TASK 1i Discuss The Main Financial

Topics: Generally Accepted Accounting Principles, Balance sheet, Financial statements Pages: 14 (1379 words) Published: November 16, 2014


TASK 1
i. Discuss the main financial statement for a company
Financial Statement
Financial Statements represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance and liquidity of a company. Financial Statements reflect the financial effects of business transactions and events on the entity. Financial statements are meaningful, written records which allow company to diagnose the financial strengths and weaknesses and increase the life and profitability of the company. Statements are usually prepared annually although the income statement should be developed on a monthly or, at least, a quarterly basis. Typically, financial statement consists four types which are Statement of Financial Position, Income Statement, Cash Flow Statement, and Statement of Changes in Equity. Basically for a company they use the three financial statements. There are Statement of Financial Position, Income Statement, and Cash Flow Statement. Statement of Financial Position

According to the (Statement of Financial Position [Balance Sheet]), Statement of Financial Position also known as the Balance Sheet, presents the financial position of an entity at a given date. It is comprised of three main components: Assets, liabilities and equity. Statement of Financial Position helps users of financial statements to evaluate an entity's financial strength in terms of liquidity risk, financial risk, credit risk and business risk. What is the assets, liabilities and equity?. Assets

Asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. Assets are divided into two categories: current and non-current asset. Current assets are ones that an entity expects to use within one-year time from the reporting date while Non-Current assets are those whose benefits are expected to last more than one year from the reporting date. For examples of current assets are cash and inventory. Examples of non-current assets are furniture, fixtures, property and equipment. Money owed to your company (accounts receivable) is considered an asset. In this company, for total current assets decrease from RM 159,000 to RM 148,700 from year 2013 to 2014 while for total non-current assets is same which is RM 870,000. Liabilities

According to the (A Review of the Conceptual Framework ), liabilities mean is a present obligation of the entity to transfer an economic resource as a result of past events. Liability can for example be a bank loan, which requires an entity to pay the loan installments during the term of the loan to the bank together with related interest costs. As an alternative, the liability can be traded entities payable arising from the purchase of goods on credit from suppliers. Liabilities are divided into two categories: current and non-current (or long-term). They are listed in the order they need to be repaid. Current Liability is one which the entity expects to pay off within one year from the reporting date while Non-Current Liability is one which the entity expects to settle after one year from the reporting date. In this company, for total current liabilities increase from RM 148,800 to RM 154,000 from year 2013 to 2014 while for total non-current liabilities increase from RM 120,000 to RM 210,000. The performance of Khalees Food Industries is not good whereas the total liabilities which include total currents liabilities and total non-currents liabilities increased from the year 2013 to 2014. Here, it indicates that the company cannot reduce the creditor and the debt is increased from year to year. Total liabilities on the year 2013 amounted RM 268,800 increased to RM 364,000 on the year 2014.

Equity
Equity is referred to- the business equity includes money the owners have invested...
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