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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.
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office of management and budget
This is the same thing as book value per share. Net asset value is Total Assets - Total Liabilities. You take this number and divide it by the shares outstanding in the company, and you get net asset per share.
Example: AT&T
Total Assets: 1000
Total Liabilities: 500
Net asset value: 500
Shares outstanding:100
Net Asset per share: $5
What is the difference between internal audit and interim audit?
Internal audit is the name of department who performs the audit while interim audit is the audit which other than statutary audit and it is perform during the fiscal year and it is performed to help the final audit procedures which is done after the completion of fiscal year.
Accountants use impact analysis and financial ratios to analyse financial statements. Some of the important ratios are: * Current ratio * Quick asset ratio * Gross profits to sales * Nett profit to sales * Return on shareholders' equity * Debt to equity * Interest cover * Stock turnover * Debtors turnover * Turnover of total assets * Return on total assets * Dividend per share * Earnings per share * Dividend yield * Dividend payout * Price earnings * Nett asset backing
What is the difference between a gross sale and a net sale?
Gross sales mean what you are charged as the overall total of your bill and net is all other deductions subtracted with what ever balance is left being your net.
Gross sales is defined to be the total invoice value of sales, before deducting customers' discounts, returns, or allowances.
Net Sales The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.
More information from our contributors:
- For easier understanding, gross sales is what is accounted for as sales and net sales is what is received on account of the transaction.
- The difference between gross sales and net sales can come from two sources.
2. Customer discounts or allowances
In accounting, the difference between gross sales and net sales can be made up of more than one factor. Gross sales revenues is all the sales revenues that have been earned by a firm during a given time period. The items that are netted out of, or deducted from, gross sales in order to arrive at net sales can be different in different industries. For example, in the book publishing industry the two items mentioned above would be deducted from gross sales to get to net sales. In the magazine publishing industry, there would be an additional deduction for advertising agency commissions.
In general, however, "gross sales" reduced by the sum of :[(1) the dollar amount of refunds for items bought and then returned by customers and (2) the dollar amount of purchase discounts taken by customers] equals "net sales".
- Gross sale is the sale that needs some amount to be deducted from it. And net amount is final sale that is in actual figure after deducting all other things like allowances etc.
- I might suggest that an example would help. e.g. if you sell your house for £300,000, that would be your gross sale. But if you then deduct the cost of selling it (like estate agents fees) of say £30,000 then you get £270,000 which would be your net sale.
Which type of depreciation method accelerates depreciation in the early years of an asset's life?
Diminishing value method where you depreciate the asset by a percentage rather than the straight line method where the same amount gets depreciated each year.
Why balance sheet both side are always equal?
The balance sheet, in its earliest form, was simply a listing of open balances in the various ledger accounts as at balance date. The total credit balances (Liabilities) were subtracted from the total debit balances (Assets) to give the net amount due to the owners (Equity). If the equity was greater at this balance date than it was at the previous one, then the business owner was trading successfully. If the equity was less, then trading was not successful.
These days the process is essentially the same.
Assets minus Liabilities equals Equity.
However, the notion of an 'equation' E=A-L was introduced to emphasise the double-entry basis for accounting. The equation describes the equality of resources or assets with the obligations to the sources from which they have been received. This can be better depicted as:
Source of Funds (Equity) equals Disposition of Funds (Net Assets)
How do consolidated financial statement differ from the financial of a single company?
Because consolidation is consolidation (meaning more than one company), the parent or majority company (50.01%) must integrate the financial details of the subsidiary company with its own. Often times the subsidiary has its own statement. This is very complex and takes time to explain. There are new rules for this and is discussed in Advanced Accounting courses.
One must note that even if consolidated some of these companies are still publicly traded and managed by others not under the thumb of the parent company.
Net credit sales are the revenues generated from the extension of an A/R account to an individual (or other entity), as modified by any allowences, returns, etc...
You could also find it by taking the Net Revenue and subtracting everything except credit sales.
Where does utilities expense appear on the financial statement?
It typically falls on the income statement under general and administrative expenses.
Does the journal entry for depreciation involve Cash account?
No, Depreciation is the process of allocation of fixed asset cost for it's useful revenue earning value to each fiscal year's income statement. So it does not affect cash.
How do you xxplain how multiple-step and single-step income statements differ?
The difference is the layout of the statement. Examples are as follows: Single Step Revenues XXX
Gains XXX
Total Revenue XXX
Expenses XXX
Losses XXX
Total Expenses XXX Net Income XXX Multistep Revenue XXX
Cost of Goods Sold XXX
Gross Profit XXX
Gains XXX
Losses XXX
Other Expenses XXX
Net Income XXX As you can tell the multistep contains a lot more subtotals however both will result in the same net income figure.
Is income tax payable located on a balance sheet or income statement?
No. Income taxes payable is a liability and would show up on the balance sheet (although it might not have its own caption depending on how material the number is compared to the rest of the Company's liabilities). The income statement account that is typically "the partner" to the income taxes payable account is the current tax provision.
Who must prepare financial statements?
Business firms, particularly those with stockholders, must prepare honest and conservative financial statements.
Difference between capital expenditure and revenue expenditure?
Revenue expense are costs in the for day to day running of the business for example servicing a machine, spare parts etc. Revenue expenditure is normally charged against profit in the Income statement in the year it is expensed. Capital expenditure is on an item that will help generate profits over the longer term (12 months or more) so a purchase of a machine or van etc. The item is depreciated over the items useful life and each depreciateable amount is charged to the Income statement in the year the item has help generate profit.
The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.
What is the profit or loss on sale of fixed assets?
In cash flow from operating activities in cash flow statement, loss on sale of asset is included to net profit to arrive at cash flow from operating activities and shown under cash flow from investing activities as this is part of investing activities but in normal net income it is shown as an adjustment which needs to be adjusted to arrive at cash flow from operating activities.
Is Prepaid insurance expense an asset?
Yes. All prepaid items go in current assets until they are used and transferred to the profit and loss.
Cash is a tangible asset. Unlike something without tangible substance such as goodwill, cash is a hard or a tangible asset.
Identify the source of information needed to prepare th income statement?
The Income Statement section of the work sheet is the information source used in preparing the income statement.
Why is prepaid expense classified as an assset on the balance sheet?
This has to do with the matching principle of accounting.
Example: A company has a December 31 year-end, but its rental agreement on a building stipulates that a full year of rent must be paid by the company on December 1 of each year. The payment will cover rent on the building from December 1, 20X1 to November 31, 20X2. The rental payment is $120,000 per year.
If the company expenses the full $120,000 payment in its December 31, 20X1 fiscal year, it will be recording an expense for a payment that it will benefit from in the future (access to the rented premises). Instead, 1/12 of the amount is expensed in the current fiscal year (representing use of the premises during December), and the remaining amount is recorded as an asset (Prepaid Expense), because the company will receive a future benefit from it, and it would be incorrect to expense the entire amount in the 20X1 fiscal year.
What statement are prior period adjustments reported in?
Generally, if you have closed and filed tax returns for a period, any Prior Period adjustments are recorded in the current year as "Non-Operating Income/<zsemicolumzExpense>zsemicolumz"zperiodz This is to retain the integrity of your current year Operating Income.
If you have a specific adjustment example, you can query info@BAFA-Solutions.com for a more detailed response.
What are the effect of depreciation on profit and loss and balance sheet?
Depreciation is an expense. It should be charged under expense of a P&L Statement.
Provision for Depreciation is the total depreciation of a particular fixed asset accumulated over the years. It should be deducted from the figure of the Fixed asset.
In California do condo owners have the right to review condo bills and financial statements monthly?
The only answer to your question is to review your governing documents. You should be able to find your answer in the sections that discuss finances.
As well, you may want to review the California Condominium Law, so that you understand your rights.
Informally, you should absolutely have this right. You can contact the property manager, and the board of directors and demand these rights. If you are denied, you can consider hiring an attorney and making a formal request to clarify your rights.
Is cost of goods sold a purchase?
Shop supplies, being goods purchased for resale, are recorded as Purchases under the periodic system, and Inventory, under the pepetual system. The price of those goods actually sold are both transferred to the cost of goods sold account, - at every sale in the perpetual systme, and once a year under the periodic system.
