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Financial Statements
A financial statement is a record of the financial activities of a person or business entity where all related financial information are presented in an orderly manner and can be easily understood.
5,583 Questions
Assets:
Current Assets:
Inventory
cash
accounts receivable
long term assets:
building
plant
land
current liabilities:
accounts payable
loan payable
long term liabilities:
long term loans
capital account
Is selling cost a period cost?
Yes selling cost not directly relate to production of units that's why it is period cost.
How do you calculate gross profit when you have turnover and cost of sales and no of units produced?
Gross profit calculation
Gross profit = Revenue - Cost of sales
Which one of the following items is not generally used in preparing a statement of cash flows?
Adjusted trial balance
Trial Balance
This transaction will be shown in balance sheet as cash as well as bond liability both related to balance sheet accounts.
What is the purpose of the Institute of Internal Auditors' internal audit function?
The internal audit function is to ensure that an organization meets its objectives through a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance
Where do pension liabilities go on a cash flow statement?
pension liabilities are not part of cash flow statement rather it is part of balance sheet until paid.
What are the Terms from a financial statement that will be used in calculation of a ratio?
1. Sales - This refers to the net sales done by the company during the reporting period (After deducting returns, allowances and discounts charged on the invoice)
2. Net Income - Amount earned by the company after taxes, depreciation, amortization and payment of interests
3. COGS - Cost of goods sold or cost of sales
4. EBIT - Earnings before Interest and Taxes
5. EBITDA - Earnings before Interest, Taxes, Depreciation and Amortization
6. EPS - Earnings Per Share
Different types of source documents?
A source document is the original record containing the details to substantiate a transaction entered in an accounting system. Source documents include original invoices sent or received, cash receipts, cancelled checks, credit memo for a customer refund, and employee time sheets.
Where does bond sinking fund go on balance sheet?
A bond sinking fund is reported in the section of the balance sheet immediately after the current assets. The bond sinking fund is part of the long-term asset section that usually has the heading "Investments." The bond sinking fund is a long-term (noncurrent) asset even if the fund contains only cash. The reason is the cash in the fund must be used to retire bonds, which are long-term liabilities. In other words, because the money in the bond sinking fund cannot be used to pay current liabilities, it must be reported outside of the working capital section of the balance sheet. (Working capital is current assets minus current liabilities.)
The balance sheet is thought of as being a snapshot of the business explain this statement?
because people have to see what assets they are loan for
What does compilation of prospective financial statements by public accountants involve?
the service of preparing the statements in whole or part from information and significant assumptions provided by the responsible party, usually a member of management
What the difference between Assets and long term Assets?
Assets are resources controlled by the business from which future economic benefits are expected to flow. In the case of current assets (e.g. Inventory) this period is expected to be within 1 period while Long term Assets (Non-Current Assets) are assets which are expected to be used over more than one period (12months) or which are held for indefinite capital accumulation (e.g. Investment Property)
Is it a good business practice to maintain a large balance in cash account as possible?
No; convert the cash into cash equivalents (like short-term CDs instead)
What are the Sources of Data for Financial Ratios?
Financial ratios of all company's can be calculated based on their financial statements that would be declared during their quarterly result announcement. Balance Sheet, Income Statement, Statement of Cashflows, Statement of Earnings etc are some of the documents from which the information required for calculating these financial ratios can be picked up. Also, if the company is listed in the stock market, its current stock price too is used for calculating some of these ratios.
Is freight out and freight in included in cost og goods sold calc?
ASC 330, Inventory, states shipping costs (read: freight out) do not contribute to bringing inventories to their present condition and location and as such should not be included in inventory costs. Because freight out is not considered a product cost, not only would you not capitalize freight out into inventory on the balance sheet, but you would also not record this cost as a COGS item, but rather a sales expense (SG&A). On the other hand, freight in is a purchase cost as it gets inventory to its current location (ie your warehouse), so that cost should be capitalized as inventory on your balance sheet which will later be recognized as a COGS item when you sell the related inventory.
