Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Importance of financial statement
Importance of financial statement
Importance of financial statement
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Importance of financial statement
Moreover, for the single reporting entity, there is a variety of procedural steps that must be taken and understood in order to ensure the proper accounting. For instance, the starting point for the preparation of consolidated statements begin with the separate financial statements of the companies and after some adjustments and eliminations of amounts they are added together in order to create appropriate consolidated financial statements. Additionally, a few steps that can be taken into account to properly create consolidated financial statements are as follows: Step 1- Determine which holdings should be reported as subsidiaries. Step 2- Gather all the financial information together from all the companies. For instance, gathering the …show more content…
Furthermore, add together the separate values from the income statements of the parent company and the subsidiaries. Step 10- Review the consolidated statements for duplicate values. For instance, an individual should consider and check, but is not limited to, intercorporate stock holdings, which means that the consolidated company owns parts of itself, they should also check for intercorporate receivables and payables which means that the company owes itself money, and they should also check for intercorporate sales which means that the company is selling items to itself for profit. Step 11- Eliminate intercorporate stockholdings, which arises from stock(s) that are in the subsidiary being owned by the parent and are not reportable as stock outstanding in the consolidated statement. Moreover, for the adjustments to the consolidated balance sheet, an individual must debit the subsidiary’s common stock, retained earnings, and additional paid in capital. In addition, they must credit the consolidate stock of subsidiary account for the book value of the intercorporate
The first method we will review is the accounting method. Through this accounting approach we will analyze specific ratios and their possible impact on the company's performance. The specific ratios we will review include the return on total assets, return on equity, gross profit margin, earnings per share, price earnings ratio, debt to assets, debt to equity, accounts receivable turnover, total asset turnover, fixed asset turnover, and average collection period. I will explain each ratio in greater detail, and why I have included it in this analysis, when I give the results of each specific ratio calculation.
for market size, trends, company goals, spending, return on investment, capital expenditures, and funding required.
We will follow proper accounting and disclosure practices. All record keeping and financial statements will be prepared according to GAAP standards and reviewed by an independent
is its two different lines of business, each one working in detachment and accordingly putting a strain on the data accumulation process. Presently the chain appearances squandered representative profit, no continuous updation, expanded expenses and absence of customer bits of knowledge. The chain obliges a more iron set of data to work adequately and proficiently in the business and contend internationally. Incorporation may be the most practical path for IT to increase the value of the undertaking. The profits of business incorporation are constrained to enhanced client benefit as well as reach out to expanded deals and a more amiable nature's
Although the subsidiary is a separate legal entity, the parent entity has to prepare consolidated financial statements. The consolidated financial statement shall include all subsidiaries of the parent (Paragraph 12 AASB 127). In Paragraph 19 AASB 127, it states that ‘the subsidiary is not excluded from consolidation because the investor is a venture capital organization, mutual fund, unit trust or similar entity’. The second reason is that the business activities of an entity are different from those of others within a group. The relevant information is provided by consolidating such subsidiaries and disclosing other information about the dissimilar business activities of subsidiaries (Paragraph 20 AASB
An acquiree shall make an election to apply pushdown accounting before the financial statements are issued (for a Securities and Exchange Commission (SEC) filer and a conduit bond obligor for conduit debt securities that are traded in a public market) or the financial statements are available to be issued (for all other entities) for the reporting period in which the change-in-control event occurred. If the acquiree elects the option to apply pushdown accounting, it must apply the accounting as of the acquisition
In this case analysis I will first show the requirements the company had for its financing. Then I will
Another factor driving financial planning in the post merger phase is implementation of new shared corporate culture and management culture. The management in the merged organization need to put in place both the shared corporate and management culture from the two entities. This is critical in avoiding the rise of discrimination from the organizations that have formed the merger. Another important factor is bringing together the formerly separate units from the two or more organizations involved in the merger. This is to make sure that activities are performed in an efficient and effective way.
It outlines the interconnection of a company’s financial and non-financial elements and aims to combine them and show value creation and maintenance. It identifies resources and their effective and responsible usage. It intends to create a dialogue between the shareholders and other stakeholders and provides them with detailed information.
In reviewing the company’s balance sheet, the current assets and liabilities were reviewed and liquidity ratios were calculated. The capital structure and the fixed and intangible asset accounting of the company were also reviewed. Off-balance sheet items such as leases and contingent liabilities were reported and noted. All of these aspects of the balance sheet were reviewed in order to do a proper analysis of the company’s balance sheet.
· Obtain an understanding of the Company, its environment, and its internal control over financial reporting.
The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four areas of information, which we can collect from a company's financial statements. They are: Ÿ Profitability - This information comes from the Profit and Loss account. Were we can compare this year's profit with the previous years.
Preparing general-purpose financial statements; including the balance sheet, income statement, statement of retained earnings, and statement of cash flows; is the most important step in the accounting cycle because it represents the purpose of financial accounting.
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000
All accounting reports are shared by all levels of accounting managers. The management of the information which at the accounting department is one of the most important factors in determines the effectiveness and efficiency of the department. The information that gathers included the invoice, account document, payment, draft, banking document and etc. It is important to ensure the validity and the accuracy of the information that provided to the department.