Accounting is a way to provide information that” identifies, records and communicates the economic events of an organization”(Weygandt, J., Kimmel, P., & Kieso, D., 2012). In order to ensure that businesses and accountants produce similar financial statements, they are held to generally accepted accounting principles or GAAP standards (Weygandt, et.al. 2012). In addition to GAAP standards, the Sarbanes-Oxley Act of 2002 was passed by Congress to help reduce unethical behavior by large businesses (Weygandt, et. al., 2012). The combination of the two provides reassurance to stakeholders or interested parties that the financial statements are uniform and provide reliable data. This is of the utmost importance for a business to be successful. It’s at this point that it is important to understand that the basic accounting equation is “assets = liabilities + owner’s equity” (Weygandt, et. al., 2012). This is the fundamental equation that all transactions fall under in one way or another. This equation should balance at all times. Assets are items which add value to the company such as Cash, money owed to the company, equipment, supplies, etc. (Weygandt, et. al., 2012). Liabilities are those items which cost the company money or equity such as money the company owes to employees or obligations that the company owes to other businesses (Weygandt, et. al., 2012). When the assets are added up and the liabilities are subtracted the part left over is the Owner’s Equity in the business (Weygandt, et. al., 2012). It’s how much the owner has invested in the company. To understand the basics of accounting a person needs to understand the steps involved. Each step is necessary in order to provide complete and accurate financial stat... ... middle of paper ... ...ndt, et. al., 2012). All closed accounts will have a zero balance (Weygandt, et. al., 2012). After the temporary accounts are all closed, the Post Closing Trial Balance can be prepared. The Post Closing Trial Balance shows the list of permanent accounts and their balances that will be used to start the next accounting cycle (Weygandt, et. al., 2012). Another step that can be performed is to prepare the Classified Balance Sheet. It separates the Current Assets and Liabilities; long-term investments; property, plant and equipment; and Intangible Assets (Weygandt, et. al., 2012). It also shows the Owner’s Equity (Weygandt, et. al., 2012). This is the complete accounting cycle and the new cycle can begin. Works Cited Weygandt, J., Kimmel, P., & Kieso, D, (2012). Accounting Principles. Retrieved from: http://online.vitalsource.com/books/9781118164143/outline/
In this essay, the author
- Explains accounting is a way to provide information that identifies, records and communicates the economic events of an organization. businesses and accountants are held to generally accepted accounting principles or gaap standards.
- Explains that the basic accounting equation is "assets = liabilities + owner's equity". assets add value to a company, while liabilities cost the company money or equity.
- Explains that to understand the basics of accounting, a person needs to know the steps involved. omitting or doing an incorrect calculation can make the financial statements worthless due to their inaccuracy.
- Explains accounting is a way to provide information that identifies, records and communicates the economic events of an organization. businesses and accountants are held to generally accepted accounting principles or gaap standards.
- Explains that the basic accounting equation is "assets = liabilities + owner's equity". assets add value to a company, while liabilities cost the company money or equity.
- Explains that to understand the basics of accounting, a person needs to know the steps involved. omitting or doing an incorrect calculation can make the financial statements worthless due to their inaccuracy.
- Explains that each transaction affects two aspects of the equation every time. if there is an increase in an asset, there has to be a decrease in another asset.
- Explains that a financial transaction is recorded in the journal, which provides an easy way to look at each transaction to make sure it was recorded correctly. the act of physically transferring the data is called posting.
- Explains that the ledger is a list of the individual accounts the company uses to conduct its daily business.
- Explains the importance of having the ability to cross-reference the ledger with the journal.
- Explains the expanded accounting equation of assets = liabilities + owner’s equity + draws + revenues – expenses. adjusting entries are made when the accounting cycle is over and an adjusted trial balance can be done.
- Explains that at the end of the company's accounting cycle, the books are closed, and the post closing trial balance can be prepared.
- Explains how to prepare the classified balance sheet, which separates current assets and liabilities, long-term investments, property, plant and equipment, and intangible assets.
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- Barnes And Noble Case Study Solutionanalytical essayA strong balance sheet gives an investor an idea of how financially stable the company really is. Many professionals consider the top line, or cash, the most important item on a company’s balance sheet. The big three categories on any balance sheet are “assets, liabilities, and shareholder’s equity.” Evaluating Barnes & Noble’s assets for the time 2014, 2013 and 2012 the company’s performance summarizes that it is remaining stable. These numbers reflect a steady rate over the three year period. Like assets, liabilities are current or noncurrent. Current liabilities are obligations due within a year. Key investors look for companies with fewer liabilities than assets. Analyzing this type of important information, informs a potential investor that if the company owes more money than they are bringing in that this company is in financial trouble. Assessing the liabilities of the balance sheet, for the same time period, it is also consistent with the assets. The cash flow demonstrates a stable performance in the company’s 2014, 2013 and 2012 assets and would be determined that the liabilities of this company are also stable. Equity is equal to assets minus liabilities, and it represents how much the company’s shareholders actually have claim to. Investors customarily observe closely to the retained earnings and paid-in capital under
In this essay, the author
- Explains that barnes & noble's income statement includes salaries, benefits, advertising, rent, utilities, depreciation, and other operating costs.
- Explains that a strong balance sheet gives an investor an idea of how financially stable the company really is.
- Explains that significant equity and low debt signals that your company has the financial resources to absorb any shock or downturns.
- Explains that barnes & noble's income statement includes salaries, benefits, advertising, rent, utilities, depreciation, and other operating costs.
- Explains that a strong balance sheet gives an investor an idea of how financially stable the company really is.
- Explains that significant equity and low debt signals that your company has the financial resources to absorb any shock or downturns.
- Analyzes barnes & noble's cash flow statement, which reports the cash generated and used during a time interval specified in the heading.
- Explains the "financial ratio" or current ratio, when reviewed with barnes & noble's balance sheet indicates that the company has sufficient funding to carry out day-to-day business.
- Explains that barnes & noble is the nation's largest retail bookseller and the leading retailer of content, digital media, and educational products.
- Explains that the denominator uses the value of average net fixed assets (property and equipment) over the same period as the revenue in the numerator.
1615 wordsRead More - Barnes And Noble Case Studyanalytical essayA strong balance sheet gives an investor an idea of how financially stable the company really is. Many professionals consider the top line, or cash, the most important item on a company’s balance sheet. The big three categories on any balance sheet are “assets, liabilities, and shareholder equity.” Evaluating Barnes & Noble’s assets for the time 2014 at $3,537,449, 2013 at $3,732,536 and 2012 at $3,774,699, the company’s performance summarizes that it is remaining stable. These numbers reflect a steady rate over the three year period. Like assets, liabilities are current or noncurrent. Current liabilities are obligations due within a year. Key investors look for companies with fewer liabilities than assets. Analyzing this type of important information, informs a potential investor that if the company owes more money than they are bringing in that this company is in financial trouble. Assessing the liabilities of the balance sheet, for the same time period, it is also consistent with the assets. The cash flow demonstrates a stable performance in the company’s assets and would be determined that the liabilities of this company are also stable. Equity is equal to assets minus liabilities, and it represents how much the company’s shareholders actually have a claim to. Investors customarily observe closely
In this essay, the author
- Explains that expenses show how much it costs to do business, outside of what barnes & noble are spending to produce their product.
- Explains that a strong balance sheet gives an investor an idea of how financially stable the company really is.
- Explains the importance of retained earnings and paid-in capital under the equity section. strong equity indicates commitment or demonstrates a contributed equity. significant equity and low debt signals that your company has the financial resources to absorb any shock or downturn.
- Explains that expenses show how much it costs to do business, outside of what barnes & noble are spending to produce their product.
- Explains that a strong balance sheet gives an investor an idea of how financially stable the company really is.
- Explains the importance of retained earnings and paid-in capital under the equity section. strong equity indicates commitment or demonstrates a contributed equity. significant equity and low debt signals that your company has the financial resources to absorb any shock or downturn.
- Analyzes barnes & noble's cash flow statement, which reports the cash generated and used during a time interval specified in the heading.
- Explains the "financial ratio" or current ratio when reviewed with barnes & noble's balance sheet indicates that the company has sufficient funding to carry out day-to-day business.
- Explains that barnes & noble is the nation's largest retail bookseller and the leading retailer of content, digital media, and educational products.
- Explains that a fixes asset turnover ratio measures the management's performance. the cost principle and measurable exchanges are important because investors want information about an economic entity.
1677 wordsRead More - The Accounting Cycleexplanatory essayThis paper will discuss these steps in detail. Because I work at home, I am not currently involved in any of the steps of the accounting cycle. The examples I give in this paper will be from various jobs I have held in the past.
In this essay, the author
- Explains that the accounting cycle consists of the following ten steps: analyze and classify events, journaling the event, posting to the ledger, adjusting entries, preparing financial statements, closed entries and after closing trial balance.
- Explains that since they work at home, they are not currently involved in any of the steps of accounting cycle. the examples they give will be from various jobs i have held in the past.
- Explains that the first step is to analyze and classify events, and the recorder must decide what needs to be recorded.
- Explains that the accounting cycle consists of the following ten steps: analyze and classify events, journaling the event, posting to the ledger, adjusting entries, preparing financial statements, closed entries and after closing trial balance.
- Explains that since they work at home, they are not currently involved in any of the steps of accounting cycle. the examples they give will be from various jobs i have held in the past.
- Explains that the first step is to analyze and classify events, and the recorder must decide what needs to be recorded.
- Explains that the second step is entering the transactions of the period in appropriate journals. the bookkeeper does the journal entries and figures out which accounts are affected.
- Explains that posting to the ledger is done either by a bookkeeper or supervised by one. the journal entries are reviewed for accuracy and then for each batch, the person entering them is either given corrections to make or is told to post.
- Explains that an unadjusted trail balance is simply a list of accounts with the credit and debit balances with totals.
- Explains that adjusting entries are prepared and recorded by a bookkeeper or higher.
- Explains that the adjusted trial balance is the same as the unadjusted trail balance, except that all of the events for the period have been recorded.
- Explains that financial statements are prepared from the adjusted trial balance. they have been reviewed by an accountant or member of management and have never worked at a place that used worksheets.
- Explains that the next step is to close the temporary accounts. the bookkeeper usually does this step supervised by an accountant.
- Explains that reversing entries are optional, except in the case of accruals, when an expense is allocated between two periods.
977 wordsRead More - Assets And Noncurrent Assetsexplanatory essayAssets are an important part of any business or organization. Assets are resources that add value to the business, fund daily operations and are used to pay expenses that have been incurred by the organization. Assets are listed on the balance sheet of an organization’s financial statements, which can be used for decision making by owners, management, investors and creditors of an organization. There are two different classifications of assets recognized on the balance sheet: current and noncurrent, or long-term, assets. The key difference in how they are classified is when the asset is expected to be realized in cash or consumed.
In this essay, the author
- Explains that assets are an important part of any business or organization. assets are listed on the balance sheet of an organization's financial statements, which can be used for decision making by owners, management, investors and creditors.
- Explains that current assets are resources that are expected to be realized in cash, sold or used in an operating cycle or within a fiscal year.
- Explains that noncurrent assets are long-term in nature and provide benefits to the organization for many years. they are capitalized, meaning the company allocates the cost over the number of years for which the asset will be in use.
- Explains that assets are an important part of any business or organization. assets are listed on the balance sheet of an organization's financial statements, which can be used for decision making by owners, management, investors and creditors.
- Explains that current assets are resources that are expected to be realized in cash, sold or used in an operating cycle or within a fiscal year.
- Explains that noncurrent assets are long-term in nature and provide benefits to the organization for many years. they are capitalized, meaning the company allocates the cost over the number of years for which the asset will be in use.
- Explains that both current and noncurrent assets can be tangible assets. tangible assets are items that have a physical existence or property that you can touch, see or feel.
- Explains that current and noncurrent assets are listed on the balance sheet of a company's financial statements, which determines the liquidity of an organization, or the ability of current assets to cover short term liabilities.
- Explains that it is important to examine the items listed on the balance sheet to determine the short term liquidity of an entity since some items are more easily converted into cash than others.
- Explains accounting tools (2014)'s definition of the order of liquidity. the balance sheet has a breakdown of current assets, followed by noncurrent assets.
- Concludes that the classification of assets is extremely important for an organization because the information may be used by a wide range of users, including owners, investors, creditors, auditors and management.
702 wordsRead More - Accounting Codificationexplanatory essay...category of related guidance such as assets. Most research using the Codification uses the browse function and it is done by selecting specific topics. In browsing, the possibility of having the same guidance in two places is eliminated (Raabe, Whittenburg, Sanders & Sawyers, 2011). The Codification structure comprises of “presentation” where the reporting aspects of GAAP are covered; “Assets” where assets such as investments, intangibles and receivables are covered; Liabilities where all types of liabilities such as contingencies are covered; Revenue which includes products such as services revenue; Equity which cover topics such as stock dividends and stock, and treasury stock; Industry for specifics such as real estates, entertainment; and “master glossary” which includes a compilation of terminologies from GAAP original documents (Espstein, Nach & Bragg, 2011).
In this essay, the author
- Explains that the aicpa's code of conduct directs that its members should prepare their financial statements based on gaap guidelines.
- Explains the purpose of codification, which is to change gaap documentation, presentation, updates, and introduce a new, organized, more accessible and user-friendly structure.
- Explains that pcaob is a non-profit body formed in 2002 by congress’s sarbanes-oxley act. it was created in response to fraudulent and misleading accounting practices by various companies.
- Explains that the aicpa's code of conduct directs that its members should prepare their financial statements based on gaap guidelines.
- Explains the purpose of codification, which is to change gaap documentation, presentation, updates, and introduce a new, organized, more accessible and user-friendly structure.
- Explains that pcaob is a non-profit body formed in 2002 by congress’s sarbanes-oxley act. it was created in response to fraudulent and misleading accounting practices by various companies.
- Explains that the pcaob conducts inspection on audit files of selected engagements, which introduces a new form of accountability within auditing firms.
- Explains that tax standards of conduct and ethics highlight tax professionals' role as a client advocate. however, auditing standards require auditors to maintain independence from their clients and avoid client advocacy.
- States that the pcaob report acknowledges the significance of auditing business to an economy that has thrived.
- Explains that pcaob had not set generally accepted accounting standards, but when fasb came up with their gaap, they created their own standards.
- Explains that codification was developed to simplify the users’ access to u.s gaap. each area in codification represents a broad category of related guidance.
1026 wordsRead More - Accounting Case Studyexplanatory essayThe balance sheet does not show a true and fair view of an entity at a specific time. This problem arises as some of the figures within the balance sheet have to be estimated and cannot be proven to be exact. These figures include some of the assets and liabilities held within the entity. Liabilities include vacation pay, pensions and any sort of contingent liability like a coming court case. Assets include any sort of intangible asset, these could be a trademark or goodwill. These examples are all estimates and predictions of what the actual value should be. This causes major problems when trying to measure the exact value of an entity as some of the figures that are being used to measure this value are just estimates and can only be taken as the best judgement of what the actual value should be which could in turn be different and effect the position of the...
In this essay, the author
- Explains that the statement of financial position is a useful tool full of information showing the position of an entity, but there are limitations and problems within the balance sheet.
- Explains that the balance sheet does not show the true and fair view of an entity at a specific time.
- Explains how assets without a monetary value cannot be added to the statement of financial position. employees are an asset in the eyes of the entity as they work hard and generate income through one way or another.
- Explains that the statement of financial position is a useful tool full of information showing the position of an entity, but there are limitations and problems within the balance sheet.
- Explains that the balance sheet does not show the true and fair view of an entity at a specific time.
- Explains how assets without a monetary value cannot be added to the statement of financial position. employees are an asset in the eyes of the entity as they work hard and generate income through one way or another.
- Explains that depreciation is an estimated value used to calculate the carrying amount of non-current assets within an entity. if it is estimated wrong, the asset is wrong in the balance sheet.
- Explains that an entity's financial position cannot be shown with just a balance sheet as the limitations are huge. an individual looking at the position of the business must also look at all the other information given with the financial reports.
- Agrees that the statement of financial position is a document with problems due to the evidence that has been given, but it is still an important aspect when looking at an entity's finances.
744 wordsRead More - Using Biblical Principles For Making Wise Business Decisionsexplanatory essayMarshall, D.H., McManus, W.W. & Viele, D.F. (2011). Accounting: What the numbers mean (10 ed). New York, NY: The McGraw-Hill Companies, Inc.
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- Opines that the best advice can be found by listening to king solomon at proverbs 3: 5-6, "trust in the lord with all your hearts.
- Explains how ceg consulting will analyze abc company's financial situation and make a strategy.
- Explains the importance of having a reliable and trustworthy manager to take charge of the second shift.
- Opines that the best advice can be found by listening to king solomon at proverbs 3: 5-6, "trust in the lord with all your hearts.
- Explains that abc company is a small contract manufacturing business that employs 33 people. they have hired the consulting firm of ceg consultants to look into the financing of this project.
- Explains that abc company received estimates on the building expansion of $35.00 per square foot which totals $420,000. a small business association loan is available at 5.25% with a loan term of 15 years.
- Explains marshall, mcmanus, & viele, d.f. (2011). accounting: what the numbers mean. the mcgraw-hill companies, inc.
1993 wordsRead More - The Financial Cycle: The Consequences Of The Accounting Cycleexplanatory essayToday were going to talk about the accounting cycle, in other words, how this stuff works in real life. We always start the accounting process with a standard sequence of events, starting with transactions. Each time a transaction occurs, it is recorded in the form of a journal entry. Then from time to time, the information from the journal entry is transferred or posted to the general ledger account by account. When we come to the end of each month, we have what we call a month enclose. At that point the accountant takes an extract of the general ledger called the trial balance. A trial balance is a listing of the ending balances in each account. The accountant uses that information to prepare the financial statements. The financial
In this essay, the author
- Explains the accounting cycle, which is a tool accountants use to document the company's financial position.
- Explains that all accounting systems list accounts in an ordered sequence, first assets, liability, equity, revenues, expenses. on the right side, we show two columns that are listed debits and credits with the balances of those accounts at the end of the month.
- Explains that the income statement is based on revenues and expenses and subtracts expenses to show the net income. the second statement prepared is the statement of retained earnings.
- Explains the accounting cycle, which is a tool accountants use to document the company's financial position.
- Explains that all accounting systems list accounts in an ordered sequence, first assets, liability, equity, revenues, expenses. on the right side, we show two columns that are listed debits and credits with the balances of those accounts at the end of the month.
- Explains that the income statement is based on revenues and expenses and subtracts expenses to show the net income. the second statement prepared is the statement of retained earnings.
- Explains how the balance sheet takes the information from the trial balance assets, liabilities, and stockholders equity.
- Explains that the accounting cycle is the sequence of events that we go through every year, january through december, but at the end of december after finalizing the financial statements, we do one final step called the closing entry.
714 wordsRead More - Ethical And Legal Obligationsexplanatory essayAccording to Marshall, McManus and Viele (2004), accounting is “the process of identification, measurement, communication of information about a business for the purpose of making decisions and informed judgment” (p.3). Decision makers look at balance sheets, income statements, changes in the owner’s equity and cash flow statement as documentation of the viability of an entity. Misrepresentation of the financial statements can place doubt of profitability in any company. The need for accountability and regulation of accounting practices is important in preserving trust in the business community.
In this essay, the author
- Explains that ethical and legal obligations apply to all members of society. financial reporting isn't exempt from ethical standards.
- Explains that accounting is the process of identification, measurement, communication of information about a business for the purpose of making decisions and informed judgment.
- Explains the role of the financial accounting standards board, the securities and exchange commission, and the public company accounting oversight board.
- Explains that ethical and legal obligations apply to all members of society. financial reporting isn't exempt from ethical standards.
- Explains that accounting is the process of identification, measurement, communication of information about a business for the purpose of making decisions and informed judgment.
- Explains the role of the financial accounting standards board, the securities and exchange commission, and the public company accounting oversight board.
- Explains that generally accepted accounting principles (gaap) require entity statements show the following in a reporting period: the balance sheet, income statement, statement of cash flow, and changes in owner’s equity.
- Explains that business ethics involves morale principles and standards in the business world. integrity in accounting means being honest and candid when communication information within financial statements; objectivity means impartiality and staying clear from conflicts of interest.
- Explains the importance of maintaining a high ethical standard and upholding the law for accounts to maintain the trust and confidence in the public spectrum.
- Cites dahlin, l. a., mcmanus, and viele, d. f.
- Cites mcgraw-hill's public company accounting oversight board and the u.s. securities and exchange commission.
1148 wordsRead More - accountingcomparative essayThe balance sheet is one of the major financial statements used by accountants and business owners. The balance sheet displays an organization's fiscal position at the finish of a specified date. Some depict the asset report as a "preview" of the organization's budgetary position at a focus a minute or a moment in time. The income statement is imperative since it demonstrates the benefit of an organization throughout the time interim specified. The period of time that the statement spreads is picked by the business and will differ. The statement of cash flows reports the sources and uses of cash by operating activities, investing activities, financing activities, and certain supplemental information for the period specified. The statement of stockholders’ equity sho...
In this essay, the author
- Explains that the paper will discuss the information found in the financial statements such as balance sheet, income statement, statement of cash flows, and statements of stockholders' equity.
- Explains that planning, controlling, and decision-making should begin with setting objectives and determining how to accomplish them. controlling includes gathering feedback to guarantee that the arrangement is legitimately executed.
- Explains that the balance sheet is one of the major financial statements used by accountants and business owners.
- Explains that the paper will discuss the information found in the financial statements such as balance sheet, income statement, statement of cash flows, and statements of stockholders' equity.
- Explains that planning, controlling, and decision-making should begin with setting objectives and determining how to accomplish them. controlling includes gathering feedback to guarantee that the arrangement is legitimately executed.
- Explains that the balance sheet is one of the major financial statements used by accountants and business owners.
- Concludes that using financial statements in managerial accounting helps with the planning, controlling, and decision making process of a company.
- Explains that planning is the correspondence of an organization's objectives. budgets recognize the sources or inflows of financial stakes, and the usage of fiscal holdings.
- Explains that forecasting begins with certain assumptions dependent upon the management's experience, learning, and judgment. the method of affectability examination relegates qualities to unverifiable components variables.
- Explains that variance analysis investigates the underlying drivers of a material change in management accounting. managerial accountants are prone to discover the genuine cost or real amount of materials utilized.
- Explains that accounting ratios are utilized to portray the relationship between accounting information. they are figured using solid, accurate fiscal data.
1219 wordsRead More - Essay On Accounting Equationexplanatory essayThe accounting equation is the foundation or basic of accounting systems. The equation maintain for all transactions and business activities. Every asset that the company hold is always equal to the liabilities and equity. Therefore, the accounting equation is : ASSETS = LIABILITIES + EQUITY. For example, when we start a company, we must take a loan from investors or any of the institutions. Now, we take a look at each accounting equation starting with the asset.
In this essay, the author
- Explains that the accounting equation maintains for all transactions and business activities. every asset that a company hold is always equal to the liabilities and equity.
- Explains that assets are the resources for running the business work. assets are divided into two categories: non-current assets and current assets.
- Explains that liabilities are debts owed by a company to solve the business problem. non-current and current liabilities can be divided into two categories.
- Explains that the accounting equation maintains for all transactions and business activities. every asset that a company hold is always equal to the liabilities and equity.
- Explains that assets are the resources for running the business work. assets are divided into two categories: non-current assets and current assets.
- Explains that liabilities are debts owed by a company to solve the business problem. non-current and current liabilities can be divided into two categories.
- Explains that equity is the resources that are provided by the owner for the business use.
- Explains that revenue is the income earned by a business that will increase the asset while expenses are expenditure pay by business.
- Explains the importance of making a profit in business because it confirms the truth of your business powerfully.
- Explains that business can calculate their profit using the equation profit = revenue – expenses. business must calculate business revenue and expenses to get their final amount of business profit.
- Explains that profit varies greatly from company to company or industry to industry, so it is always better to consider profit as a percentage of sale when comparing companies.
- Explains that the higher the profit represents the successful of the business while the lower will represent the weak. the accounting cycle records business transactions during the accounting period.
- Explains that the first step to start the accounting cycle is systematizing and analyzing the transaction or data from the economic events.
- Explains the steps of recording the adjusting entries and trial balance, which are used to record the accrual basis of accounting such as devaluation, depletion and amortization.
- Explains that the post-closing trial balance is the end of accounting cycle and it will start again with the first step in the next accounting period.
- Explains that there are two types of account information, which are internal users and external users. management, employee, and owner use the accounting information to make decisions for planning and controlling business activities.
- Explains that external users are people who didn't involve in the organization and business activities but interested in financial information and the performance of the company.
- Explains the purpose of each type of financial statement. the financial statements provide accounting information about financial position, profit or loss, changes in equity, and cash flows.
- Explains that the statement of financial position shows the current assets, liabilities, and equity owned by a business during an accounting period.
- Explains that the statement of cash flows provides information about the gross receipts and gross payments of a company. it reports the cash generated and used during the operations, investing and financing activities.
- Explains that the statement of changes in equity allows financial statement readers to figure out the factors that cause a change in owners' equity in the accounting periods.
- Concludes that 5 of them have completed the assignment for the subject abfa 1013 introduction to accounting. they learnt through the research that they did, that the accounting statement is not only done for taxation but prepared for business owners or shareholders to make an economic decision in different situations.
1798 wordsRead More - Accounting: Accounting And Accountingexplanatory essayEquity in business means an owner cannot own 100% of the business shares ownership with others and accounting for business should be separate from all personal affairs of its own. This means the person(owner) should not place any personal assets to the business balance sheet. For e.g.Expenditure of car should not be written on the balance sheet.
In this essay, the author
- Explains that the accounting equation tells us that law assets, liabilities of a company is measured by these three only like accounting for corporation is assets equal to liabilities and stockholders.
- Explains that equity is the ownership interest in a business firm. an owner cannot own 100% of the business shares ownership with others and accounting for business should be separate from personal affairs of its own.
- Explains revenue and the cost period in accounting that the company get income from normal business activities.
- Explains that the accounting equation tells us that law assets, liabilities of a company is measured by these three only like accounting for corporation is assets equal to liabilities and stockholders.
- Explains that equity is the ownership interest in a business firm. an owner cannot own 100% of the business shares ownership with others and accounting for business should be separate from personal affairs of its own.
- Explains revenue and the cost period in accounting that the company get income from normal business activities.
- Explains that the asset of a business that owner own are called assets for example building, machinery, etc.
- Explains that liabilities are the depth to be payee by a person or company to bank or other company.
- Explains that expenses are the cost occurred during manufacturing or preparing or on anything of the product unit it is sold out.
- Explains that dividend is that which shareholders earn like the companies profit equally divided into all the shareholders.
- Explains that non-current assets are like the depths that aren't profitable within one accounting year, like purchases, ling term loans, and noncurrent liabilities.
- Explains that it is a non-cash expense that reduces the value of assets of passing of time. assets lose their value by times and need to be replaced.
- Explains that formal entities are used to record revenue expenses that are consumed by selling products but not yet paid or received. it is important to know the correct financial statement.
- Explains the expenses that are paid in advance. these are the current assets of a business, such as rent, tax, and insurance.
- Explains that relevance is information that impacts decision-making, while timely information has predictive value.
- Explains that financial statements should be understandable by persons with reasonable information or knowledge of business, economic, activities.
- Explains that reliable information is reliable if the user can rely on to be accurate physically. large errors or omissions in the financial statement reduce the reliability of the information contained in them.
- Explains that financial statements must be comparable with each other according to the time period. users have to give the meaningful conclusion about the trend in an entity’s financial performance and position over time.
- Explains that information is material, its mission or measurement could influence the economic decision of users on the basic of the financial statements. materiality is also linked closely other accounting concept and principle.
- Explains that an income statement measures a company's financial performance over an accounting period. a balance sheet reflects accounting identity the components of the balance sheets.
- Explains that equity is an owner interest in a company which is obtained by total assets and liabilities. revenue is the amount of money that includes discount and deduction.
841 wordsRead More - Business Accountingexplanatory essayWhat carries out the accounting and financial forecasting of any type of company is financial statement. As for financial statement, it is a financial report or record compiled usually on a quarterly and annual basis which quantitatively provides the indication of an individual’s, an organization’s, or business’s financial status. There are, according to belief of most experts, generally three financial statements such as: an income statement (Pro Forma Profit and Loss), a balance sheet and a cash flow statement. Although these three financial statements differ by different functions each of them performs, they closely depend on one another. For instance, an income statement hinges upon a balance sheet for debts that have effect on the interest, whereas a balance sheet depends on an income statement for earnings and on a cash flow statement for other financial transactions that affect cash.1
In this essay, the author
- Explains that a financial statement carries out accounting and financial forecasting of any type of company.
- Explains that balance sheet statements provide information about assets and debt of a company, shareholder equity, and spending and money management, which is not included in income statements.
- Explains that neither the income statement nor the balance sheet is sufficient to plan and manage cash. cash flow statements provide a look at the movement of cash in and out of the company.
- Explains that a financial statement carries out accounting and financial forecasting of any type of company.
- Explains that balance sheet statements provide information about assets and debt of a company, shareholder equity, and spending and money management, which is not included in income statements.
- Explains that neither the income statement nor the balance sheet is sufficient to plan and manage cash. cash flow statements provide a look at the movement of cash in and out of the company.
- Explains that financial statements provide information about the financial position of an enterprise that is required by internal (managers, employees) and external users to make economic decisions.
- Explains why regulatory bodies in the government such as public utility commissions, tax authorities, and other such bodies need to look into the financial statements of a company.
- Explains that financial statements provide the government with easy opportunity to ascertain the state of employment — how many people are employed and how much they are paid.
- Explains that financial institutions use financial statements to determine whether a company is safe to lend working capital. suppliers require financial reports to ensure that the company runs its business productively.
- Explains that potential investors are dependent on financial statements when it comes to analyzing the possibility of whether a company is productive and reliable.
- Opines that investors should spend enough time carefully studying the whole balance sheet statements and income statements as well.
- Explains that income statement is also called profit and loss. it has some influence on assets, liabilities, and capital.
- Explains that people use financial statements for various reasons, such as to determine whether to apply for a job or not, and to ascertain whether it is worth buying their product or service at their claimed price.
- Explains that financial statements must follow standards set by regulatory bodies such as financial reporting council to avoid incompatibility and misinterpretation.
1627 wordsRead More - Accrual Accounting vs. Cash Accountingargumentative essayThe recording of financial activities in a business is essential in making sure accurate information is provided for decision making. Zafirakis (2005:4) states that "Accrual accounting is the cornerstone of modern accounting procedures." In this essay, the importance of accrual accounting will be considered by looking at how it functions in the Double Entry System and comparing it to cash accounting, another method of gathering financial information. Time and an accurate accounting measurement is what will be considered in determining the importance of accrual accounting.
In this essay, the author
- Analyzes the importance of accrual accounting in the double entry system and compares it to cash accounting. time and an accurate accounting measurement will be considered.
- States that double-entry accounting is necessary for the accounting equation to be kept in balance.
- Explains the accounting equation of assets = liabilities + equity + revenues - expenses, which is recorded in the general journal as entries and posted to general ledgers as t'-accounts.
- Analyzes the importance of accrual accounting in the double entry system and compares it to cash accounting. time and an accurate accounting measurement will be considered.
- States that double-entry accounting is necessary for the accounting equation to be kept in balance.
- Explains the accounting equation of assets = liabilities + equity + revenues - expenses, which is recorded in the general journal as entries and posted to general ledgers as t'-accounts.
- Explains that accrual accounting attempts to recognize events either before or after those events have been settled in cash. there are four scenarios that require us to adjust entries made in the double-entry system after a financial period.
- Explains how expenses are recorded in the accrual basis of accounting. prepaid expenses are debited, and cash accounts are credited.
- Explains the process of recording revenues in an accrual context. unearned revenue is a liability, and an accrued revenue is an asset.
- Explains that an accurate calculation of net profit of a financial period results as adjustments are made and the correct balances are calculated for revenues and expenses.
- Explains that cash flow is the amount of cash received or paid during a period. cash accounting recognizes revenue and expenses when payments are made or when cash flows occur.
- Explains the difference between cash and accrual accounting. famous zamous sold $100 worth of cookies on credit on the 1st of jan.
- Concludes that accrual accounting is the better system as it provides an accurate account of the operations and performances of a business.
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