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
Where does loss appear on the balance sheet?
Loss is shown in asset side of business as other asset because it has debit balance and reverse of profit which has credit balance.
What are New developments in management accounting techniques?
There are many new developments in management accounting techniques. Many new software products have entered the market that assist managers in producing accurate accounting records.
straight line depreciation
When do you Record an expense as a journal entry?
In accrual accounting, expenses are recorded as you get them, so say receive your Utilities Bill due the next month, you record it immediately.
For example I have a $500 Utility Bill it's June 28th, the bill isn't due until say July 15th, the entry would be;
Utility Expense (debit) $500
Utilities Payable (credit) $500
On July 15th when the bill is paid you adjust the entry as follows;
Utilities Payable (debit) $500
Cash (credit) $500
In Cash Basis Accounting the expense isn't recorded on the books until the bill is actually paid and the entry would be;
Utilities Expense (debit) $500
Cash (credit) $500
EXAMPLE OF increase in liability equals decrease in owners equity?
A company takes accounts payable to increases revenue but suffer losses.
Name five components of the statement of changes in equity?
Contributed Capital, Treasury Stock, Minority Interests, Other Comprehensive Income, and ....Retained Earnings perhaps?
3.17 years
What are the asset and liability with help of examples?
Assets are those items which business uses to earn revenue like propery, plant, equipment, inventory, cash etc.
Liaibities are those items which is payable by company to third parties or owner of business like owners capital , accounts payable, bonds payable etc.
Dividends paid reduce the net income that is reported on a companys income statement?
Dividends paid do not reduce the net income amount shown in income statement rather it reduces the income amount shown in balance sheet as retained earnings which is the remaining profit after dividend.
Expenses that have been incurred but have not been recorded in the accounts are?
Incurred Expenses also sometimes known as Accrued Expenses are expenses that a company incurs but has not yet paid. Unless the company in question uses Cash Basis Accounting, the transaction should be recorded immediately as a debit to the appropriate expense account and a credit to the appropriate payable account.
It is an "unrecognized" expense until it is recorded, not necessarily paid.
What is cash based of accounting?
an accounting method in which income is recorded when cash received and expenses are recoreded when cash is paid out
Explain the difference between direct cost and indirect costs?
Direct cost are those costs which varies directly with variation in volume of products units like direct labor or direct material while indirect cost has not direct connection with volume of units of products like depreciation building rent supervisors salary etc.
What is a contribution margin and why is it important?
Contribution margin is that contribution which any selling unit contribute towards recovery of fixed cost after recovering the variable cost to manufacture it.
It is important becauase if unit not contribute enough then company will not be able to recover it's fixed cost in long run and in the end incur losses.
Prepare a post closing trial balance?
I can't actually do on here for you, however I can explain what a Post Closing Trial Balance is and how to get one.
A Post Closing Trial Balance is a Trial Balance that is prepared only after all "closing" entries have been made to the Ledger and all adjustments have been made from the Journal, leaving only the permanent balance sheet accounts remain open. This is to check clerical accuracy and to prove that the accounting equation is in balance before the next accounting equation begins.
To make your PCTB simply take the balances from the permanent accounts and list the in the PCTB with the balances, listing assets first (debits) then liabilities, owners equity next (credits) and balancing the account.
What is the Purpose of Post-Closing Trial Balance?
The purpose of the post-closing trial balance is to prove the equality of the balance sheet account balances that are carried forward into the next accounting period.
Profit margin = Net income / Sales
.08 = Net income / $18,000,000
Net income = $1,440,000
Now we can calculate the return on assets as:
ROA = Net income / Total assets
ROA = $1,440,000 / $13,000,000
ROA = 0.1108 or 11.08%
We do not have the equity for the company, but we know that equity must be equal to total assets minus total debt, so the ROE is:
ROE = Net income / (Total assets - Total debt)
ROE = $1,440,000 / ($13,000,000 - 3,800,000)
ROE = 0.1565 or 15.65%
management's judgment of intent and ability may lack comparability
proofsheet
How will a post-dated cheque issued to a creditor be treated in the Balance Sheet?
Generally accepted accounting principles (GAAP) and cash accounting methods treat post-dated checks the same way---no journal entry recording. A post-dated check is essentially a promise to pay, and until the business partner pays or reimburses amounts owed, no change is made in accounting books. To illustrate, an accounting clerk receives a $45,000 post-dated check negotiable in one week. She cannot debit cash (asset) and credit sales revenue or accounts receivable to record this transaction because no payment is made. She can, however, write a memo about the post-dated check in the accounting ledger. (Bookkeepers debit asset accounts to increase their balances and credit revenues to increase their amounts). If the check clears the customer's bank after one week, the clerk may then record journal entries in the sales ledger.
Post-dated checks do not affect financial statement accounts, but regulatory guidelines and industry practices require a company to reveal significant amounts that it expects from customers at future dates. These amounts may relate to post-dated checks or promissory notes. GAAP requires a corporation to prepare accurate and complete financial statements that indicate such arrangements. Complete financial records include balance sheet, statement of profit and loss (P&L), statement of cash flows and statement of retained earnings.
