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Financial Statements Paper - Essay Example

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Financial Statements Paper

Assets include all the properties of an organization that have value such as inventory, plants, equipment and trucks. It also includes intangible things that have value like patents and trademarks. On the other hand, liabilities refer to the money owed to other entities including obligations such as bank loans, rent, suppliers’ payments and salaries among others. Shareholders’ equity refer to the balance that belongs to the shareholders after the organization has paid off all of liabilities it owes various entities. Fridosn and Alvarez (2011) represent this as: Assets = Liabilities + Shareholder’s equity On the left hand side of the balance sheet would be the company’s assets while on the right would be its liabilities and shareholders’ equity. An income statement shows the revenue earned by a company in a specific financial period. It captures the expenses and cost of earning these revenues (Anthony, Hawkins & Kenneth, 2003). At the bottom of the statement would be an indication of the company’s loss or profit over the specified financial period. This statement also captures the earnings per share, EPS which indicates the amount of money that shareholders would get if the net earnings were to be distributed to them in that financial period. The net income would be computed by subtracting expenses from the gross income. Dividing the net income by the outstanding shares gives the EPS. The statement of owners’ equity, also referred to as statement of retained earnings shows the changes in

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Summary

Name: Title: Course: Tutor: Date: Financial Statements Introduction The end product in accounting processes would be the presentation of financial statements and reports. Financial statements refer to data summaries prepared by an entity periodically to communicate to respective users of accounting information on the effect of various accounting activities and the entity’s financial position in a given period of time (Fridosn & Alvarez, 2011)…
Author : vincenzo42
Financial Statements Paper essay example
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