Introduction
This paper was devised to give small business owners an insight to the financial statement and managerial reports that are essential for business. The financial statement consists of an income statement, balance sheet and statement of cash flow. This paper will provided an explanation of proper financial accounting and ethical business decisions making techniques.
Audiences, Purposes and Nature of Financial Statement
Business owners, CEO's and managers are among those who are the important decision makers of their companies. To make these important decisions many pieces of information are needed. The financial operation of any business is one of the most important aspects of business management. Some of the most important tools available to managers today are financial statements and managerial reports. The business managers basic knowledge and understanding of these reports are essential in the decision making process. Three types of financial statements that are relative to business, the income statement, balance sheet and statement of cash flow. These three statements provide key information on the overall health of a business. The first type of financial statement is the income statement, is the major device for measuring the profitability of a firm over a period of time. (Block-Hirt, p. 25). They are in a stair-step or progression form from top to bottom, with sales at the top and subtract the cost of goods to determine the gross profits. Next subtract the selling and administrative expenses to determine the profits or losses of the business. Then other administrative expenses are subtracted to determine what the company has earned. The second type of financial statement is the balance sheet, indicates what the firm owns and how these as ...