The first statement is the income statement. An income statement documents the income for a period of time. External users, such as investors and creditors utilize income statements as an indication of future performance-based on past income when deciding whether to invest in a company or the probability of loan repayment. Internal users, such as managers and owners may use the net income to verify sales goals or justify bonus payment. When preparing the income statement, the first entry is revenue.
1. Outline how you monitored cash flow on a daily basis. Cash flow is monitored on a daily basis by keeping the company cash flow statement up to date. A cash flow statement will show the movement of money in and out of the company over a specific period of time. A cash flow statement will show not only the cash that is left at the end of the day, but also the amount that entered and left the business.
It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock. Since the tax identity of Smithon corporation would have not ceased, it is not a favorable purchase for Mr. Jones. Ina a case where the tax identity of a firm does not cease not to exist, the tax aspects will remain the same and so will the existing tax schedule. So in this case it would mean that Mr. Jones would not be allowed to change the financial year to end on December 31. The buyer in cases where he can’t change the legal entity is in a non -benefice situation, the buyer is limited to follow the current tax basis on the company’s assets even if the buyer paid more for the
Those financial statements are income statement, retained earnings statement, balance sheet, and cash flow statement (Weygandt, 2008). The income statements show operations results of the revenues, expenses, net profit, or net loss for the accounting period. The information obtained from the retained earnings statement listing the revenue followed by the expenses is used to prepare it. The income statement reflects the organization’s success through its profits. The retained earnings statement reconciles the beginning and ending balances of the retained earnings.
Liabilities are accounts that are owed out to a creditor, vendor or a bank. Liabilities are presented on the Balance Sheet and normally have a credit (negative) balance. A debit to a liability account decreases it while a credit will increase it. Liabilities are broken down to current and long term. The current liabilities are what is owed and is expected to be paid off on one year.
The owner is also held responsible for all legal and financial liabilities. Liability: In a sole proprietorship the owner is liable for all debts of the business. If the business assets are not enough to cover any debt creditors can come after the owners personal assets. Income taxes: In a sole proprietorship the owner claims the business income on his or her personal tax form only. The business is not required to file taxes, as the business and owner are considered one.
For B, accounting standard is not correct. For C, it is impossible to ignore public comments. For D, it is not independent of SEC, yet keep close relations with other department. 2-22: C. ASB does not belong to public audit company because it does not belong to government. However, PCAOB is established by the government and all of content of law is regulated by the government in order to standardize the
Consequences and solutions to cash flow problems Factor | Why It Causes a Cash Flow Problem | Low profits or (worse) losses | There is a direct link between low profits or losses and cash flow problems. Remember - most loss-making businesses eventually run out of cash | Over-investment in capacity | This happens when a business spends too much on production capacity. Factory equipment which is not being used does not generate revenues – so is often a waste of cash | Too much stock | Holding too much stock ties up cash and there is an increased risk that stocks become obsolete (i.e. it can’t be sold) | Allowing customers too much credit | Customers who buy on credit are called “trade debtors” Offering credit to customers is a good way to build revenue, but late payment is a common problem and slow-paying customers put a strain on cash flow
According the legal dictionary an incorporated company is formed with the approval from the state in which the corporation is being formed. This corporation is an artificial person, that is someone who does not exist. The organization can sue and be sued, that is unless it is non-profit. A corporation can sell shares of stock if needed. An corporations liability is limited to its assects, so the owner or the shareholders are protected from personal claims unless they commit fraud.
Depreciation, items as buildings, machinery, and equipment. Depreciation can be applied in two ways, as a straight- line, meaning the write-off is applied in equal amount annually for the estimated useful life cycle or by Accelerated Depreciation – meaning a higher percentage of write-offs is applied in the early time