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Accounting is indispensable for any company. If applied accurately, accounting can be a very helpful tool for management and financial decisions. As a matter of fact, it can summarize the whole financial and economical situation of a corporation in a few documents (the reports) which can be used by the managers or outside parties (like investors).
The most important reports or financial statements are the following:
-the balance sheet
-the income statement
-the cash flow statement
The balance sheet
The assets, they are the resources used by the firm to operate its business. As seen in the BS example above, they are most often classified as current assets (including cash and equivalents, receivables, investment securities) long term assets (including equipments, lands and buildings), inventories and finally intangible assets (brand equity, goodwill, patents�etc)
The liabilities are usually divided in current liabilities (including suppliers debt or accounts payable, dividends, taxes payable and various short term liabilities) and long term liabilities (which are basically long term bank loans).
The third part is the total equity which represents the capital that investors have put in the business plus the retained earnings; this is the net worth of the company (the enterprise value minus the debts).
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