Statement of Stockholders' EquityThe fourth financial statement is the statement of stockholders' equity. This statement lists the changes to the stockholders' equity section of the balance sheet during the current accounting period.A common format of the statement of stockholders' equity is shown here:To see additional examples of the statement of stockholders' equity we recommend that you identify a few U.S. corporations with stock that is publicly...

 While the balance sheet and the income statement are the most frequently referenced financial statements, the statement of cash flows or cash flow statement is a very important financial statement.The cash flow statement is important because the income statement and balance sheet are normally prepared using the accrual method of accounting. Hence the revenues reported on the income statement were earned but the company may...

 The balance sheet is one of the four main financial statements of a business:Balance SheetIncome StatementCash Flow StatementStatement of Stockholders' EquityThe balance sheet reports a company's assets, liabilities, and stockholders' equity as of a moment in time. (The other three financial statements report amounts for a period of time such as a year, quarter, month, etc.) The balance sheet is also known as the statement of financial...

 Recording TransactionsWith sophisticated accounting software and inexpensive computers, it is no longer practical for most businesses to manually enter transactions into journals and then to post to the general ledger accounts and subsidiary ledger accounts. Today, software such as QuickBooks* will update the relevant accounts and provide more information with a minimum of data entry.*QuickBooks is a registered trademark of Intuit Inc. AccountingCoach...

 Adjusting EntriesWhy adjusting entries are neededIn order for a company's financial statements to be complete and to reflect the accrual method of accounting, adjusting entries must be processed before the financial statements are issued. Here are three situations that describe why adjusting entries are needed:Situation 1Not all of a company's financial transactions that pertain to an accounting period will have been processed by the accounting software...