0
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
What is the purpose of a cash flow analysis?
Cash flow can be:
operational cash flow (the flow of cash for normal operation of the business)
financing cash flow (the flow of cash for financial activities like loans, dividends, stocks, etc.)
investment cash flow (the flow of cash for investments like plant & machinery, land, and other long term capital expenditures)
What is the journal entry to discount notes payable?
debit cash
debit discount charges
credit notes payable account
Does the income statement show total assets?
The income statement shows the total movement of expenses and revenues from that year.
The balance sheet shows the total movement of assets, liabilities and equity from that year.
It is the BALANCE SHEET that shows the total assets, not the income statement - which shoes profit/loss etc etc..
When is an item material to a company's financial statements?
Hi guys, i am a student in accounting in malta. Well an item is material if it is does influence the decision of the user. An item is material when it does have a significant amount of money but it does have to do also with the size of the company, for eg an amount of 10000 may be immaterial to a big company but material to a small company. Also the nature of the item has to be seen, this is an item may be seen immaterial with a small amount of money but in fact it should be material because the user does want that particular information eg a pending litigation against the company for a faulty good and service. So to conclude, an item which is immaterial should by pass the rule for the cost - benefit effectivness but an item which is material should be there included for the use of the user. For more info check Ihe concept of materiality ( one of the most important concept of GAAP).
Distinguish between capital and revenue expenditure?
Capital expenditure refers to an expense resulting in acquisition of an asset or increase in the earning capacity of a business. Revenue expenditure is defined as an expense that is essential for the maintenance of earning capacity of a business.
It actually does both. I'm assuming that Taco Hut will deposit these earnings into your account, and from this account you will then pay your rent. So your assets (cash) temporarily goes up until you then pay your current months rent liability. Then both your assets (cash) goes down and your current rent liability goes down too.
The picture we are illustrating is best termed as cash-flow.
A financial asset is something normally that an ability to generate income over the course of time. Eg. A savings account with an interest rate above the rate of inflation.
For some good definitions on cash-flow, assets and liabilities have a read of the Rich Dad, Poor Dad series of books, or check out similar websites.
What are subscription receipts?
A provisional certificate entitling the holder to a fractional share of stock or the jointly held property.
Why is depreciation taken out of both income statement and cash flow statement?
Depreciation is added back to net income in cash flow statment because it is not involve directly in reduction of cash while preparing cash flows of operating activities using indirect method.
Is bank included in the balance sheet?
Yes. The "bank" account usually represents cash deposited into a bank. Cash is an asset, and is included in the balance sheet (the balance sheet lists assets, liabilities, and equity). Therefore, bank is included in the balance sheet under current assets.
What journal columns are used to record receiving cash from sales?
as a record cash payment bill.like the following:cash in hand (Dr)Sales or Sales Revenues (Cr)&Cost of goods Sold (Dr)inventory (Cr)
What are the advantages of the modified cash basis of accounting?
Advantanges of the modified cash basis of accounting
- Simple, cheap and easily understood
- Doesnot involve estimating unlike accrual
- The method facilitates monitoring of actual against budgets where budgets are set on cash terms
Should fixed assets be initially recorded in the balance sheet at the lower cost of cost or market?
False
What generally accepted accounting principles are designated under Category A in the GAAP hierarchy?
Category A consists of the following officially established accounting principles: (1) FASB Statements of Financial Accounting Standards, (2) FASB Interpretations, (3) APB Opinions, and (4) AICPA Accounting Research Bulletins.
When did the statement of cash flows become a requirement for business?
The statement of cash flows replaced the statement of changes in financial position in 1987 as a required financial statement for all publically traded business enterprises.
How do you classify different types of capital investments?
Maintenance projects Cost-saving/revenue-enhancement projects Capacity expansions in current businesses New products and new businesses Projects required by government regulation or company policy Maintenance expenditures
False.
Payment of an accounts payable reduces cash and reduces accounts payable. Equity is not affected.
What is the difference between fixed income and fixed interest?
Fixed income is when an individual has a source of income that is reliable, but often limited. Examples include social security, pensions, etc.
Fixed interest means that the rate of interest charged or accrued from a transaction will not change during the term of the contract. The opposite of this is called variable interest (most common with credit cards and some home mortgages).
How do you figure total equity if give assets debt sales and profit margin?
To figure out equity, you need to know total assets as well as total liabilities. Assuming there are no liabilities other than debt, equity equals assets minus debt.
Is leased land off the balance sheet?
Yes if lease is operating lease then no asset is shown in balance sheet but by paying rental payment land can be used and it is helpful to improve return on assets ratio.
What are the two principal components of stockholders' equity?
paid-in capital and retained earnings.
What are GAAP Financial statements?
Generally Accepted Accounting Principles. These are a framework of guidelines for financial accounting. The GAAP in each country differs and the standards are shaped by the relevant country company law and governed by an accounting standards board.
Difference between net profit and turnover?
Net Profit is the profit determined by a company after deducting the cost of product plus the cost of carrying the prdt from the gross received amount.
While turnover of a company represents the total volume of sales a company does .It includes the cost price of the product plus the profit.
