After completing the reading assignments and watching the lecture, write a 3-page (minimum 750 words) response to the following question (do not use the question in your response):
List the four financial statements. For each financial statement, (1) explain the main characteristic of an organization that it assesses (for example, the balance sheet assesses liquidity); and (2) list its main components. Also explain the main purpose
of each of the following: the notes to the financial statement; the management’s letter
of responsibility; and the audit opinion.
Financial statements are used to present formal records of financial activities of organizations over certain financial or trading period. They provide insights on these activities in monetary terms. There are four basic financial statements that are prepared by organizations, and each statement serves a different purpose. They can be prepared at any time of the year (end of the month, quarter or year) and any time span (monthly, quarterly and yearly). The basic financial statements being prepared by organizations include:
* The balance sheet.
It is also referred to as the statement of financial position because it presents the financial position of an organization at the end of a specified period. It summarizes the assets, liabilities and shareholder`s equity of an organization over a certa