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include quoted include bibliography exclude small matches download refresh print mode: 3% match (Internet from 7/25/10) http://www.scribd.com 3% match (Internet from 2/5/09) http://econ.ucsb.edu 2% match (Internet from 11/22/11) http://www.brainmass.com 1% match (Internet from 8/27/10) http://www.scribd.com 1% match (Internet from 5/14/11) http://www.wiley.com 1% match (Internet from 8/24/11) http://www.coursehero.com Running head: FINANCIAL STATEMENTS PAPER 1 Financial Statements Paper Randy E. Fitzhugh ACC/290 November 28, 2011, 2011 Jeff Stone Financial Statements Paper When starting a business accounting plays a major role. Often there are many questions that come to mind. For instance, where and how am I going to get the funds to start a business? Do I use my own money or should I take on investors. Regardless of how you determine how to start a business it is important that you understand accounting. The key to starting your business begins with knowing and understanding the four financial statements. The four financial statements are the forms of business organization, uses and users of financial information, business activities, and communicating with users. In this paper each of the four financial statements will be described, also what will be discussed are the many uses of financial statements for internal and external users. Starting with the Forms of Business Organization, this is to determine the way you may choose to start your business. There are three ways for you to choose from. Either you can do the sole proprietorship, partnership, or corporation. A sole proprietorship is mainly for a small business owner, this is for one business owner. A partnership is when there are two or three owners. Partnerships are started because of a lack of funds or experience. Lastly, you have a corporation. This form of business is controlled by stock holders. One of the features of being a stockholder is that you can buy or sell shares in the company. Uses and Users of Financial Information have to do with internal users, external users, and ethics in financial reporting. According to Kimmel, Weygandt and Kieso (2011) internal users of accounting information are managers who plan, organize, and run a business. External Users can be investors or creditors. Investors make the decisions to buy, hold, or sell stock, while creditors evaluate the risk. Lastly, ethics of course play a role. People will not invest into a business if they think that it is unethical. There are three Business Activities financing, investing, and operating. Financing has to do with the money. Either a company will borrow or sell shares of stock. Next is investing activities, this has to do with what a company will need to run and operate a company. A perfect example of this is buying a work truck or leasing a building. Operating Activities are the day to day operations a company needs to stay afloat. Operating activities also deal with marketing, selling, and the cost of goods. The last of the four of the financial statements are communicating with users. This is a visual sheet that shows everything that you earned and spent for the month. Mostly it shows where you went wrong and what you can do to improve your business. For internal users