In order to make appropriate financial decisions, it is important to understand the different categories of financial statements. Financial statements allow data to be compiled and analyzed for direct comprehension, including evaluating a companys profitability, liquidity, and solvency. These financial statements are important, because once the information is presented, it can be compared with past years of production, as well as how a company compares with its competitors. Without accurate financial statements, a company has no point of reference and therefore no way to improve or grow.

To prepare for this Assignment, review the weeks Learning Resources and consider what elements factor into each type of financial statement, and how the creation of financial statements has an accepted sequence to establish a report of a companys financial health and stability.

Part 1: Balance Sheet

Classify the list of financial elements within the different categories of a balance sheet.

Categories	Elements
Short-term assets Long-term assets Short-term liabilities Long-term liabilities Owners equity	Cash Accounts payable Land Property, plant, and equipment Inventory Accounts receivable Paid in capital Retained earnings Notes payable Mortgage

Then, explain in 2 or 3 paragraphs which sequence the four major financial statements need to be prepared for, and why.

Part 2: Statement of Cash Flow

Classify the list of financial elements within the different categories of a statement of cash flow.

Categories	Elements
Operating activities Investing activities Financing activities	Net income-decreased for period Accounts receivable increase for period Accounts payable decrease for period Accruals decrease for period Depreciation-increases for period Stock issued Property purchased Bonds paid off Inventories increase for period Accrued liabilities decrease Notes payable increase for period Bonds redeemed for period Inventory-decreased for period

Then, in a 1-page paper, explain whether or not each item would be considered a source or use of cash for the period in question.

Note: In preparing your final submission, be sure to include both your completed charts and the written explanations.