Financial Statements

A post balance sheet event is a significant event that happened after the reporting period but before the financial statements have been completed and finalised.

You get adjusting events and non adjusting evens. An adjusting should be included in the statements as well as a note after the balance sheet to tell people about it. A non adjusting event should not be adjusted for but a note should be included.

Examples would be:

Stock destroyed in a fire after the balance sheet date - NON adjusting.

Significant debtor customer going bust where you're not likely to get anything from them - Adjusting.

operating activities

The auditor is the person who assesses whether the financial statement has been prepared accordingly or not. Firstly it is not the role of the auditor to prepare the financial statement as the auditor has to form an independent opinion. Secondly, it would be part of internal control and corporate governance activities for the preparation of the financial statement and the audit to be conducted be two separate parties to eliminate error or fraud.

Its entered in b/s bcz its an asset nd in prof. n loss bcoz of matching concept according to which only those expenses and incomes which correspond to year are included in it and so opening stock is the amt of total expense of stock at start and purchase is the expense for new stock purchased but as the amt equal to closing stock is expense which has not occured this year and so it needs to be reversed

make a phisicle donation

operating loss capitalization

Same like net profit shown in balance sheet net loss is also shown in balance sheet because net profit or net loss both are part of equity of the owner and to show the net effect of fiscal year;s performance with previous performance it is shown in balance sheet.

Earnings before interest and depreciation after taxes # I don't believe this person's answer is correct - after a long search I found the following meaning "Earnings Before Interest, Depreciation, Amortisation >And< Tax" #

Pre operative expenses are categorized as preliminary expenses and shown as other assets in balance sheet and amortized over period.

Adding net income balances out the equity account, which will generally be reflected as the beginning balance of equity (prior year ending balance) before you add net income. Balancing the equity account (Beg Bal of Equity + Net Income/(Loss) = End Bal of Equity) is necessary in order to balance the Balance Sheet, since Assets = Liabilities + Equity.

expenses paid with cash

At the time of issuance of BG

Dr : Constituent's Liability for BGs issued

Cr : Acceptance, Endorsement & Other Obligations - Bank Guarantees

and at the time of cancellation / closure of BG from the books

Dr : Acceptance, Endorsement & Other Obligations - Bank Guarantees

Cr : Constituent's Liability for BGs issued

Cash flow statement provides the basis of going from opening bank or cash balance to closing cash / bank balance and determines that where is cash used during the year and how closing cash or bank balance is arrived.

fixed assets are long term assets which used by business for revenue generation while inventory is current asset used for one fiscal year.

If company has the policy to not distribute profit as a dividend then retained earnings will be equal to net income otherwise dividend and retained earnings will be equal to net income.

Payroll expenses account goes to Profit & Loss account while Payroll payable is a Balance Sheet Liability item... Journal entry:


Payroll Expense Account - DR ...........(P&L)
Payroll Payable Account - CR ............(B/S)

But in the end, fair financial reporting depends on the integrity of the company's financial team.

A going concern is an accounting assumption that states that a business will stay in operation for the foreseeable future.

When the financial statements are not prepared for the annual report, it is the responsible of the Board of Directors must put this information into the footnotes to the financial statements and state any factors that may threaten that status.

Further, the fact that the business is not a going concern means that it can not pay its liabilities and realize its assets. The company's auditor is responsible to the Board of Directors and must determine whether or not the company is still a going concern.

The auditor is required to disclose any negative trends in the company's business operations. Negative trends would be lower operating income, loan denials, loan defaults, repossession of assets, and more. The auditor then must not issue a "going concern opinion."

Investors may have second thoughts about holding the stock of the company if an auditor does not issue a going concern opinion in the annual report.

Journal entry for removal cost:

Debit Removal cost 200

Credit Cash 200

Net Income = Revenues - Expenses

Net income = 200000 - 190000

Net income = 10000

$2,000,000.00 or $2 million

Method 1

1 - [Debit] Depreciation Expense xxxx

[Credit] Asset account xxxx

Method 2

1 - [Debit] Depreciation Expense xxxx

[Credit] Accumulated Depreciation xxxx

2 - [Debit] Accumulated Depreciation xxxx

[Credit] Asset Account xxxx

Going concern assumption