Executive Summary GAAP‚ generally accepted accounting principles‚ are the rules for preparing the financial statements. There are specialized professionals FASB‚ SEC‚ AAA‚ FEI‚ IMA‚ AIMR and others for developing GAAP. There are 13 principles for preparing Financial Statement. Business Entity Principle requires business to be separated from owner of the business. Going Concern principles requires the business to assume that the business will for long time. Revenue Recognition Principle considers
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Analysis of Financial Statements After reading this chapter‚ students should be able to: Explain why ratio analysis is usually the first step in the analysis of a company’s financial statements. List the five groups of ratios‚ specify which ratios belong in each group‚ and explain what information each group gives us about the firm’s financial position. State what trend analysis is‚ and why it is important. Describe how the Du Pont chart is used‚ and how it may be modified to include
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IDENTIFY THE MAJOR FINANCIAL STATEMENTS AND OTHERS MEANS OF REPORTING. FININCAL STATEMENTS: The statements prepared to show the financial position of the business is known as financial statements. These statements provide financial information of an equity to internal and external users and decision makers. MAJOR FINANCIAL STATEMETS: The three main financial statements are as follow:
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Financial Statements Financial statements are records of relative financial information of organizations that are highly valuable to both internal and external users of that organization. The following four basic financial statements constitute the foundation of accounting: * Balance sheet * Income statement * Retained earnings statement * Statement of cash flows Purpose of the Financial Statements The balance sheet shows a clear picture of the organization’s financial
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AS No. 1: References in Auditors’ Reports to the Standards of the Public Company Accounting Oversight Board Auditing Standard No. 1 Appendix: Illustrative Reports AS No. 3: Audit Documentation Auditing Standard No. 3 Appendix A: Background and Basis for Conclusions AS No. 4: Reporting on Whether a Previously Reported Material Weakness Continues to Exist Auditing Standard No. 4 Appendix A: Illustrative Reports on Whether a Previously Reported Material
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was “Financial Statements.” There are four financial statements to work with; Balance Sheets‚ Income Statements‚ Retained Earnings Statements‚ and Statement of Cash Flows. Balance sheets let you have a quick review of what assets‚ liabilities‚ and equity were distributed within the accounting period. Income statements show the business whether they made a profit or not. Retained earnings statement shows what the company decides to retain for them‚ after everything else is paid. The statement of cash
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company’s accounting statements or financial statements and making comparisons with relevant information Financial Ratios are measures of relative values of key financial information. Ratio Analysis involves methods of calculating and interpreting financial ratios to assess the firm’s performance. Ratios are measured as (1) percentages; (2) times or multiples; and (3) number of days. Ratios are of interest as key indicators of financial health to: shareholders
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In the corporate annual report‚ a statement reporting the independent auditor’s opinion was included. This opinion shows that the auditor has reviewed the internal controls over financial reporting and it also audits the consolidated financial position of Monsanto. The auditors express the fact that they are independent from Monsanto which means that the report is not coming from someone within the Monsanto Company. This is also important because it means that the report will not be biased and
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PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31‚ 2013 (UNAUDITED) AND DECEMBER 31‚ 2012 (AUDITED) AND FOR THE THREE MONTHS ENDED MARCH 31‚ 2013 AND 2012 (UNAUDITED) F-1 PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in million pesos‚ except par value per share amounts and number of shares) As at January 1‚ As at March 31‚ As at December 31‚ 2012 2012 2013
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Auditing Final Review Questions Chloe Granahan 1. Assume that the audit team notes the client has made a significant change in its product line which requires that new equipment be purchased. Which of the following would be of greatest concern to the auditor? A. Inappropriate book value of new equipment. B. Impaired value of new equipment. C. Impaired value of old equipment. D. Inappropriate depreciation calculation for new equipment. 2. A. B. C. D. Audit procedures should be proportional to which of the following
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