(Horngren, 2012) Financial statements and their related disclosure notes provide information such as the results of operations, the financial position of the business, and cash flows. The most frequently provided financial statements for external users are the balance sheet or statement of financial position, the income statement or statement of operations, the statement of cash flows, and the statement of shareholders' equity. This paper will discuss financial accounting and how external stakeholders use financial information to make decisions. The balance sheet and the accompanying disclosures provide a lot of information to external users. The purpose of the balance sheet is to report a company's financial position on a particular day at the end of a period.
It would need to be reviewed and signed off on by all responsible officers. A step that should be included is periodic internal audits of the financial data. An audit of that nature would review the accounting records and supporting documentation to verify accuracy of the financial records. You could do this by employing an Internal Auditor or my having McGladrey, LLC. complete an audit of all the financial data on a yearly basis.
d. cash investing and financing transactions during the period. 2. The statement of cash flows a. must be prepared on a daily basis. b. summarizes the operating, financing, and investing activities of an entity. c. is another name for the income statement.
……………5 f. What types of stock does the company have? How many shares are there outstanding for each type of stock for the most recent year presented?.......................................................................5 g. Does the company use the single-step or multiple-step income statement or a variation?........5 h. Does the income statement contain any separately reported items in any year presented, included discontinued operations or extraordinary items? If it does, describe the even that caused the item. Hint: there should be a related footnote……………………………………………………..6 i. Describe the trend in net income over the years presented……………………………………………………6 j.
Using accounting records prepare a balance sheet for a business and determine the balance of the cash and owner’s equity account. 4.29 Dual Effect of Transactions. For six cases, describe transactions that will cause the changes in different elements of the accounting equation. 4.30
Before attempting to utilize ratios to analyze financial statements, managers must clearly understand the purpose of each financial statement and its content. The income statement is a statement that depicts movement of cash over a period of time and provides information of the revenues and expenses in order to determine liquidity. Liquidity is the ability to turn assets into cash quickly. Two of the most frequently used ratios which draw from the income statement are the current ratio and
Managerial Accountants should calculate net income or loss in a manner that accurately reflects the closest true costs and profits as determined by the International Federation of Accountants (IFA). To effectively help Management Accountants do this, the IFA has set in place a code of conduct that should regulate the integrity, competence, confidentiality, and credibility of a corporation. Introduction To fully understand the ethical issues of Managerial Accounting, you must first assess the difference between Managerial Accounting and Financial Accounting. Financial accounting is used for to present the status of the company to external sources such as board of directors, investors, auditors, and for reporting purposes as well. The financial side of accounting is used to represent the company’s current standing based on the past profits, net income, bad debts, and current ratio of assets to liabilities.
7- Prepare financial statements; income statements, retained earnings statements, balannce sheets. Financial staments, income statements, retained earning statements and balance sheets are prepared to report the bottom line, year end (fiscal) earnings and financial standing to investors and company owners.
The current ratio for a company shows the relationship between current assets and current liabilities. The current ratio measurement can show the working capital within the company. A quick ratio is like the current ratio but excludes items such as inventory. It is a ratio that shows items that can be quickly converted to cash when compared to the current liabilities. Financial ratios based on the income statement are important as well.