Accounting Assingment

North South University,

(NSU)

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School of Business

Assignment

Course ID : ACT 201 (Sec.: 11)

Course Title: Introduction to Accounting

Instructor : M. Morshed (MDM)

Senior Lecturer, School of Business.

Semester : FALL

Year : 2012

Submitted by

Robiul Hassan Labib

ID – 1220296030.

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Question 1: Explain using various examples, how the major accounting concepts are used in preparing financial statements.

Solution:

Introduction to Financial Statements One of the steps included in the accounting cycle is the preparation of the principal financial statements. They are the Income Statement and the Balance Sheet. These financial statements are a means by which the information accumulated and processed in financial accounting is periodically communicated to the users. Once the worksheet is completed, it is easy to prepare the financial statements as the necessary data have already been summarized. A third financial statement, which is the Statement of Cash Flows, provides information about cash receipts and cash payments into operating, investing, and financing activities. A Balance Sheet is a formal statement that shows the financial condition of the business as of a given date. It reports the resources of the business (assets), its obligations (liabilities), and the residual ownership (capital or owner’s equity). The Income statement, on the other hand, shows the results of the operations during a given time period. It summarizes business activities for a given period and reports the net income or loss resulting from operations. It contains the nominal accounts or the revenue