Fundamentals of Financial Statements Starting a business takes a lot of time, commitment and patience. The ultimate goal of most businesses is to succeed professionally and financially. In order to show the progress of business operations, careful financial statements must be maintained. This statement communicates economic information about the company to those involved in decision-making and judgment. According to the University of Phoenix 2006, “an entity's financial statements are the end product of a process that begins with transactions between the entity and other organizations and individuals. » Connie Rochce started a cookie business in November 1986. A business plan and business plan were developed. place people to help. Connie was worried she needed someone to keep the financial accounts. Aunt Connie's cookies, November and December financial statements are reviewed along with a suggestion to expand its operations. The transactions in Connie's financial statements involved the balance sheet, income statement, and cash flow statement. We will look at some balance sheet and income statement transactions. Connie's initial transaction of depositing $80,000 into her account to start her business increased her ownership. This transaction increased the company's equity and was added to balance the account. According to the University of Phoenix (2006), "the balance sheet is sometimes called a statement of financial position because it summarizes the resources (assets), obligations (liabilities), and owners' receivables (equity) of the entity." Kitchen and office equipment was purchased as well as supplies. With these three transactions, she also increased her property. Purchasing the supplies increased his debt, but still added value to the operation of the business. Meeting its first sale obligation increased revenue, this was shown in the income statement. This statement will show Connie whether the company is making a profit or a loss. Greta (1998) stated the following: “The balance sheet can show the financial strength of a company. The income statement can answer every investor's central question: "How much money do they make?" More importantly, the income statement can provide a solid basis for forecasting future profits. If Aunt Connie was looking for a loan to expand her business, the income statement can show revenue in advance. Aunt Connie may, in good faith, accept a future order from a customer. Connie can report this transaction as income received in advance and as a liability under unearned income. During the process of balancing the accounts, the income received in advance would be recorded as an adjustment..