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an essay on financial statements and its objectives
an essay on financial statements and its objectives
importance of income statement
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Financial Accounting
Companies operate to achieve varies goals. They may be interested in
providing a healthy work environment for their employees, in reaching
a high level of control, or making contributions to civic and social
organization and activities. However, to meet these goals, a company
must first achieve its two primary objectives: earning a satisfactory
profit and remaining solvent. If a company failed to meet either of
these objectives, it will not be able to achieve its various goals and
will not be able to survive in the long run. In order to show others
how well one company has performed, financial statement is necessary,
it is because " Financial statements are accounting reported used to
summarize and communicate financial information about a company. A
company's integrated accounting system produces three major financial
statements: the income statement, the balance sheet, and the cash flow
statement. Each of these statements summarizes specific information
that has been identified, measured, recorded, and retained during the
accounting process."
Basically, The financial statements and what they report are as
follows. The income statement (sometimes referred to as the " P&L" or
profit and loss statement) reports revenue and expense events that
occurred during the reporting period. A revenue minus expenses equals
net income (also referred to as profit or earnings). The balance sheet
reports the business's assets, its liabilities, and the owners' equity
in the business as of the last day of the reporting period. The
statement of cash flows reports cash inflows and cash outflows from
financing events, investing e...
... middle of paper ...
...s group would have interest in the substantial
contribution is made to the local economy by the enterprise together
with the local and national factors such as employment and
environment. Some of these issues are included in their financial
information and long-term strategy.
Overall, relevance and reliability are major characteristics of a
financial statement. Irrelevant information is useless; consequently,
the financial statement must be reliable and relevant in order to meet
the basic objective. Information must be accurate since they are
always influencing the decision of the users, and moreover relevant
accounting information is capable of making a difference in a decision
by helping users to form predictions about the outcomes of past,
present, and future events or to confirm or correct prior
expectations.
Anyone considering accounting needs to assess whether this career fits his or her interests, abilities, and aspirations. There are certain qualities and qualifications, however, that a person should consider before making a commitment to a particular career field. Selecting a career can take a lot of time, and many people do not choose until they are adults. Contributing to the difficulty in choosing a career is the vast number of vocations from which to choose. The field of accounting alone covers dozens of types of accountants and dozens of jobs. In trying to decide whether accounting is an appropriate career choice, a person should talk with bookkeepers and accountants that have years of experience. Ask questions about their daily work requirements, their likes and dislikes about accounting, and how they became interested in the profession. Questions such as these can give a person insight into the profession and help in considering accounting as a career.
According to the Generally Accepted Accounting Principles, T-Shirts by Tommy can account for the accident is to record an extraordinary item. Using the definition from our Intermediate Accounting textbook, extraordinary events are defined as, " events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence" (Keiso). Because of the nature of the plane crash, and the fact that these types of accidents happen very rarely, it can definitely be categorized as extraordinary. Tommy needs to estimate how much to expense for the loss of the building and other losses associated with the crash. Then he must record this item on his yearly income statement.
To determine Panorama’s financial positions, we need to use ratio analysis. There are four main categories we can use. They are liquidity, activity, profitability, and debt or financial leverage.
This paper will discuss the information found in the financial statements such as, balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity. The financial statements will show the relation to planning, controlling, and decision making. Also, the paper will discuss some the reports and ratios that can be developed by analyzing the statements. The statements mostly used by managerial accounting are: budgets, forecast, variance reports, and ratios to name a few.
Accounting for financial instruments and the issues that go along with it have been an ongoing issue throughout the years for businesses. As a result the Financial Accounting Standards Board have handed down decisions regarding the valuation method that should be used. Whether these decisions are truly the best way to value financial instruments has been up for debate. The earliest decision came down in May of 1993 when the Financial Accounting Standards Board passed Statement of Financial Accounting Standards No. 115. According to the Financial Accounting Standards Board this statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. These investments are classified in one of three different categories. (Financial Accounting Standards Board [FASB], n.d.) For debt securities that a company intends to hold until maturity are classified as “held to maturity” securities. For debt and equity securities that are purchased and then held for the purpose of them being sold in the...
This test is about an informational presentation to a group of small business owners with no accounting or financial knowledge. It is a report that identify the audiences, purposes, and natures of financial statements and managerial reports. In addition, it will explain the use of financial accounting information in making informed and ethical business decisions.
Accounting is defined as set of concepts and techniques that are used to measure and report financial information about economic units. (Walther L.M, 2012).
What do you understand by the phrase “stakeholder analysis”? Attempt a stakeholder analysis of an organisation that you are closely associated with.
When a company feels that there is no way to survive its current situation and when the losses are greater than the profits, some people may bel...
2-1 D. Given: Current Ratio = 2.2:1; Current Asset = $33,000, Non-current Asset = $55,000; Liabilities = $15,000
The process of systematic recording of the business transaction in the various books of account maintained by the entity with ultimate purpose of preparing financial statement there from is called Financial Accounting. Financial accounting summarizes the transaction taking place during a period with the objective of preparing the financial statements
In this essay, I will briefly describe some of the most important components of financial accounting: the accounting cycle, merchandising operations, internal cash and control, receivables, plant assets, natural resources and intangibles. I will summarize their concepts, explain their key applications, and describe their integration of implications in the Accounting Cycle.
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.
A largely accepted language is required for a business or organization to effectively communicate its results and position to stakeholders, which is why accounting has come to be known as the "language of business". Accounting is really the means for providing financial information to others. Financial analyst then take the data the accountants have compiled in the form of reports, and make educated guesses at what their company should do next. David ballast (1996) stated, "The fact remains that accounting and finance are the primary tools for reducing business problems and opportunities to a common denominator, setting goals, measuring results, and making decisions." (p. 1)
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