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Overview Of Accounting

Overview of Accounting Paper
3/3/08
University of Phoenix

Overview of Accounting Paper
Accounting is sometimes said to be the language of finance because it provides financial data through income statements, balance sheets, and the statement of cash flows (Block & Hirt, 2005). The purpose of this paper is to provide basic information on accounting and finance to the small business owner. By providing the small business owner with the basics of finance and accounting, enables the company to understand the relationships between these fields and apply the concepts to their own company. The field of finance is closely related to economics and accounting, and financial managers need to understand the relationships between these fields (block & Hirt, 2005). Economics provides a structure for decision making in such areas as risk analysis, pricing theory through supply and demand relationships, comparative return analysis, and many other important areas. This paper will identify the audiences, purposes, and natures of financial statements and managerial reports and explain the use of financial accounting information in making informed and ethical business decisions.

Identify the audiences, purposes, and natures of financial statements and managerial reports.
Financial statements are formal records of a business' financial activities. These statements provide an overview of a business' financial condition in both short and long term. The four types of financial staements are:
1. Balance sheet: is a statement that details the financial position or condition of a company, reports on a company's assets, liabilities and net equity as of a given point in time. The income statement and balance sheet used together, will anwer questions like: How much did the company make or lose, and what is a measure of its worth? (Block& Hirt 2005)
2. Income statement: is the profit or loss statement, and reports on a company's results of operations over a period of time....