Key Financial Relationships: Bank of America and Wells Fargo
Bank of America and Wells Fargo are separate banks, however; both of these institutions share many similarities when reporting their financial statements. The inter-relationships of the data provided in the statements seem to exemplify the correlation of accounting practices between these two banks. As large as these two banks have become, and as complex, one can see that the banks’ roots are still tied firmly to the basic accounting equation. While both banks use organizational control techniques, their financial statements clearly indicate that each bank wishes to discuss a specific type of organizational control used by their company. To better understand the similarities and differences in how Bank of America and Wells Fargo choose to operate; an in-depth look at three specific topics is necessary.
A four part review of the inter-relationships of the data provided in the statements from both banks will provide a better understanding of how they compare. The first inter-relationship of data that can be viewed from these two banks is their statement of cash flows. While Bank of America and Wells Fargo’s statements of cash flows are not identical, the statements have three similarities. The similarities are operating activities, investing activities, and financing activities (Bank of America, 2007) (Wells Fargo & Company, 2007). These three activities have similar subdivisions, however; the amounts that correlate with those subdivisions differ greatly between the banks. The second inter-relationship of data that can be viewed from these two banks is their statement of income. While Bank of America and Wells Fargo's statements of income are not identical, they are similar. These similarities are interest income, interest expense, net interest income, non-interest income, and non-interest expense (Bank of America, 2007) (Wells Fargo & Company, 2007). Once again these activities have similar...
References: Albrecht, S., Stice, J., Stice, E., and Swain, M. (2005). Accounting: Concepts and Applications. (9th Ed.). [University of Phoenix Custom Edition e-text]. Mason, Ohio: Thomson 2005. Retrieved March 11, 2008, from University of Phoenix, rEsource, FIN324--Financial Analysis for Managers I Web site.
Bank of America. (2007). 2006 Annual report. Retrieved March 5, 2008, from http://media.corporate-ir.net/media_files/irol/71/71595/reports/2006_AR.pdf.
Wells Fargo & Company. (2007). Wells fargo, the next stage. 2006 Annual Report. Retrieved March 6, 2008, from https://www.wellsfargo.com/invest_relations/annual.
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