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Week 4 Reflection Acc 291

In: Business and Management

Submitted By shambo510
Words 1044
Pages 5
Weekly Reflection
March 17, 2014

Week 4 brought on the discussions of analyzing financial statements. We looked at how to use the indirect and direct methods when putting together a statement of cash flows. It was also discussed how one would use ratios and vertical and horizontal analysis in regards to deciphering financial statements. Lastly, we talked about preferred and common stocks are issued, placed as journal entries on financial statements and the paid out in dividends. With these topics we got to see why financial statements are compiled the way they are and it gave us a better understanding of how they work for a company. Each week the understanding is getting greater on financial statements.

Financial statements are analyzed by corporations so that they are able to see and identify their strengths and possible weaknesses. Identifying the relationship with the balance sheet and a company’s profit and loss accounting will help in the decision making process on whether to proceed with certain things or to either change or eliminate them all together. External users of a company look at the information on financial statements to decide whether or not they want to invest or issue credit but the company also uses these statements to help make the hard decisions that management needs to build a company with staying power. Through issue of common and preferred stocks we must pace the journal entries on our statements and then we use that information when we are paying out dividends as well. There are multiple ways to analyze financial statements, this week we focused on ratio, vertical and horizontal analysis.
In the statement of cash flows net income must be converted from an accrual to a cash basis. This can be done using either the direct or indirect method. According to (Weygandt, J.J., Kimmel, P.D., & Kieso, D.E,…...

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