Task 1 – Questions 1 Income statement-: Income statement is the financial statement that measures a company 's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. Balance sheet-: Balance sheet is a statement at the book value of all of the assets and liabilities of a business or other organization present a particular date such as the end of the financial year. It is known as a balance sheet because it reflection accounting identity the components of the balance sheets. The balance sheet must follow the following formula: Assets = Liabilities + Shareholders ' Equity Question 2 The accounting equation-: Accounting equation tells us a easy way to understand that law assets, liabilities of …show more content…
Equity 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. 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. Question 3 Assets The resource of a business that owner own are called assets for example building, machinery etc. In other words we can say the thing that owned by a person a regard to company and having value, commitment and legacies. Liabilities Liabilities are the depth to be Payee by a person or company to bank or other company like if a person buys car $10000 and paid 2000 in cash then instalments of $8000 is to be paid in instalments is
The balance sheet provides a snapshot of a firm’s financial position at a specific point in time, by using the company’s Asset and Debit Equity.
The balance sheet is mainly comprised of three components, i.e., Asset, Liabilities, and Equity. The asset and liability component of a balance sheet is further divided into current and noncurrent. The balance sheet analysis of Cisco Systems covers the period of 2013-2015.
The equity part of the debt-equity relationship consists of the company’s stock and retained earnings. This long-term capital and debt supports the company’s growth and its assets.
categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a
a different way, liabilities are creditors' claims on company assets because this is the amount of
Income statement gives us a summary of incomes and expenses for a given accounting period. It gives the financial performance on how the business incur it revenues and how it spent it through operating and non-operating cost activities. With income statement one can see expenses of income and adjust accordingly.
The balance sheet shows what the company’s assets are and what it owes for its assets also known as liabilities.
Both accounting and finance deal with money and assets; however, they are categorically different concepts. This portion of the essay will discuss the dissimilarities between accounting and finance. Examples of different concepts will be given for both practices.
Before establishing the accuracy of the balance sheet as a valuation tool it is important to understand that to produce a document that shows the exact value of a company is virtually impossible. The combination of all assets, liabilities, owners equity and many other factors must be calculated in order to reach a final value. However, the methods used when valuing, and the constant changes in the economy and inflation make the value of the company itself a constantly changing figure. Therefore should an accurate value of the company be produced it would only be accurate at the time it is produced. Throughout this essay I will discuss the different aspects of the balance sheet and how the way they are presented affects the figures on the balance sheet. But firstly it is important to understand what the balance sheet comprises of and the role it is intended to carry out.
...ually termed as the book value of the company and it is gotten from two sources that are considered main. The first source, i.e. the original source is the funds that were initially invested in the company, inclusive of any additional investments made afterwards. The second source is the retained earnings that the company can accumulate as time goes by via its operations. After looking at what stockholders equity is, we would look at its different components, or what it is made of. The shareholders equity is inclusive of:
Accounting in general has many terms that are important to know and understand when dealing in the financial realm. When looking at these terms and understanding how they are implied it is important to remember what the objective of businesses are: to earn a profit and remain out of bankruptcy. To better understand how a company can achieve these objectives we need to understand accounting’s terms and principles first. In order to do that we will look at five concepts that are important to Accounting: Generally Accepted Accounting Principles (GAAP), Contra-Asset Accounts, Historical cost, Accrual Basis vs. Cash Basis Accounting, and Accounting Standards Codification.
The statement of profit or loss is also known as income statement and it’s equation is revenue minus expenses equals profit or loss. The statement of profit or loss summarize the revenues and expenses of a business and also shown the ability of a business to generated business. The total profit or loss that generated in an organization during an accounting period can be seen through the income statement. For example, if the expenses of the company are higher than revenues, the company will get a loss in the business. However, the company will generate a profit when the revenues are greater than the
Assets 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.
If there is sufficient working capital than we can assume that it has sound financial position and if the business is under trading than there will be increment in liquid assets which shows that the funds are not been utilized and kept ideal.
Time Interval Concept, in accounting, requires that financial statements be prepared at regular intervals, e.g. monthly, quarterly, annually.