Chapter 1: Overview—The Financial Statements Chapter 1 introduces the four financial statements--Income Statement‚ Statement of Retained Earnings‚ Balance Sheet‚ and Statement of Cash Flows. Accounting as the language of business is discussed along with an introduction of the various users of accounting information. Financial and Managerial accounting are compared. The four ways to organize a business – proprietorship‚ partnership‚ limited – liability company‚ and corporation‚ are discussed
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Case Preparation Questions (Note that questions sometimes continue on the next page) Use a spreadsheet program such as Excel for computations for all cases Riley Supply 1. Prepare one indirect cash flow statement (operating-investing-financing) for 2004-2005 and a second one for 2005-2006. Do not aggregate any accounts. 2. Calculate common-size income statement for each year. 3. Calculate all financial ratios (use “A Basis Set of Financial Ratios”) for each year. You will
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required. A brand new company will need to be able to provide a sales projection plan‚ the production plan‚ to be able to put together the pro forma income statement. A brand new company will not have a balance sheet from the year before‚ or will it have an income statement‚ a cash balance sheet or any other budget plan that could be used to be able to secure the operating capital and the loans that is from the bank. A new company that is starting up and that is forming they will need to know how
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Interpret the contents of a trading profit and loss account and balance sheet for a selected company. Wansbeck Motors Ltd is a limited company‚ there for have to submit their income statement and balance sheet to HM Revenue and Customs every year‚ for larger businesses this could be more often. The Income Statement (Trading Profit And Loss Account) I would also point out the fact that the “trading profit and loss account” is now called an income statement. The income statement was constructed
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form of financial recording to do as part of your job description. Spreadsheets‚ budgets‚ cash flow projections‚ business statistics‚ figures and the financial side of a business is not just meant for accountancy experts. Many are baffled by balance sheets‚ or confused by the financial statements of a business entity. This article therefore takes us through the basic terminology and knowledge to enable us understand and interpret effectively financial statements. For any thriving business‚ financial
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per section. 1. Should the information pertaining to actual claims incurred as of the balance sheet date that became available after the balance sheet date be considered in determining management’s best estimate of the medical benefits payable? If so‚ how does this information impact the amount recognized or disclosed? Yes‚ the information pertaining to actual claims incurred as of the balance sheet date must be considered in order to provide management with the best estimate for Medical
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assets are used in accounting to clearly define the positive side of a balance sheet. Current and non-current assets are not only cash‚ but also monies which will turn into cash in the future. This includes receivables‚ properties‚ work in progress and buildings. This paper will define current and non-current assets‚ differentiate between the two‚ the order of liquidity and how the order of liquidity applies to the balance sheet. A current asset is defined as “receivables‚ inventory‚ work in process
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based on the information in the financial statements. Given below are the components of the Financial Statements and the objective of each component is also given in-front of each component. Statement Trading account Profit and Loss account Balance Sheet Objective Computation of gross profit or loss Computation of net profit or loss Represents the financial position or status 2. Trading‚ Profit and Loss Account A Manufacturing account is prepared by an organization engaged in manufacturing process
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Presentation 4 What can you find from a financial statement? Financial statement ate meant to present the financial information of the entity and for readers. Financial statement for businesses usually include income statement‚ balance sheet ‚ statement of retained earnings and cash flows are well as other possible statements. Income Statement A financial statement that measures a company’s financial performance over a specific accounting period. Financial performance is assessed by giving
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Standards may lead to distortion of information in the financial statements. 4.2 Types of Financial Statements Generally‚ most business is required to prepare a set of the following financial statements : Trading‚ Profit and Loss Account Balance Sheet 4.3 Trading‚ Profit and Loss Account The Trading‚ Profit and Loss Account shows the profitability of the business at the end of its financial accounting period. The income earned is matched with the cost and expenses incurred during the period
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