Abstract
ABSTRACT
Finance is the most predominant Artifact, by which the regime of every citizen is hinged on... Let us imagine that there is no money? How these civilized days do goes? It is most resilient for us to make up with present materialistic days. Businesses run on money, and business finance guides you to make shrewd and prudent decisions about cash flow and longer-term funding strategies. As you develop skills and strategies for using the funds you have and for accessing additional capital when needed, you'll improve your company's profitability and increase your potential for leveraging new opportunities. Financial accounting is the process of preparing financial statements that companies’ use to show their financial performance and position to people outside the company, Including investors, creditors, suppliers, and customers. This is one of the most important distinctions from managerial accounting, which by contrast, involves preparing detailed reports and forecasts for managers inside the company.
Most companies put together quarterly and annual financial statements, which they make available to shareholders and the investing public. There are four basic financial statements used in the corporate world to show a company’s financial performance:
The income statement (also called the profit and loss statement) covers a specific period of time (such as a quarter or a year).
On an income statement, Revenues - Expenses = Net Income.
In accordance with the Generally Accepted Accounting Principles (GAAP), revenue is always recorded in the period of the sale of the goods and services, which may not be the same period when cash is actually received.
The balance sheet is a statement of assets and liabilities at the end of an accounting period. In other words, the balance sheet is a financial snapshot at a specific point in time.
On a balance sheet, Assets = Liabilities + Stockholders’ Equity.
Stockholders’ equity is the amount of financing provided by operations (retained earnings not distributed to stockholders) and by stockholders who reinvest through contributed capital.
The cash flow statement shows the actual flow of cash into and out of a company over a specific period of time, in contrast to the net income on the income statement, which is a non-cash number. A cash flow statement shows cash flows from operating activities, investing activities, and financing activities.
The statement of retained earnings covers a specific period of time and shows the dividends paid from earnings to shareholders and the earnings kept by the company.
Key words: Finance, Financial accounting, The income statement, The balance sheet , The cash flow statement, The statement of retained earnings