FINANCIAL STATEMENTS AND CASH FLOW 1. Liquidity measures how quickly and easily an asset can be converted to cash without significant loss in value. It’s desirable for firms to have high liquidity so that they have a large factor of safety in meeting short-term creditor demands. However‚ since liquidity also has an opportunity cost associated with it - namely that higher returns can generally be found by investing the cash into productive assets - low liquidity levels are also desirable to the
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CHAPTER 4 & 5 – BALANCE SHEET AND INCOME STATEMENT -Identify the different financial statements (BS*‚ IS‚ Statement of Stockholders’ Equity‚ and related notes) -Identify the different components of the BS (Assets: current and long term; Liabilities: current and long term; stockholders’ equity: preferred stock‚ common stock‚ PIC‚ treasury stock) -Identify the different component of the IS (Gross profit‚ earnings before interest and taxes‚ interest expense‚ income tax expense‚ income from continuing
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Balance Sheet and Income Statement Commentary Belinda Greer BSA/500 March 24‚ 2012 Murali Ramachandran Balance Sheet and Income Statement Commentary Balance sheets and income statements are a snapshot of a company’s stability and financial situation. Combined the statements show the income‚ expenses‚ and stockholder’s equity in the company. These statements are often analyzed by financial institutions when a company comes to them needing a loan. Stockholders and other investors also look
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4-1 4 Income Statement Usefulness Predicting future performance. 4-2 Evaluate past performance. Help assess the risk or uncertainty of achieving future cash flows. Income Statement Limitations Companies omit items that cannot be measured reliably. 4-3 Income is affected by the accounting methods employed. Income measurement involves judgment. Income Statement Quality of Earnings Companies have incentives to manage income to meet or
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Assignment - A Question 1(a) What do you understand by the concept of conservatism ? Why is it also called the concept of prudence? Why is it not applied as strongly today as it used to be in the Past? Question 1(b) What is a Balance Sheet? How does a Funds Flow Statement differ from a Balance Sheet? Enumerate the items which are usually shown in a Balance Sheet and a Funds Flow Statement. Question 2(a) Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances
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TRUE-FALSE STATEMENTS 8. Closing entries are not needed if the business plans to continue operating in the future and issue financial statements each year. 9. The dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period. 10. After closing entries have been journalized and posted‚ all temporary accounts in the ledger should have zero balances. 11. Closing revenue and expense accounts to the
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(BWFF1013) FIRST SEMESTER 2012/2013 (A121) CHAPTER 2-FINANCIAL STATEMENT AND CASH FLOWS Section A Please circle TRUE or FALSE to the following statements. 1) An income statement reports a firm’s cumulative revenues and expenses from the inception of the firm through the income statement date. Answer: FALSE 2) A firm’s income statement reports the results from operating the business for a period of time‚ while the firm’s balance sheet provides a snapshot of the firm’s financial position at
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14 Statement of Cash Flows Solutions to Questions 14-1 The statement of cash flows highlights the major activities that impact cash flows and hence affect the overall cash balance. 14-2 Cash equivalents are short-term‚ highly liquid investments such as Treasury bills‚ commercial paper‚ and money market funds. They are included with cash because investments of this type are made solely for the purpose of generating a return on temporarily idle funds and they can be easily converted to cash. 14-3
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Course Project Comprehensive Balance Sheet December 31st 2012 Assets Current Assets Cash $42‚485 Account Receivable $165‚824 Allowance for Doubtful accounts 1‚850 Net Accounts Receivable 163‚974 Inventories 499‚493 Securities (available for sale/at fair market value) 28‚250 Notes Receivable (due next year) 23‚000 Prepaid Expenses 16‚252 Total Current Assets……………………………………………………………………………………$773‚454 Non-Current Assets
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Income statement: In the case of sole proprietary and partnership concerns there are no prescribed forms of the income statement and balance sheet. Their preparation is also desirable but not compulsory. However‚ they are generally prepared. In the case of trading concern‚ a trading account and in the case of a manufacturing concern‚ a manufacturing account and a trading account can also be prepared. In such a case‚ the account heading is mentioned as follows: Manufacturing/trading and profit and
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