Financial Statements and Stakeholders - Mark Blue Notes

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The four financial statements are the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity. The purpose of the balance sheet is to show a company's assets, liabilities, and equity at a specific point in time. The income statement shows a company's revenues and expenses over a period of time. The statement of cash flows shows how a company's cash balance changes over time and where the cash came from or went to. The statement of stockholders' equity shows changes in a company's equity over time. My opinion is that these financial statements provide important information for investors and other stakeholders to understand a company's financial health and performance.

The three types of legal business structures are sole proprietorship, partnership, and corporation. A sole proprietorship is owned and operated by one person, and has the advantage of being easy to set up and manage. A disadvantage is that the owner is personally liable for the business's debts. A partnership is owned and operated by two or more people, and has the advantage of shared management and shared profits. A disadvantage is that partners are personally liable for the business's debts. A corporation is a separate legal entity owned by shareholders and managed by a board of directors. An advantage is that shareholders are not personally liable for the business's debts. A disadvantage is that it can be more complex to set up and manage. My opinion is that the choice of business structure depends on the specific needs and goals of the business owners.

Current assets are assets that are expected to be converted into cash, sold, or consumed within one year or the company's operating cycle, whichever is longer. Current liabilities are obligations that are due within one year or the company's operating cycle. Noncurrent assets are assets that are not expected to be converted into cash, sold, or consumed within one year or the company's operating cycle. Noncurrent liabilities are obligations that are not due within one year or the company's operating cycle. The distinction between current and noncurrent assets and liabilities is important for stakeholders because it helps them understand a company's liquidity and ability to meet its short-term obligations. My opinion is that it is important for companies to manage their current and noncurrent assets and liabilities in a way that supports their overall financial health and stability.

Stakeholders are individuals or groups that have an interest or concern in an organization. Examples of stakeholders include shareholders, customers, employees, suppliers, and the community. Shareholders might use the financial statements to evaluate the company's financial performance and potential for growth. Customers might use the financial statements to assess the company's financial stability and ability to provide high-quality products or services. My opinion is that it is important for companies to communicate effectively with stakeholders and to consider their interests when making decisions.

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