietorship. Accounting systems is also referred to as Accounting Information system. Accounting Information systems is process of collecting and processing transaction data and communicating with decision makers. Every business should have Accounting Information system because it helps us answer questions such as should we expend our company overseas? Do we have enough payroll for our employees? Accounting information systems can also help us understand what types of inventory we should use. ...view middle of the document...
" Liabilities are detailed on the balance sheet. There are two types of liabilities, current and long-term. Current liabilities can be paid within one year, while long-term liabilities are not payable for a longer period. An example is if I buy a few things from a supplier but pay for those items some time later, the cash value of those parts is a liability until I've paid the debt off. Stockholders’ equity means the claims by the owners of a business to the assets of the business. It also means the portion of the balance sheet that represents the capital received from investors in exchange for donated capital and retained earnings. In corporation business, the third section of a corporation's balance sheet is Stockholders' Equity and its also the book value. The relationship is liabilities plus Stockholders' equity equals assets.
The four basic financial statements are income statement, retain earnings statement, balance sheet, and statement of cash flows. The income statement provides a company's success or failure performance over a period of time. The income statement shows if the company indicates a net loss or net profit. Net loss means when the company did not make profit and net income means when company earned profit, the lenders or investors are confident in making further investments in the comapny. Income of statement is best known as "statement of revenue and expense." Retained earning statement begins in the retained earnings amount, then the company adds net income and subtracts dividends to have the retain earnings arrive at the end of period. A blance sheet is the financial statement that summarize an organization’s assets, liabilities and owner equity. The balace sheet also reports assets and the claims of assets. The cash flow statement reports the cash generated and used during a specific period of time. Financial users are interested in the statement of cash flows...