Accounting Chapter 1 Essay

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What are General Purpose Financial Reports? Who are the main users and identify the information that would be relevant to them.

In accounting there are four general financial statements that companies use during their accounting process.

Income Statement: • Shows the results of the company's operations for a set period of time. It shows the gains, the expenses, and the losses, which lead to the company's final net income for that time period. • Revenue is an inflow of cash and receivables that the company received by selling goods or services. • An expense is an outflow of selling goods or services. Again, if somewhat like a revenue in that it is also inflow of resources, but it is not related to the company's main business. • Losses are like expenses and that they also are outflow of resources, but they too are not related to the primary activity of the business.

Balance Sheet: • The balance sheet is what shows accompanies current position at an exact date. • It helps people see how the company is balancing their assets, liabilities, and stockholders equity.

Statement of Stockholder’s Equity: • What the stockholder’s claim against a company's assets.

• The statement of stockholder's equity is what shows the change of stockholder's equity for a set period of time. • It has both inflows and outflows. Inflows show how much the original shareholders had invested in the company. Outflows are the dividends that the company pays out to current stockholders.

Statement of Cash Flows: • The
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