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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
How to Compute Net Assets Value?
Net assets are calculated as:
Fixed Assets+Current Assets-Current Liabilities-Preliminary expenses if any
General Reserve, in short is the part of reserve amount kept by the company out of its profits for future purpose. Example, if the company might not expect any contingencies or unforseen happenings in the future. Usually, companies keep 20% aside the general reserves out of the total profit earned for a particular year or a certain period.
What are speculative balances?
Speculative balances are pretty much money used to capitalize on an uncertain gain in the future.
For example... When interest rates are high people prefer to buy bonds because they believe that the next movement in the rate of interest will be downward so the bond prices will increase and they will make capital gains. But as interest rates decrease more and more people will stop investing in bonds because they believe the next movement in the interest rate will be up and bond prices will fall thus leading to capital losses. To avoid these capital losses, people hold more speculative balances (money).
What does Assets Under Custody mean?
AUC is the value of assets held under custody by a "custodian of securities".
Pseudo-cash is almost money. That is, Pseudo-cash are items that can be traded for other goods or services. They are items that exhibit many or all of the characteristics of money.
Does an increase in the a company sales imply an increase on the expense side as well?
If I understood the question correctly: Any increase in sales should be met with a similar increase in costs of goods sold, but not necessarily the operating expenses.
Type your answer here
double accout system is the system where all the entry has to be kept as a double.
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Why are accounting standards important for the preparation of financial statements?
For comparability.
Why unearned rent is liability?
Because if the tenant vacates the premisses you are required to return unearned rent. There are complications to that, say if they damaged the rental unit and part of the rent was as a security deposit... but if you're referring to actual prepaid rent... then you are required to return any unearned rent.
Why do you need applied overhead rate?
We need applied overhead rate to know about the overhead variance. Otherwise how will we know how much overhead expenses should have been incurred and how much is actually incurred? Predetermined rate multiplied by the actual unit level activity is applied overhead
How are compensating balances reported?
They are reported within the discolsure notes to the financial statements. A material compensating balance must be disclosed regardeless of the classification of the cash. Classification depends on the nature of the restriction and the classification of the related debt.
A balance sheet is a more detailed version of the accounting equation A=L+E at a specific point in time.
or it could be
-The company's assets and its liabilities at a specific point in time.
What does it mean by organizational structure of an office?
Meaning . the whole office area (from receptionist to the President ) the structure (what makes it run) organization.
I tried...
Why is a Financial Analysis important to a company?
Financial analysts provide guidance to businesses and individuals making investment decisions. Financial analysts assess the performance of stocks, bonds, commodities, and other types of investments. Also called securities analysts and investment analysts, they work for banks, insurance companies, mutual and pension funds, securities firms, the business media, and other businesses, making investment decisions or recommendations. Financial analysts study company financial statements and analyze commodity prices, sales, costs, expenses, and tax rates to determine a company's value by projecting its future earnings. They often meet with company officials to gain a better insight into the firms' prospects and management.
What is the formula for calculating ratio analysis?
Ratio Analysis = Current Asset / Current Liabilities
Offline and online are two different types of e-cash. Also, anonymous and identified are also two other different types of e-cash.
Do you close out retained earnings?
the accounting entry to transfer retained earning to balance sheet is as follows profit and loss appropriation a/c dr to capital account No. Retained Earnings in accumulation (of all years) of earnings. It appears on the balance sheet. Any account on the balance sheet is in essence rolled over from period to period (not closed out). What is closed out TO retained earnings are revenues, expenses, and dividend account (notice how they are all accounts that appear on the income statement).
What are the components of a balance sheet?
The balance sheet shows
- the assets of the company,
- the liabilities of the company to others, and
- the accumulated investment of the shareholders, also known as the owners' equity. (This is shares issued + accumulated profits).
The assets include cash, stock/inventory, amounts receivable from customers, and fixed assets such as buildings and equipment.
The liabilities include debts (e.g. bank loans), deposits/prepayments received from customers, amounts payable to suppliers, taxes due, wages due to employees.
Owners' equity includes investment by shareholders, additional capital supplied by shareholders, retained profits.
What is the meaning of the 2 sides of a T-Account?
One side is for Debits (left side) and the other is for Credits (right side).
What is a classified balance sheet?
A Classified Balance sheet classifies assets into categories. These categories typically are:
Current Assets
· Current assets are cash and other resources expected to be realized in cash, sold, or consumed within one year of the balance sheet date or the company's operating cycle, whichever is longer.
· Listed on B/S in order of liquidity.-Cash is first, then receivables, then prepaids.
· Examples:
Long-term Investments
- Long-term investments are resources that can be converted to cash.
- Conversion is not expected within one year or the operating cycle, whichever is longer.
- Examples:
Property, Plant and Equipment
- Tangible resources of a relatively permanent nature used in the business and not intended for sale are classified as property, plant, and equipment.
- Examples
Intangible Assets
- Intangible assets are non-current resources lacking physical substance.
- Examples
A Classified Balance Sheet classifies liabilities into two categories.
Current Liabilities
Obligations expected to be
• paid from existing current assets, or
• by creation of another current liability,
within one year/operating cycle, whichever is longer.
Long-term Liabilities
§ Obligations expected to be paid after one year.
What is the high risk of finished goods inventory?
The high risk of finished goods inventory is the risk of loss of inventory due to theft, spoilage, or even fire. Storing finished goods is also expensive and if the market changes, can destroy a business.
How does depreciation generate cash flows for a company?
That's a difficult issue to explain on a few words.
