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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
What do you think is the major purpose of financial statements?
the objective is to evaluate and report a company's fianancial performance fairly and correctly and provide useful imformation for internal and external users for decision making.
Why accumulated depreciation exceed depreciation expense?
Depreciation expenses is for one specific fiscal year while accumulated depreciation is the sum of all depreciation expenses that’s why accumulated depreciation exceeds the depreciation if there is depreciation expense in prior year as well.
Is operating expense on the balance sheet?
No. Revenues and Expenses over a given period of time are shown exclusively on the Income Statement.
Can net operating income be more than revenue?
NOI comes to fruition because of Actual Revenues. NOI is your bottom line before income taxes and interest are deducted. NOI can also be labeled as NOL (Net Operating Loss). There's tons more of explaining to this matter and other financial statements - LOTS of junk!
Why are total assets in a business always equal to the total of the liabilities and owner's equity?
Total assets are equal to total liabiliteis and owner's equity because it is the basic accounting equation which is as follows:
Total Assets = total liabilities + Owner's equity
if this accounting equation is not balance it means there is some mistake in preparation of financial statements.
The adjusted trial balance includes depreciation and other adjustments. This is the account balance that changes between the adjusted trial balance and the post closing trial balance.
What is Return on Equity DuPont?
DuPont Corporation created this type of calculation for Return on Equity. This theory breaks down ROE into three distinct elements. This analysis enables the analyst to understand the source of superior (or inferior) returns by comparison with companies in the same industry or even between industries.
Formula:
ROE DuPont = Profit Margin * Asset Turnover * Equity Multiplier
Profit Margin = Net Profit / Sales
Asset Turnover = Sales / Assets
Equity Multiplier = Net Profit / Equity
What is Cash Flow Return on Investment?
CFROI is a valuation that assumes that the stock market sets prices based on the company's cash flow and not on the corporate performance and earnings. It is calculated by comparing the gross cash flow generated by the company and the gross investment done into the same.
Formula:
CFROI = Gross Cash Flow / Gross Investment
Here Gross Investment refers to the Market Capitalization of the company.
What is Basic Earnings Power Ratio?
The basic earning power ratio (or BEP ratio) compares earnings apart from the influence of taxes or financial leverage, to the assets of the company. It is just a ratio of the earnings of the company and its assets and does not include the capital invested into the company or the tax and interest liabilities.
Formula:
BEPR = EBIT / Total Assets
What is error of trial balance?
Type your answer here omission error
commission error
principles error
compensatory error
What are the qualities of good internal control system?
In basic they are (in no particular order).
1 - Most important, is the safeguard of assets.
2 - All employees must be encouraged to follow company policy and work towards the company's goals.
3- The promotion of operational efficiency.
4- A company must ensure accurate and reliable accounting systems and records
5- Maintaining complience to the legal requirements of (a) its counrty of registration (b) of countries of operation.
Why are some goods sold below their cost price?
Some goods are sold below their cost price because the government believe that the good is essential, for example, prescriptions from doctors, we need these so the government have a set price of £9 no matter what the prescription is.
What type of account is treasury stock?
Treasury stock is a stockholders equity stock. Treasury stock is stock that a company buys back in order to reduce the amount of outstanding stock available on the market.
What is the most important financial metric to review to determine long-term financial viability?
Solvency ratios are the most important financial metric systems used to determine long term viability. These ratios analyze how long it will take to pay off obligations that are long term.
Why cost of goods is higher under LIFO?
Because the price of goods tends to increase over time, the last in is usually the most expensive, hence in LIFO (LAST in FIRST out) the most expensive items are the ones expensed first.
Being pH balanced means that the substance has a neutral pH of 7. This means that there are equal amounts and strengths of acidic and basic substances.
historical cost
How are notes receivable due in 5 years listed on the balance sheet?
nOtes receivable due in five years is listed on the balance sheet under what csption
Where on the balance sheet are the capital account?
Capital is also the net asset.
This value is the closing capital amount.
Just below, there should be a the (Owner's) Equity section where you can find the opening capital value and at the end you can find the closing capital, which should be the same value as the new asset.
