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Business Management Assignment- Financial Statements

   

Added on  2020-05-28

7 Pages1108 Words66 Views
Running head: BUSINESS MANAGEMENTBusiness ManagementName of the Student:Name of the University:Author Note

1BUSINESS MANAGEMENTTable of ContentsAnswer to Question 1......................................................................................................................2Answer to Question 2......................................................................................................................3Answer to Question 3......................................................................................................................5References........................................................................................................................................6

2BUSINESS MANAGEMENTAnswer to Question 1The issue that is reflected in the question is that the general purpose of the financial statements has been asked to elaborate. The three major financial statements that are utilized by the corporate entities are the balance sheet, cash flow statement and income statement. The primary purpose with which the financial statements of an organization are prepared is that the investors and other stakeholders of that particular organization get an overview into the financial performance and the liquidity position of the firm for a particular accounting period.The three major components of the financial statements as mentioned above are the cash flow statement, balance sheet and income statement (Cascino caes et al., 2014). The general purpose of the financial statements is as follows:Income statement – the income statement is primarily prepared with the purpose of looking into the profitability of the company. This means that the key indicator of profit or loss that has been incurred by business is represented in the income statement of the firm. The primary financial components in this particular accounting statement is the gross and net profit or loss that has been incurred by business.Balance sheet – the balance sheet of a company is prepared for giving the stakeholders of business an overview into the liabilities and assets of the company. The balance sheet of the company also aims to disclose the exact amount that has been invested in business in the form of equityCash flow statement – the cash flow statement facilitates the providence of computation of the accurate amount of cash that flows in and out of business in relation to the financing, operating and investing activities.

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