¶ … Financial Statement
The four financial statements are the balance sheet, income statement, statement of cash flow, and statement of owner's equity. Briefly, the balance sheet is comparison of assets to liabilities and equity. This statement is indicative of a company's position at a specific time. The income statement is a record of a company's operations over a given period of time. It shows a company's expenses, losses and revenues and is indicative of the company's net income during that period of time. The statement of cash flows is intended to provide information about a company's cash receipts and cash payments for operations, investments and financing during an accounting period. Finally, the statement of owner's equity is intended to show changes in owner's or shareholder's equity from one fiscal year to the next. Owner contributions and any additional capitol, such as the sale of new shares, are added to the equity, while dividend payments and owner withdrawals are subtracted. Financial statements are generally supplemented by information from management to explain anomalies in revenues that may have occurred during the course of the accounting period (U.S. Security and Exchange Commission, 2007).
Both internal and external entities use these statements in order to inform the decision making process. These documents provide pertinent information on the financial position (balance sheet),
Purpose of the Income Statement
The income statement represents the flow of resources: revenues, expenses and profits, which reveal financial performance of over a specific period of time. In addition to reporting profit or loss results the income statement helps decision makers focus on overall revenues and costs involved in generating these revenues. The income statement provides much of the basic data need to calculate the financial ratios used in planning and controlling activities. An income statement begins with total revenue generated during a year, quarter, or month, and then deducts all the costs related to producing the revenue. The final figure on the income statement, net income after taxes, is the so called bottom line (Kurtz, 2010).
Application of the Income Statement in Everyday Life
Personal Finance is an important aspect of everyday life. A personal finance statement is essential to evaluating an individual's ability to afford both large and small purchases and should drive a personal budget. Budgeting is the process of assigning monies for a particular purpose. In order to make the best use of one's income it is crucial not to spend more money than one makes. Deficit spending can be easily done, and is a financial trap that can take decades to overcome. Whether making a budget for an annual salary of $24,000 or an annual salary $240,000, the fundamental…
Financial Statement Review Costa Company Balance Sheet Assets Cash Accounts Receivable Equipment (net of depreciation) Inventory Total Assets Liabilities Accounts Payable Long-term Debt Total Liabilities Stockholder's Equity Common Stock Paid in Capital Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder Equity Costa Company Income Statement Revenue Cost of Goods Sold Gross Profit Expenses Depreciation Expense Insurance Marketing Misc Expense Property Taxes Salaries Utilities Rent Total Expenses Net Income Balance Sheet errors effect the presentation of assets, liabilities, and equity where the Income Statement errors effect the classification of revenues and expenses (Kieso, Weygandt, & Warfield 2008, p 1174). The physical count of inventory shows the
I agree with Harper (2009) on this, as well. Just scratching the surface of the financial statements will not help a person who is trying to invest in a company, because, as is often said, the devil is in the details. Something can look incredibly good on the first page and simply be terrible as one digs deeper into it. There might also be issues that a company has and
Financial Statements The income statement and the balance sheet are some of the most commonly used financial statements, both at a personal and corporate level. In this text, I concern myself with how I can utilize the balance sheet in my day-to-day life. Further, I look at how a business manager could benefit by having a comprehensive understanding of this crucial financial statement. Lastly, I discuss how I may apply
financial statements of Marriott Hotels and discusses measurement bases they employ. The essay also surveys the literature for current thinking on fair value measurement. According to the International Financial Reporting Standards (IFRS), measurement "involves assigning monetary amounts at which the elements of financial statements are to be recognized and reported" (Deloitte, 2011). Accounting measurement consists of quantifying financial information in dollars or units. These measurements are then used to report
Balance sheet of a business describes a picture of that business from a financial point-of-view. The balance sheet represents a real time analysis of the company and can assist all those who understand its purpose in gaining a full understanding of conducting the operations of that business. The balance sheet of a company will have sections identifying the company's assets liabilities and equity. Assets describe the positive and liquid attributes of
Financial Statements McDonalds is a fast food restaurant chain that operates globally. The company is the leader in the industry, and is one of the most recognized brands in the world. The income statement can reveal a number of things about a company. First, it reveals the revenues that the company has earned. McDonalds has seen its revenues fluctuate over the past three years. In 2012, revenues were $27.567 billion. They increased
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now