Financial Statement Usefulness
The Balance Sheet is a statement that tells the assets, liabilities, and net worth of an individual or business at a specific date. It provides information about the nature and amounts of investments, obligations to creditors, and owner's resources and helps in predicting the amounts, timing, and uncertainty of future cash flows (Kieso, 2008). The Balance Sheet is used to access liquidity, solvency, and financial stability.
For an individual, the Balance Sheet can keep track of an investment portfolio and tell the individual what is owned, the costs of the assets, fees, etc., and what the overall portfolio is worth. It can be used to assess the individual assets for worthiness. It can keep track of assets the individual owns, such as cash, savings, etc., and obligations owed to creditors to tell the individual's overall financial worth. Using the Balance Sheet can help an individual assess spending habits and how the spending can be reduced to build worth for solvency and liquidity for emergencies and retirement....
Financial Statements Accounting is a means of keeping track of a firm's financial transactions. There are two different types of accounting, financial and managerial. Financial accounting focuses on the construction of financial statements with the intention of providing an accurate overview of the firm's financial condition. The four major financial statements are the income statement, the balance sheet, the statement of changes in owner's equity and the statement of cash flows
By adding up the two figures one obtains the company's total net worth. The basic rule of a balance sheet is that the assets on one side have to add up to the same amount as the liabilities and the owners' equity combined, on the other side. Investors need to know the contents of a balance sheet because important financial ratios may be calculated with the data therein. These ratios
This means that Ferrellgas is in risk of default. The company paid more in dividends last year than it earned in cash from operations. In short, Ferrellgas has an unsustainable burn rate. While Inergy had a poor financial position, it was able to tap into capital markets to alleviate any cash crunch -- Ferrellgas has yet to do this and of all these firms is the closest to default. Amerigas
Accounting Qualitative Characteristics of Financial Statements There are four principal qualitative characteristics that make the information provided in financial statements useful to users. These are understandability, relevance, reliability and comparability. The first section of this paper will be dedicated to explaining each of these concepts and how they relate to making financial statements more valuable for the audience. The first principal qualitative characteristic is understandability. This relates not only to the information but
The first advantage is that it is easy. The math associated with the percentage of sales method is very simple to execute. The underlying premise of this method is that most of the items on the income statement and on the balance sheet will vary with sales. In addition to direct variable costs, such as cost of goods sold, indirect costs will also vary roughly in line with sales.
According to these analysts, "The implicit assumption underlying the price-to-earnings method is that the fair market value of the closely held business can be approximated from the market value of comparable publicly traded businesses. To implement this method, the valuator must be able to identify a set of presumed-to-be comparable publicly traded companies and obtain sufficient information on each to verify the extent of comparability from an economic, management,
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