Financial Statements

1. What conditions would help make a percent-of-sales forecast almost as accurate as pro forma financial statements and cash budgets?

# Principle of separate entity # Going concern # conservatism # matching of revenue & cost are considered fundamental accounting concepts as it enables to record transactions executed in business properly & figure out true profit earned as a result of undertaking the business. # Principle of separate entity # Going concern # conservatism # matching of revenue & cost are considered fundamental accounting concepts as it enables to record transactions executed in business properly & figure out true profit earned as a result of undertaking the business.

No they do not mean the same thing. Financial reporting is the more indept report. A financial statment are a subset of the total information in the financial report.

Yes.

Depreciation is a non-cash adjustment and only appears in the statement of cash flows when transitioning between operating income and cash flow from operations.

Depreciation is no more or less critical in a cash flow statement than any other adjustments for non-cash items.

Due to several factors

You will only get paid the depreciation up to what you were actually charged. If you got it done for less than what they were going to give you, then the recoverable depreciation will be less also.

Unrealized gains and losses are not cash involving transactions that's why while making cash flow from operating activities, net income is adjusted for these kind of non-cash items.

bond issuance cost is part of cash flow from financing activities and this amount is shown as outflow.

what are the alternatives to overcome the limitations of financial accounting

loan loss reserve: loans are going to default so banks use part of provision to book reserve.

loan loss provisions: percertage of gross loans that all banks have to keep in their balance sheet as regulated

Substance over form is an accounting principle used to ensure that the financial statement reflects the complete, relevant and accurate picture of the transactions and events.

In American financial statements, Stockholder's Equity is the last set of items on the balance sheet.

Depreciation itself does not affect cash flow. After all, depreciation is a noncash entry that reflects the reduction in value of a long-lived asset. It has no direct cash flow effects.

However, because depreciation is tax-deductible, it can reduce a company's tax provision. Therefore, to the extent that depreciation reduces taxes, it provides a cash flow benefit. To compute the benefit in any given year, multiply the Modified Accelerated Cost Recovery System (MACRS) depreciation on the asset by the company's marginal tax rate.

Yes

A liability hazard is any type of hazardous situation that can cause a lawsuit. One example of a liability hazard would be an icy sidewalk outside your home.

wanna be a successful business man someday

Analyzing Trends is crucial in financial management, it involves comparing account balances against themselves and each other from one accounting period to the next to identify unusual changes in the balances.

Unusual changes in the balances indicate either under/over payments, accounting errors or other problems including possible fraud.

how can we maintain/ prepare the fixed assets register? pleases tell me with proforma.

No. Cash can come from several sources - investors, bank loans, sales of assets (the firm's buildings, or equipment), payments from people who owe the firm money, etc. Likewise, it can go to several places - back to investors, to buy long-lived assets and pay suppliers, etc. Here are a couple of key difference between cash flow and net income (somewhat simplified): When a firm has expenditures that will have value for more than 1 year (i.e. to buy a new factory), this is treated as buying asset, so it does not effect income, but it will effect cash if that's how they paid. The expense from using the factory will be incurred as depreciation over its life. Even though the firm may have used cash to pay for it all up front, it only effects net income a little each year. Net income is difference between revenue and expenses. Revenue can only be recognized when goods are transferred or services rendered, but in the real world this usually doesn't coincide with cash in the bank (because sales are made on credit). Expenses must be recognized at the same time that sales are made. Here is an example to show this: A firm uses cash to purchase $100 of inventory in 2007 and delivers it to a customer at a selling price of $200 in in 2008. The customer finally pays the bill for it in 2009. In 2007, the firm spent $100 in cash, but has no expense for this transaction, because the inventory is still "on the books". It 2008, the firm made $100 of net income on this transaction ($200 revenue - $100 expense) even though no cash traded hands. In 2009, the firm has an extra $200 in the bank, but can not treat it as income because they did not earn the money in 2009 (instead, it is a decrease in accounts receivable). Hope this helps. No. Cash can come from several sources - investors, bank loans, sales of assets (the firm's buildings, or equipment), payments from people who owe the firm money, etc. Likewise, it can go to several places - back to investors, to buy long-lived assets and pay suppliers, etc. Here are a couple of key difference between cash flow and net income (somewhat simplified): When a firm has expenditures that will have value for more than 1 year (i.e. to buy a new factory), this is treated as buying asset, so it does not effect income, but it will effect cash if that's how they paid. The expense from using the factory will be incurred as depreciation over its life. Even though the firm may have used cash to pay for it all up front, it only effects net income a little each year. Net income is difference between revenue and expenses. Revenue can only be recognized when goods are transferred or services rendered, but in the real world this usually doesn't coincide with cash in the bank (because sales are made on credit). Expenses must be recognized at the same time that sales are made. Here is an example to show this: A firm uses cash to purchase $100 of inventory in 2007 and delivers it to a customer at a selling price of $200 in in 2008. The customer finally pays the bill for it in 2009. In 2007, the firm spent $100 in cash, but has no expense for this transaction, because the inventory is still "on the books". It 2008, the firm made $100 of net income on this transaction ($200 revenue - $100 expense) even though no cash traded hands. In 2009, the firm has an extra $200 in the bank, but can not treat it as income because they did not earn the money in 2009 (instead, it is a decrease in accounts receivable). Hope this helps.

revenues minus cost of goods sold.

this would reduce your net income thereby understating your profits or increasing your loss .

debit interest receivable
credit interest income

Define Arnold.

Rent expense is a Revenue expense and not a capital expense. It is a revenue expense because it recurs from year to year and is not an expense in purchasing a fixed asset. It is classified as a revenue expense also because it features in the income statement of each year and following the principle of accruals, the accountant must, make the necessary end of period adjustments to make sure that the the amount of rent expense that should have paid is charged against revenue and not just the actual cash paid.