Financial Statements

A disadvantage of using financial statements is that the complete picture of a companyÕs finances may not be on the statement. For instance, the finances of a company can change drastically from month to month.

Common stock issued for cash will be appear under cash flows from financing activities in indirect method of cash flow statement.

•To find out the liquidity position of the concern through ratio analysis.

•To study the growth of RaneMadras Private Ltd.in terms of cash flow statement.

•To know the short term Solvency Position of the company.

No, technically goodwill is put under the category of assets because there is no expiration date for goodwill, however, it represents no assets that can be quantified, it is the amount in excess of bookvalue that the company paid when acquiring another firm

for trading business interest expense is always non-operating expense because of that "the person who use trading business is only to sell and purchase of goods" so the business activity is only to purchase and sell of goods. in this type of business, to perform these activities may face the expenses like transportation, employee salary and rent expenses and sort of thing. rather than interest expense which is an another expense these expense not use to generate operational goods in this type of business or operational income

No entry for opening debtors these are just transferred from previous period to current period.

Yes a business can choose to accept any method of payment. Although our federal reserve notes state that they can be exchanged "for all debts public and private," that doesn't mean someone has to accept them. They can still choose to accept only electronic payments of dollars, or a check made out in dollars.

accounts payable is account in balance sheet

Cash flow means the cash in and cash out from business due to different business activities.

A cash flow statement is a financial statement that shows the changes in a company’s cash position over a given period.

A cash flow projection is an analysis of how the company will make money in the future.

The difference between these two statements is that the projection includes information about what will happen to a company's cash balance from now until then, whereas the statement only shows how much money has been made or spent during that time period.

There are 2 types of functionality comes under Cashier.

1.Recipient

2.Payments

The Approved Bills, Debit Notes & Debit Request come under In Receipt.

The Credit Notes & Deposit Refund come under In payment.

An income statement let's the management of the company know how well or how poorly the company performed over the year. The balance sheet is a snapshot at the end of the year that show's how much the company has in assets, liabilities, and in equity.

[Debit] Accululated Depreciation xxxx

[Debit] Loss on disposal of asset xxxx

[Credit] Asset account xxxx

Entry 2

[debit] Profit and loss account xxxx

[Credit] Loss on disposal of asset xxxx

Accounts receivables has debit balance as normal balance of account and shown in current assets in balance sheet.

As it is a advance receipt the journal entry would be

cash dr.

to deferred revenue

Depreciation does not generate cash flow. If a million dollar piece of equipment is purchased, an accountant would reflect that the company now owns a million dollar asset. Without depreciation, the company would still show a million dollar asset on the books even though we all know the equipment's value is decreasing. As such, the company's value would be overstated in the books.

I found this from Wikipedia, so I believe the above answer should be modified.

From Wikipedia - "Depreciation recognized for tax purposes will, however, affect the cash flow of the company, as tax depreciation will reduce taxable profits; there is generally no requirement that treatment of depreciation for tax and accounting purposes be identical. Where depreciation is shown on accounting statements, the figure usually does not relate to depreciation for tax purposes."

-

The above answer is correct. This is an additional point.

Depreciation is a source of funds (not cash). Think about this - When you deduct depreciation from your profits, your net income figure gets reduced and if there is any distribution of cash which is based on net income, the amount of cash that is going out of the business will also be reduced. In that way, the company is able to retain part of its cash within the business that could have gone out, had the depreciation not been done.

Additional comment -

And even more to add regarding the taxes thing (at least in Canada). Depreciation is not an allowable expense for calculating taxable income. What happens is that you add the depreciation that you expensed back, but then you are allowed to take a deduction for capital cost allowance (at specified rates for the particular class of asset) to calculate taxable income. In the US it is a a legit expense and is typical done with straight line or MACRS.

Additional comment -

Regarding the first post: depreciation in accounting terms (amortization) is not meant to reflect the value of the asset. Rather, it is the gradual allocation of its cost to expense over its useful life.

The fair market value of an asset may increase significantly over its original purchase price while at the same time its book value will decrease yearly due to depreciation.

Strictly speaking, depreciation is a non-cash expense (no physical outflow of cash is involved). However, as mentioned above by others, it serves to reduce taxable income, which, in turn, reduces the income tax paid.

Depreciation is not a cause of reduction of cash from business, so in indirect method depreciation is added back to net income to arrive at actual cash flow from net income and non cash items are either added or deducted for this purpose.

Fixed asset is a financial term, that is, in comparison to current assets (money, bank accounts), fixed, which means it can't be easily converted to liquid assets.

Oftentimes when a business undergoes rapid growth in sales and profits, asset growth also increases rapidly. It may be difficult for a business to come up with the funds from suppliers, the bank, or stockholders in a reasonable amount of time. For example, if I made $30K profit this year but asset growth was $60K due to the growth, I would have to find a way to finance the remaining amount.

If that happens, there will be overstatment of the period's profit as well as overstatement of assets. This will reduce the future profit of business because the original costs of assets will be charged more to the Profit and Loss account in process of depreciation of assets.

Net profit doesn't appear in a balance sheet, it only appears in an income statement.

The term "future cash flow(s)" describes cash that will be received in the future.