Very Vegetarian

In: Business and Management

Submitted By mapruden
Words 548
Pages 3
Very Vegetarian

It is advisable to evaluate the Very Vegetarian’s financial statement because it possesses valuable information pertaining to the company’s financial condition. Key information that will be useful would be things like the company’s profitability, if Very Vegetarian is able to pay their bills or if there is any debt that they owe. (Understanding Business, p.466) This type of information would be very vital to anyone looking to associate themselves financially with a business.
There are three key financial statements made available to measure the financial capability of a business. One of these statements is called a balance sheet. A balance sheet reports the firm’s financial condition on a specific date. Secondly, you have an income statement. An income statement summarizes revenues, cost of goods, and expenses, for a specific period and highlights the total profit and loss from that particular period. Lastly, you have what’s called a statement of cash flows which provides a summary of money coming into and going out of the firm. (Understanding Business, p.472) These statements are essential to a business’ operations. Generally Accepted Accounting Principles (GAAP) is rules to which accountants must follow when preparing financial statements. (financial-dictionary.the free dictionary.com) Accounting reports must be prepared according to specific GAAP procedures because it assures that the financial information provided is accurate and will also meet the standards to which accountants have agreed upon. (Understanding Business, p.467) Unfortunately, without these

strict guidelines in place, it would continually allow for company failures like Enron, WorldCom, and Tyco to continue operating unethically. These very schemes are examples of reasons businesses are not allowed flexibility or creativity when preparing financial…...

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