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The job of an accountant is to track, organize, and record financial data during the accounting cycle. At the end of each cycle, the accountant will prepare financial reports. Some of the most common financial reports in accounting are Income Statement, Statement of Capital, Balance Sheet, and Cash-Flow Statement.
Income Statement: Income statements represent the bottom line of the business. This type of report will show the summary of various expenses and revenues from business operations in a specific period. A company’s net income or loss is represented by the difference between expenses and revenues.
Statement of Capital: Changes in owners’ capital accounts over time is usually shown in the statement of capital. Capital account will tell you how much of your company you own. The owner’s statement of capital will show any changes to the capital at the end of accounting cycle.
Balance Sheet: The balance sheet will list your assets, liability, and owners’equity. It is based from the equation:
Assets = Liabilities + Owners’ equity
Assets refer to everything you company owns, and liabilities refer to everything that the company owes to creditors. Finally, owners’ equity refers to ownership stake in your company.
Cash-Flow Statement: The uses of company’s money are shown in the cash-flow statement. Cash-flow statement is important, because it shows whether a business’s cash flow is decreasing or increasing.
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