In order to make appropriate financial decisions, it is important to understand the different categories of financial statements. Financial statements allow data to be compiled and analyzed for direct comprehension, including evaluating a companyâ€™s profitability, liquidity, and solvency. These financial statements are important, because once the information is presented, it can be compared with past years of production, as well as how a company compares with its competitors. Without accurate financial statements, a company has no point of reference and therefore no way to improve or grow.
Part 1: Balance Sheet
Classify the list of financial elements within the different categories of a balance sheet.
Then, explain in 2 or 3 paragraphs which sequence the four major financial statements need to be prepared for, and why.
Part 2: Statement of Cash Flow
Classify the list of financial elements within the different categories of a statement of cash flow.
Then, in a 1-page paper, explain whether or not each item would be considered a source or use of cash for the period in question.
Note: In preparing your final submission, be sure to include both your completed charts and the written explanations. Template for chart is attached!