The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company's operations, financial position, and cash flows. Once the transaction is recorded, it must be transferred to the ledger accounts. This is where all of the journal entries recorded in the general journal are transferred
The purpose of this step is to ensure that the total credit balance and total debit balance are equal. This stage can catch a lot of mistakes if those numbers do not match up. Generally accepted accounting principles (GAAP) require public companies to use accrual accounting for their financial statements, with rare exceptions. What is Fund Flow Statement?
If it reads positive, the company has enough assets to cover its liabilities. From the point of view of an investor, it is essential to understand the stockholder's equity formula because it represents the real value of the stockholder's investment in the business. The stockholder's equity is available as a line item in the balance sheet of a company or a
It also shows how much shareholders might receive in the event that the company is forced into liquidation. Since equity accounts for total assets and total liabilities, cash and cash equivalents would only represent a small piece of a company's financial picture. Retained earnings are a company's net income from operations and other business activities
