Overview Of Accounting
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Overview Of Accounting
Overview of Accounting
Jimmie L. Moore Jr
University of Phoenix
Dr. Damir Tokic
The purpose of this paper is to give an overview of accounting. This academic exorcise will attempt to identify the audiences, purposes, and natures of financial statements and managerial reports. In addition, this paper will attempt to explain the use of financial accounting information in making informed and ethical business decisions.
First we will look at financial statements. Financial statements are an important tool for companies to use when attempting to analyze important information for the purposes of making sound business decisions. Financial statements are important tools because they provide important financial data. The three basic forms of financial statements are the balance sheet, the income statement and the statement of cash flows. The income statement is the tool that is most used for measuring the profitability of a company over a specific period of time such as a month, year or several years. An income statement provides a snapshot of an organization’s profit. ”Balance sheets indicate what the firm owns and how these assets are financed in the form of liabilities or ownership interest.” (Burk & Hurt, 2004) The balance sheet is a snapshot of the firm at a particular moment in time. Typically, balance sheets do not represent the result of transactions for a specific month, quarter, or yearn however the balance sheet is a representation of all transactions. “The purpose of the statement of cash flows is to record the critical nature of cash flow to the operation of a firm”. (Block & Hurt, 2005) Cash flow represents cash or cash equivalent items that can easily be converted into cash within a short period, such as 30, 60 or 90 days. Ultimate, the statements of cash flows allows for quick viewing of the liquidity of an organization’s assets. The statement of cash flows takes the data given on the income statements and the balance sheet and translates them...
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