Financial Statements

Non recognition of revenue in the relevant month will

ü Lead towards inconsistent application of matching principle

ü understate monthly profit

Affect profitability ratios

prophitability

you don't need to transfer it manually. It happens automatically.

rent

Salaries

Depreciation

Insurance

first show the long term liabilities and then short term liabilities afterwards.

work in progress will not go on in income statement

Window dressing can be used by companies and mutual funds.

A company can use window dressing when preparing financial statements to improve the appearance of its performance or liquidity. In this case, window dressing may consist of changing asset depreciation or valuation policies, making short-term borrowings, or engaging in sales and leaseback transactions at the end of a period. By doing so, management embellishes the company's results or liquidity and obtains some benefits.

Other examples of window dressing by companies may include advertising, selling, and marketing. In these cases, window dressing occurs when positive characteristics of products or services are a little exaggerated to increase demand for them while negative characteristics are not mentioned or kept hidden.

Mutual funds use window dressing when preparing periodic (quarterly, yearly) reports. Window dressing by mutual funds consists of selling underperforming stocks and buying well-performing stocks near the reporting period end. This practice makes a fund portfolio look more profitable and thus more attractive to its (prospective) clients.

Typical cash flows from investing activities included a purchase of asset or interest received from investing in other company or receipts from selling of assets etc.

Combining financial statements could be a disadvantage because you cannot see the details that give you the strengths of the company. If you have separate financial statements for the parent and subsidiaries then you can break down a more meticulous analysis for each department and therefore see the basis and solidarity of the company

Cash flow by definition looks at the flow of cash either inwards or outwards. However, financial statement accounting considers cash flows as well as non-cash items like depreciation, amortization of goodwill, capital write offs, bad debts, provisions, discounts & rebates, etc. The non-cash transactions affect the accounting profit while does not have any impact on the cash flow statements.

Hope this helps!

Analysis of financial statement means using the data in the financial statements to perform further calculations and analysis, like ratio analysis, trend analysis, industry comparison, horizontal and vertical analysis, etc. Analysis is useful to understand historical transactions and also to estimate future prospects.

Interpretation of financial statement is basically is drawing meaningful conclusions and judgment based on the results of basic or detailed analysis.

Example: Profitability analysis shows that the company has made profit for the last 5 years consistently. Interpretation of this analysis will lead to the conclusion that the probability of the company produce profits in next year is high.

Yes

It is not same as market value because book value of assets derives from its cost and deduction of depreciation, while market value varies due to market conditions. That's why it may not be same.

No FLow

Equipment (asset account) - DR 10,000 Cash / Bank account - CR 10,000

When the Company decide to write off the fixed asset, the following entries will be passed:

Dr. Accumulated Depreciation
Dr. Loss on Asset written off (if any)
Cr. Fixed Asset ( at cost)

The company would write off the fixed asset in the following circumstances:

1) The company may write off the fixed asset, if the assets are no longer in feasible use.
2) The fixed assets have been fully depreciated.

In case 1 above, the company might incurred a loss on fixed asset written down if the net book value is > nil. Whereas, when the assets have been fully depreciated ( as in case 2), no losses will be incurred upon written off.

they are both inportant, because they both burn your money.

Financial ratios are analytical tools used to assess a company's financial performance and stability. They answer questions about profitability (e.g., "Is the company generating sufficient profit from its sales?"), liquidity (e.g., "Can the company meet its short-term obligations?"), efficiency (e.g., "How well is the company utilizing its assets?"), and solvency (e.g., "Can the company sustain its operations long-term without facing financial distress?"). By comparing these ratios over time or against industry benchmarks, stakeholders can gain insights into the company's overall health and operational effectiveness.

profit margin

[Debit] Cash

[Credit] Donation

Contra entry

There are different cash flow patterns. Each cash flow should be discounted at a unique rate appropriate for the time period in which the cash flows will be received to get a more accurate bond price.

No.

Cost of Goods Manufactured includes direct cost and factory over heads plus adjustments for work-in progress.

Cost of goods sold includes COGM + factory expenses adjusted for change in stock of finished goods.

Yes - Like Raw materials inventory, and finished good inventory, Work in process (WIP) is recorded on the balance sheet.