Financial Statements

Capital is an equity of company so capital appreciation is also come to equity part of balance sheet.

Window dressing refers to actions taken or not taken prior to issuing financial statements in order to improve the appearance of the financial statements.

Sales commission payable is not part of income statement and it is shown in balance sheet as current liability in liability side of balance sheet.

2.Reasonably possible likelihood liabilities.

I think balance sheet

If you are a student, please be aware that any reputable publisher will verify your information with the college to make sure that you are actually a faculty member.

Many things can cause a decrease in cash flow including decrease in sales, increase in expenses, not collecting accounts receivables timely, and increase in interest rates.

no, i dont think so

An income statement is split into two sections the first, is the trade section where the costs of the goods sold are subtracted from the sales to give you the gross profit.

The second part is what used to be called the Profit and Loss Account, it lists and adds the gains or profits then lists and adds the expenses and the latter is subtracted. The income statement is written in the following form

Sales
Less Returns Inwards

Less costs of goods sold
Opening Inventory
Add Purchases
Less Purchase Returns
LessClosing Inventory

GROSS PROFIT


Add Additional Income (profits/gains)

Less Expenses

NET PROFIT

Cost accounting mainly becomes a decision making issue. However, it does impact financial accounting with regards to the inventory account on the balance sheet statement and cost of goods sold on the income statement. It is used in manufacturing firms in order to cost there inventory which is not as easy as a retail firm that really justs costs products at the purchase price. While your countries accounting board regulates the method (generally absorption costing) there is significant debate in accounting theory as to which method (variable or absorption) is a better costing method.

Balance sheet

The concept of materiality refers to the relative significance of an amount, activity, or item to informative disclosure and a proper presentation of financial positions and the results of operations. Materiality has qualitative aspects; both the nature of the item and its relative size enter its evaluation.

An accounting misstatement is said to be material if knowledge of the misstatement will affect the decisions of the average informed reader of the financial statements. Financial statements are misleading if they omit a material fact or include so many immaterial matters as to be confusing. In the examination, the auditor concentrates efforts in proportion to degrees of materiality and relative risk and disregards immaterial items.

The relevant criteria for assessing materiality will depend upon the circumstances and the nature of the item and will vary greatly among companies. For example, an error in current assets or current liabilities will be more important for a company with a flow of funds problem than for one with adequate working capital.

The effect upon net income (or earnings per share) is the most commonly used measure of materiality. This reflects the prime importance attached to net income by investors and other users of the statements. The effects upon assets and equities are also important as are misstatements of individual accounts and subtotals included in the financial statements. The auditor will note the effects of misstatements on key ratios such as gross profit, the current ratio, or the debt/equity ratio and will consider such special circumstances as the effects on debt agreement covenants and the legality of dividend payments.

There are no rigid standards or guidelines for assessing materiality. The lower bound of materiality has been variously estimated at 5% to 20% of net income, but the determination will vary based upon the individual case and might not fall within these limits. Certain items, such as a questionable loan to a company officer, may be considered material even when minor amounts are involved. In contrast a large misclassification among expense accounts may not be deemed material if there is no misstatement of net income.

Loan account is the most important account in the bank's Balance sheet.

Sometimes business equipment can be bought for cash at a greatly reduced price. This helps keep expenses down in a business if less money is going out for equipment.

50

Measures deposits match to investments and whether they could be converted quickly to cover redemption. The higher the ratio the better.

Average rate of return = Net Income / Average Assets

Average assets = (opening assets - closing assets) / 2

The phrase notes payable is a result of a purchase made by a business and is a form of receipt.

Think... ENRON, Tyco, etc. The practice of inappropriately misconstruing income statements for the purpose of pleasing investors and inflating stock prices.

noun the imposition of a new organization; organizing differently (often involving extensive and drastic changes); "a committee was appointed to oversee the reorganization of the curriculum"; "top officials were forced out in the cabinet shakeup" [syn:

arr is for 1year only..irr can be for a period of 1 or more years

If you're referring to income taxes, direct costs are easier to allocate.

Many people who are working in the business world are confused about the difference between revenue and profit. These are very similar ideas, so the confusion is understandable. They are also very different things, though, so it is important that you understand just what each one means. You do not want to make a mistake in this, or you might think that your company has more money than it actually does. This can lead to poor financial decisions that you will come to regret later on.

First, you need to know what profit is. This is simply the amount of money that your company makes after you have paid for everything. You might have fifty thousand dollars worth of expenses, for instance. If you make one hundred and fifty thousand dollars, you cannot count this all as profit. You have to remember that your expenses need to be covered by the money that the company brings in. This means that you will make a profit of one hundred thousand dollars.

The total amount of money that you bring in, before you factor in the costs that you have to cover, is known as your revenue. In the case mentioned above, this would be the one hundred and fifty thousand dollars. This is the sheer amount of money that a company makes. As you can see, it would be very dangerous to confuse the two. Some companies have a lot of costs before they can take in any profit, so you could end up thinking that your business is doing very well when it really is not if you just look at revenue.

While it is uncommon for a company to have negative revenue, it is still possible for them to lose money. If the costs are higher than the amount of money that comes in, the company can go into debt. That is why so much time is spent analyzing the correlation between revenue and profits. Companies all want these numbers to be as close together as possible since this will mean that they are making more money. They do this by reducing the costs that they have as far as possible.

Yes income in balance sheet is the same amount which is calculated in income statement if there is any difference then it may be due to distribution of net income between retained earnings and dividend.

a cash flow hedge ia an instrument designated as hedging the exposure to variability in expected future cash flows attributed to a particular rick. gain/losses on the effective portion of a cash flow hedge are deferred and are reported as a component of other comprehansive income (outside earning) until the cash flow associated with the hedged item are realized. gains/losses on the ineffective portion of a cash flow hedge are reported in current income.