Financial Statements

Expenses are never listed in the balance sheet regardless of what they are for. Expenses appear on the income statement. At the end of the accounting period (fiscal or calendar year) expenses are close out.

Repayment of Borrowing falls under the Financing Activities section of the Statement of Cash Flows as a Cash Outflow.

It won't.

Equipment will be recorded in the Statement of Financial Position (Balance Sheet) as an asset.

with regards to the income statement the only entries relating to equipment would be deprecation expense, impairment expense and perhaps revaluation gain (although that would probably go into the Statement of Other Comprehensive Income- depending on policies)

It is a summary of the balance of all accounts in the chart of accounts to, firstly, make sure the books are balanced. Then, these account balances are used to prepare financial statements. The trial balance is a worksheet on which you list all your general ledger accounts and their debit or credit balance. It is a tool that is used to alert you to errors in your books. The total debits must equal the total credits. If they don't equal, you know you have an error that must be tracked down. When closing out your books at the end of an accounting period, you will prepare three trial balances: 1. A preliminary trial balance is prepared using your general ledger account balances before you make adjusting entries. 2. An adjusted trial balance is done after preparing adjusting entries and posting them to your general ledger. This will help ensure that the books used to prepare your financial statements are in balance. 3. A post-closing trial balance is done after preparing and posting your closing entries. This trial balance, which should contain only balance sheet accounts, will help guarantee that your books are in balance for the beginning of the new accounting period. What if your trial balance does not balance? In other words, what if total debits don't equal total credits? This shouldn't surprise or discourage you. In fact, it might be more surprising if it does balance. Accounting errors happen. Even experienced bookkeepers normally have to find trial balance errors.

No, cash + cash equivalents is the most liquid account. Liquidity is how quickly an asset can be converted to cash.

Ok, you make a spreadsheet with a column per time unit - say weeks.

Now you start with one you have of net cash, and for every week this is increased by e.g. sales, decreased by payments expected to be made. Traveling, advertising, payment of wages requires funds to be in place, and if your cash flow predict that you cannot satisfy those payment, you have to sit down with the bank and ask for a line of credit to be exposed/increased - you cannot run out of cash before your good idea earns money from sales.

So, making these predictions accurate and sober is essential to operating the business. If you do not get the credit, you have to cancel the traveling and maybe change marketing to less expensive media. I use a pile of sheets, with payroll, VAT and inventory / stock - you do not need all, but determine the critical payments and receivables - and use ball park figures and common sense for the rest.

Gain on sale of investment is shown in profit and loss account as well as on cash flow from investing activities as well.

While making cash flow statement this needs to be deducted from cash flow from operating activities and needs to be shown in cash flow from investing activities

The balance sheet lists assets in order of liquidity, from the most liquid assets (at the top) to the least liquid assets) at the bottom. Liquidity is how quickly the company can or expects to convert the asset into cash.

The most liquid asset is, of course, cash. Therefore, the first asset account listed in the balance sheet is cash and cash equivalents.

Depreciation Expense, though called an expense, is not an expense where the company actually pays money out. The statement of cash flows deals with the company's "cash flow" in order for a manager to see where the company's cash is going to and coming from. Since depreciation expense doesn't involve actual cash flow, it would not affect the Cash account.

formula for future value of a mixed stream

With non-profit organisations, when the balance sheet doesn't show a loss, but what would be classified a profit for profit organisations, it is called a surplus.

When it is what would be considered a loss for profit organisations, it is called a deficit.

Financial ratios can be used for comparison

• between two or more companies (ex: comparison between ICICI and HDFC Banks)

• between two or more industries (ex: comparison between the Banking and Auto industry)

• between different time-periods for the same company (ex: comparison on the results of the company in the current financial year and the previous year)

• between a single company and the industry performance

Ratios are generally meaningless unless we benchmark them against something else. Like say past performance or another company. Ratios of firms that operate in different industries, which face different risks, capital requirements, competition, customer demand etc can be very hard to compare.

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Irregular cash outflow is when a business pays their fees, taxes etc irregularly.

Retained Earning is the profit bring in the share capital.

Example Company XYZ is running since last 3 years they have not declare any dividend since last two years so in the year 2008 the profit of Rs. 100000 bring in share capital as a retained earning. In the year 2009 again profit of Rs. 150000 bring in share capital as retained earning so (100000 of year 2008 +150000 of year 2009 =250000 in the year 2009). now company declared dividend in the of Rs. 100000 in the year 2010 and generate profit of Rs. 200000 so in the year 2010 the retained earning is ( 100000 of 2008 + 150000 of 2009+200000 of 2010 - 100000 dividend= 350000)

It is added back in because it is an accounting expense, not a cash expense. So when you break down a Statement of cash flows you have three parts; Cash flow from operating activities (Think selling of goods), cash flow from investing activities (Think fixed assets) and cash flow from financing activities(Getting a loan, or issuing stock). We depreciate fixed assets (except for land, unless we are taking into account something like the amount of coal in coal mine). However like stated before, depreciation isn't a cash expense and if we look at an Income Statement we see that depreciation is one of the first things subtracted from the Income Statement balance and skews the Income statement. Hence the Statement of Cash Flows. So again, just think of it this way; it was money that was never really spent, so we need to add it back in.

Hope you are able to see what I'm getting at, sorry if I made it hard to follow or was to redundant.

1. A company wants to increase capital using equity financing will involve in issuing share capital to public for subscription.

An income statement is the summary of a business's income and expenses during the past year. Income statements are used to determine how well a business is performing financially.

A Balance Sheet, also sometimes referred to as a Statement of Financial Position.

A prepaid expense is an expense you pay before you have incurred an obligation to pay it. Paying three months rent in advance is an example. Prepaid expenses are viewed as an asset on the balance sheet which is reduced as the expense is incurred. For example, every month in which rent falls due would be a reduction of your prepaid rent asset and a recognition of an expense equal to the amount of the reduction.

Accrued expenses, on the other hand, are essentially the opposite. For example, assume you didn't prepay your rent. As the rent expense is incurred, a liability is created. After you actually make your payment, the liability is reduced by the amount of your payment.

Retained Earnings in BS. There are to terms in Finance Net profit and Retained Earnings. Net profit which is earned during the year from the business transactions. where the Retained earnings is carried over from the business over the period of time. which stays either asset or liability side of the balance sheet. Every year the Net profit/Loss is added to the Retained earnings account which is carried forward to the next year and Net profit account is become 0 at the end of the year.

Net Profit Before Tax(N.P.B.T.) = Total sales - Total Expenses.

Correct. When a long-term tangible asset is purchased (e.g., property, plants and equipment), the Matching Principle under GAAP requires expenses to be systematically matched with the periods in which the corresponding revenues are generated. All depreciation expense does is systematically expense the asset over the period of its useful life. The useful life of the asset has nothing to do with when cash was actually paid for the asset.

Asset servicing is a "core" ongoing service provided by custodians. This service includes collecting dividends and interest payments, processing corporate actions and applying for tax relief from foreign governments on behalf of customers.