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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 is net profits divided by total assets?
net profit devided by total assets is called return on total asset and formula is as follows:
Return on total assets = Net profit / total assets.
If company has less cash then it may use shor term borrowings to pay or use loans for this purpose as well or owners may need to issue more capital to fulfil shortages in working capital as well.
What an example of a decrease in an asset and a decrease in a liability?
Paying A/P: Decrease in Cash (Asset), Decrease in A/P (Liability)
How do you get Direct Labor for a service company?
Direct labor for service company is the salary or wage cost of the person who is performing the services like in software industry the salary of software engineer is direct labor cost as well as the technical lead etc.
Which part of the elements of financial statements does sales belong to?
If I understand your question correctly, sales is revenue, which is part of owner's equity. So you would use that amount in your income statement, and your trial balance (if you use one).
Assets in Accounting is all cash, accounts receivable, inventory, merchandise, property, equipment that is owned by a business and/or company.
According to investorwords.com the meaning of Assets in Accounting is...
Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property.
What is the journal entry to record the FUTA tax expense?
Debit FUTA Tax Expenses xxxx
Credit FUTA Tax Payable xxxx
Is share is a asset or liability?
Share is a liability for business because due to issuance of shares company acquire more cash to run it's business and that amount is refundable by business to it's owners.
What is meant by interpretation of financial statement?
Interpretation is purely a synonym for understand and it is the ability to be able to comment on the financials and make future business decisions from that information.
What are the accounting journal entries to record depositing cash for common stock?
[Debit] Cash /bank
[Credit] Common Stock
Why is accounting standards important for financial statements?
Accounting standards ensures that financial statements are prepared whereever in the world is same and information provided on it is comaprable and readable for all kind of users.
Is a loan is current liability or long term liability in the balance sheet?
If loan is payable within twelve month of issuance of loan then it is current liability but if it is payable in more than one fiscal year then it is long term liability but even in long term loan, that portion of loan which is payable in current fiscal year is current liability and remaining portion is long term liability.
What are the three basic financial statements and what major information does each contain?
Income Statement: it shows the revenue and expenses for specific year
balance sheet: it shows the overall performance of the company from the time of incorportation to till date
Cash flow statement: Cash flow statement shows the cash inflows and outflows from operating, financing and investing activities.
Does commission have a balance sheet or income statement account?
If commission is already received or paid then it is income statement item, but if it is still receivable or payable then it is balance sheet item, simple commission is a income statement item
Should the book value of a plant asset approximate its market value?
i keeps the e and j sitin bent up in the stair way
Is a declaration of dividends reported on a statement of cash flows?
The answer is no since there is no actual cash outflow at declaration date.
Journal Entry at Declaration Date:
Dr. Dividends/Retained Earnings xxx
Cr. Dividends Payable xxx
If you will prepare the cash flow statement using the indirect method, try to imagine the "Dividends" account as if an expense/nominal account. Start first with the net income, assuming only dividends is your transaction during the month...
Net Loss (Dividends) (XXX)
Increase in liability (dividends payable) XXX
The impact is zero 0
*Rule is increase in asset (-), increase in liability (+) for the indirect method of cash flow statement.
Where do you place loan interest in the trading account and is it an expense?
As an expense, loan interest should be placed in the debit side of the Profit & Loss A/c and not in the Trading a/c.
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How do you record a journal entry for money recevied from legal judgment?
Debit cash
Credit other income
What does cash flow from financial activity items include?
Cash flows from fianance included all cash items which affects or related with the financing in business like new shares issue or interest paid etc.
Why are assets listed before fixed assets on a balance sheet?
Assets are listed in order of liquidity, or how quickly they can be converted into cash. Fixed Assets (Land, Buildings, Machinery, etc.) take longer to sell than stocks and bonds. Accounts Receivable will turn into cash in 30 days (for the most part) etc. Inventory will turn over several times in a year.
The assets listed first are "Current Assets" - things that wil be used within the fiscal year. Fixed Assets have a longer life. This is similar to Current Liabilities (amounts due within 12 months) and Long-term Liabilities (amounts due beyond 12 months).
