The income statement is important because it will show whether the company’s revenue exceeded expenses for a specific period resulting in net income or the amount the company may have lost because the expenses exceeded the revenue. The retained earnings statement is equally important because it will indicate the exact reason why the company’s retained earnings increased or decreased over the reporting period. The balance sheet is important because it is the overview of the company’s financial condition at the time of the reporting period and the statement of cash flow’s is important because “Reporting the sources, uses, and change in cash is useful because investors,creditors, and others want to know what is happening to a company’s most liquid resource.” (Weygandt,
These four basic financial statements are interrelated and consist of: income statement, retained earnings statement, balance sheet, and statement of cash flows. Accounting is an information system using three basics activities which are identify, record, and communicate economic events to interested users. Companies identify economic events relevant to its business. Financial activities are recorded systematically in a chronological order of events to provide history. Recording also will classify and summarize economic events.
Internal users that use the financial statements would be accounting personnel, departments heads, corporate auditors, business unit leaders, and top management. These financial statements provide specific and varying data to all the internal users. For the accounting personnel, the objective is to prepare and present any accurate and complete data according to the norms. Department heads and leaders bring different perspectives to financial issues by undergoing accounting reports. Internal auditors, these accounting reports light on the tools a company uses to comply with all the rules.
| cash conversion cycle | b. | inventory conversion period | c. | receivables collection period | d. | payables deferral period | e. | days sales outstanding | 5. The average length of time required to convert a firm's receivables into cash is called the ____. a. | cash conversion cycle | b.
Of the five essays, three of the essays require calculations while two of the essays are qualitative in nature. Terminal Course Objectives A, B, C, D, E, F, and G are all addressed on this exam. You should review the following concepts for this exam. For the multiple choice questions worth a total of 70 points, you should know: 1. The characteristics of the corporate form of business.
Financial Statements Paper ACC/280 YOUR NAME University of Phoenix INSTRUCTOR NAME DATE Financial Statements Paper Accounting provides an exceptional contribution to the success of any small or large company. More specifically, accounting assists company owners in their management decisions by providing valuable financial information. Financial accounting is regulated by rules and concepts recognized as “generally accepted accounting principles” (GAAP). The GAAP requires four financial statements which include: the balance sheet, income statement, statement of cash flow, and statement of owner's equity. In this paper, the purpose of accounting and the four financial statements and how they correlate with each other will be discussed.
Or Financial statements (balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity) are the primary means accountants use to communicate financial information to investors, creditors, regulatory agencies, and others. Choose one of these financial statements and provide an example of the statement from your current organization, if possible. Provide a brief analysis of what is contained on the statement. The text identified three common legal forms of business organizations: sole proprietorships, partnerships, and corporations. IF you were to start or your business (or if you already have started your own business) what type of legal form would you use?
The computation of ratios facilitates the comparison of firms which differ in size. Ratios can be used to compare a firm's financial performance with industry averages. In addition, ratios can be used in a form of trend analysis to identify areas where performance has improved or deteriorated over time. Because Ratio Analysis is based upon Accounting information, its effectiveness is limited by the distortions which arise in financial statements due to such things as Historical Cost Accounting and inflation. Therefore, Ratio Analysis should only be used as a first step in financial analysis, to obtain a quick indication of a firm's performance and to identify areas which need to be investigated further Profitability.
There should be a surveillance camera system where cash is being received and processed. Accounts Payable This is a very important part of a company's financial structure. It is when the company pays its obligations to suppliers or vendor for products and services purchased on credit. They are a current liability that is to be paid within a short period of time. Accounts payable are recorded in the general ledger and reflected onto the balance sheet.
The income statement and the balance sheet can often be misleading to an investor as there are many ways to record the dispensing of an asset or other types of financial obligations (Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports, 2009). The cash flow statement contains three sections: the cash flows from operating activities, which shows how much money the business received from operating the business; the cash flows from investing activities, which shows the money the business has gained or loss from investing; and the cash flow from financing activities, which shows the money that was taken in or paid out to finance the different business activities. Using the cash flow statement allows an investor to see if a business is generating more money than is used to operate the business. If this is happening regularly, the business is considered healthy and should be a good