A company financial statements give us the amount of resources (assets) it has available and also any claims against the valuable resources at any given time, the difference between the two companies net worth.
Claims on the company's assets can also be obtained as liabilities or equities. A company can be known as a combination of economic resources and equities.
No matter what your business structure (sole proprietors, partnerships orCompany), any business or company has two different types of shares. They are creditor liabilities and shareholders' equity.
The primary way that information to help financially the implementation of an enterprise, for those who have an interest in the business to communicate is through financial statements. However, it must be taken out of interpretation of this, as no financial statements is perfect and all have their flaws, the fact it is essentially the position of a company at a givenTime and may not reflect significant changes in financial condition since that time.
There are three degrees: --
Statement of financial performance (profit and loss account). Reports) in the form of a summary of revenues, expenses and profit (or loss that has made in a given period. The statement shows a company where the turnover was achieved and what expenses were incurred. With this report, and investors for the value in the past a company to assessand assesses the prospects for the future, many believe this is the most important financial report as it shows whether a company has achieved its profitability goal.
Balance sheet (balance sheet). This report is a summary of the book value (equity) of a company at a specific time in which the assets or resources that is controlled by the company, its debts, and the owner of the claim to the equity. The most important elements in the balance sheetare assets, liabilities, assets, liabilities, equity and retained earnings.
Statement of Cash Flows. Reports the effects of transactions over a fixed accounting period, that a flow of cash into or out of the companies involved and whether these transactions are of an operational, financial or investment nature.
Operating activities include receipts and payments for the production, sale and delivery of goods and services.
Financing of the activities related to theComposition of the financial structure, movements, for example, bonds and investments.
Investment activities relate to the acquisition and disposal of long-term assets such as machinery and equipment or shares in other companies.
The accounting equation: economic resources (assets) = Liabilities + Owners Equity.
As in all the algebraic equations, which have both sides of the equation must be equal. The significance of this equation becomes clear when the analysisthe financial impact of your daily business activities.
The assets of how the economic resources that are known for a company that the company's revenue is expected to generate in the future available.
Such as land, buildings or other property that can rent a shop, or lease use in the manufacture of goods for sale.
Inventory - finished goods and components that are used in the manufacture of finished products.
Money that the company owed for goodsor services already provided (known as claims).
There are also some assets that are not physical, but still very valuable for a company, some examples are: copyright, trademarks, patents and goodwill.
The liabilities are financial obligations that a company has received such as: taxes, payroll obligations, utilities, amounts owed to other companies for the supply of goods or services. These are the debts and liabilities of a company thatMoney that they have to pay in the near future. The law gives the creditors (people who owe money) the right to sell (liquidation), press the assets of a company if it is unable to pay its debts on time. The creditors have more rights over the assets of a company as owner, as they must be paid before the owners received.
Owner's equity refers to the allegation that the owners of a company over the assets of the company. It is the interest or the remainder ofremaining assets of an entity after deduction of liabilities. Here is the equation for equity owners. Owner Equity = Assets - Liabilities. The owner's equity within a given society is referred to as shareholders or equity.
This consists of two distinct parts, the paid-up capital and retained earnings. (Owner's Equity = paid-in capital + retained earnings). The amount that individual shareholders will be placed in a shop, known as contributedCapital. Retained earnings is the amount of equity) (Profit, which has earned by shareholders from the income-generating activities of the company, which has kept for future use by the company. Retained earnings are three types of transactions, revenue, expenses are involved, and dividends.
If the revenues do not exceed costs, is defined as net income results announced an increase in assets and therefore the owner's equity. On the other side, where costs are higher than revenues itwill be a loss leads to a reduction in assets and therefore the owner's equity is known (which means that you lose business or your business costs more than what) they deserve to run.
Dividends are the distribution of assets (income) to shareholders in relation to the past earnings of the company. It is important not to confuse the expense related to dividends, since both reduce the retained earnings. Retained earnings are the collected net income or revenue minus expenses.
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