Introduction to Financial statements - AccountingFaHaD .H. NooR
Financial statement introduction and its elements.
There are three fundamental financial statements used in accounting.
The income statement shows revenues and expenses.
The balance sheet is a listing of all asset, liability, and equity account balances that do not appear on the income statement.
The statement of cash flows shows how the company receives and spends its cash.
Learning Objective 1: To explain the nature and general purpose of financial statements.
Learning Objective 2: To explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles.
Learning Objective 3: To demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners’ Equity.
Learning Objective 4: To explain how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation.
Learning Objective 5: To explain how the income statement reports an enterprise’s financial performance for a period of time in terms of the relationship of revenues and expenses.
Learning Objective 6: To explain how the statement of cash flows presents the change in cash for a period of time in terms of the company’s operating, investing, and financing activities.
Learning Objective 7: To explain the important relationships among the statement of financial position, income statement, and statement of cash flows, and how these statements relate to each other.
Learning Objective 8: To explain common forms of business ownership—sole proprietorship, partnership, and corporation—and demonstrate how they differ in terms of their presentation in the statement of financial position.
Learning Objective 9: To discuss the importance of financial statements to a company and its investors and creditors and why management may take steps to improve the appearance of the company in its financial statements.
Introduction to Financial statements - AccountingFaHaD .H. NooR
Financial statement introduction and its elements.
There are three fundamental financial statements used in accounting.
The income statement shows revenues and expenses.
The balance sheet is a listing of all asset, liability, and equity account balances that do not appear on the income statement.
The statement of cash flows shows how the company receives and spends its cash.
Learning Objective 1: To explain the nature and general purpose of financial statements.
Learning Objective 2: To explain certain accounting principles that are important for an understanding of financial statements and how professional judgment by accountants may affect the application of those principles.
Learning Objective 3: To demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners’ Equity.
Learning Objective 4: To explain how the statement of financial position, often referred to as the balance sheet, is an expansion of the basic accounting equation.
Learning Objective 5: To explain how the income statement reports an enterprise’s financial performance for a period of time in terms of the relationship of revenues and expenses.
Learning Objective 6: To explain how the statement of cash flows presents the change in cash for a period of time in terms of the company’s operating, investing, and financing activities.
Learning Objective 7: To explain the important relationships among the statement of financial position, income statement, and statement of cash flows, and how these statements relate to each other.
Learning Objective 8: To explain common forms of business ownership—sole proprietorship, partnership, and corporation—and demonstrate how they differ in terms of their presentation in the statement of financial position.
Learning Objective 9: To discuss the importance of financial statements to a company and its investors and creditors and why management may take steps to improve the appearance of the company in its financial statements.
An introduction to the three main financial statements using a tree analogy. If you like this, just imagine what I can do in person at your next event. Go to www.geniwhitehouse.com or www.evenanerd.com for more information and my list of topics, expertise, and nerdy obsessions.
My next deck is going to include basset hounds (see my post from 2023). That is a promise.
Horizontal analysis is also known as Trend Analysis refers to studying the behavior of individual financial statement items over several accounting periods. The Vertical Analysis concentrates on the relationships between various financial items on a financial statement. Copy the link given below and paste it in new browser window to get more information on Horizontal and Vertical Analysis:- http://www.transtutors.com/homework-help/accounting/horizontal-and-vertical-analysis.aspx
Financial Reporting And Analysis Explained.as to why is it important, Who is it important for and the different ways of analyzing a financial statement.
Greenwich University
The Cash Flow Statement translates earnings in the Income Statement into cash inflows. Explained in detail above as a part of the topic “Financial accounting”, is brought to you by Welingkar’s Distance Learning Division.
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Essential Components of Financial Statement Invensis
A financial statement is an important tool which gives crystal clear information about a company’s financial situation and is helpful in making sound business decisions. Find out the essential components of financial statement and how outsourcing Finance and Accounting services to Invensis Technologies can improve the fiscal aspect of your company.
Invensis Technologies (http://www.invensis.net) is a leading IT & Business Process Outsourcing Firm based in Bangalore, India with more than 15 years of experience. Our customized End-to-End Finance and Accounting(F&A) Outsourcing Services (http://www.invensis.net/outsource-finance-accounting-bpo-services.php) include Tax Preparation Services, Accounting and Bookkeeping, Financial Analysis reporting, Record to Report Services and Payroll Processing Services.
To find out more about our services and benefits of partnering with us, please contact us at sales{at}invensis{dot}net or you can call us from US +1(302)-261-9036 ; UK +44 203 411 0183 ; AUS +61 3 8820 5183 ; IND +91 80 41155233
An introduction to the three main financial statements using a tree analogy. If you like this, just imagine what I can do in person at your next event. Go to www.geniwhitehouse.com or www.evenanerd.com for more information and my list of topics, expertise, and nerdy obsessions.
My next deck is going to include basset hounds (see my post from 2023). That is a promise.
Horizontal analysis is also known as Trend Analysis refers to studying the behavior of individual financial statement items over several accounting periods. The Vertical Analysis concentrates on the relationships between various financial items on a financial statement. Copy the link given below and paste it in new browser window to get more information on Horizontal and Vertical Analysis:- http://www.transtutors.com/homework-help/accounting/horizontal-and-vertical-analysis.aspx
Financial Reporting And Analysis Explained.as to why is it important, Who is it important for and the different ways of analyzing a financial statement.
Greenwich University
The Cash Flow Statement translates earnings in the Income Statement into cash inflows. Explained in detail above as a part of the topic “Financial accounting”, is brought to you by Welingkar’s Distance Learning Division.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/SlideshareFaccounting
Join us on Facebook: http://www.facebook.com/welearnindia
Follow us on Twitter: https://twitter.com/WeLearnIndia
Read our latest blog at: http://welearnindia.wordpress.com
Subscribe to our Slideshare Channel: http://www.slideshare.net/welingkarDLP
Essential Components of Financial Statement Invensis
A financial statement is an important tool which gives crystal clear information about a company’s financial situation and is helpful in making sound business decisions. Find out the essential components of financial statement and how outsourcing Finance and Accounting services to Invensis Technologies can improve the fiscal aspect of your company.
Invensis Technologies (http://www.invensis.net) is a leading IT & Business Process Outsourcing Firm based in Bangalore, India with more than 15 years of experience. Our customized End-to-End Finance and Accounting(F&A) Outsourcing Services (http://www.invensis.net/outsource-finance-accounting-bpo-services.php) include Tax Preparation Services, Accounting and Bookkeeping, Financial Analysis reporting, Record to Report Services and Payroll Processing Services.
To find out more about our services and benefits of partnering with us, please contact us at sales{at}invensis{dot}net or you can call us from US +1(302)-261-9036 ; UK +44 203 411 0183 ; AUS +61 3 8820 5183 ; IND +91 80 41155233
1. Cash Flow statement
2. Permanent & Temporary Working Capital
3. Cash Flow and Common Size Statement
4. EOQ & Safety Stock
5. Return on Equity & Return on Capital Employed
Understanding financial statements - ITT Project Lekshmi Pillai
Here the speaker describes the roots of financial statements, how to interpret the financial statements and the different types along with practical examples.
Basics of Financial Management for Non Finance Executives - Part 1SChakrabarti
This is an introductory Session of Financial Management for Non Finance executives. it covers the basic Financial concepts and provides an overview of Financial Statements, different types of transactions and the similarities and differences between assets & expenses.
A presentation about the Cash Flow Statement ,whole chapter is covered in the slides .one can easily understand the concept of cash flow statement
and a video is also there but link went missing so please search it on youtube by the name of "cash flow statement in 3-min" a beautiful video to understand the basic concept of cash flow statement.In the end a numerical has solved for the better understanding ,which let u fetch marks in your examinations.
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Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
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Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Ethnobotany and Ethnopharmacology:
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Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
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Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
2. 2-2
Introduction to FinancialIntroduction to Financial
StatementsStatements
Three primary
financial
statements.
Income Statement
Balance Sheet
Statement of Cash Flows
We will use a corporation to describe these
statements.
3. 2-3
Describes
where the
enterprise
stands at a
specific date.
Income Statement
Balance Sheet
Statement of Cash Flows
Introduction to FinancialIntroduction to Financial
StatementsStatements
4. 2-4
Depicts the
revenue and
expenses for a
designated
period of time.
Income Statement
Balance Sheet
Statement of Cash Flows
Introduction to FinancialIntroduction to Financial
StatementsStatements
5. 2-5
Depicts the
ways cash has
changed during
a designated
period of time.
Income Statement
Balance Sheet
Statement of Cash Flows
Introduction to FinancialIntroduction to Financial
StatementsStatements
6. 2-6
Basic Financial StatementsBasic Financial Statements
Three types of financial statements are mandated by the
accounting and financial regulatory authorities:
1. Income statement – how much money you made last year?
Revenue, expense, profits over a year or quarter.
1. Balance sheet – What’s your current financial situation?
a snap shot on a specific date of
Assets (value of what the firm owns),
Liabilities (value of firm’s debts), and
Shareholder’s equity (the money invested by the company
owners)
1. Cash flow statement – How did the cash come and go?
cash received and cash spent by the firm over a period of time
7. 2-7
Vagabond Travel Agency
Balance Sheet
December 31, 2009
Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:
Notes receivable 10,000 Notes payable 41,000$
Accounts receivable 60,500 Accounts payable 36,000
Supplies 2,000 Salaries payable 3,000
Land 100,000 Total liabilities 80,000$
Building 90,000 Owners' Equity:
Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000
Total 300,000$ Total 300,000$
A Starting Point: Statement ofA Starting Point: Statement of
Financial PositionFinancial Position
8. 2-8
The Concept of the BusinessThe Concept of the Business
EntityEntity
Vagabond
Travel
Agency
A business
entity is
separate from
the personal
affairs of its
owner.
9. 2-9
Vagabond Travel Agency
Balance Sheet
December 31, 2009
Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:
Notes receivable 10,000 Notes payable 41,000$
Accounts receivable 60,500 Accounts payable 36,000
Supplies 2,000 Salaries payable 3,000
Land 100,000 Total liabilities 80,000$
Building 90,000 Owners' Equity:
Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000
Total 300,000$ Total 300,000$
AssetsAssets
Assets are
economic
resources that are
owned by the
business and are
expected to benefit
future operations.
Assets are
economic
resources that are
owned by the
business and are
expected to benefit
future operations.
10. 2-10
AssetsAssets
Cost PrincipleCost PrincipleCost PrincipleCost Principle
Going-ConcernGoing-Concern
AssumptionAssumption
Going-ConcernGoing-Concern
AssumptionAssumptionObjectivityObjectivity
PrinciplePrinciple
ObjectivityObjectivity
PrinciplePrinciple
Stable-DollarStable-Dollar
AssumptionAssumption
Stable-DollarStable-Dollar
AssumptionAssumption
These accounting principles support
cost as the basis for asset valuation.
11. 2-11
Vagabond Travel Agency
Balance Sheet
December 31, 2009
Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:
Notes receivable 10,000 Notes payable 41,000$
Accounts receivable 60,500 Accounts payable 36,000
Supplies 2,000 Salaries payable 3,000
Land 100,000 Total liabilities 80,000$
Building 90,000 Owners' Equity:
Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000
Total 300,000$ Total 300,000$
LiabilitiesLiabilities
Liabilities are
debts that
represent
negative future
cash flows for the
enterprise.
Liabilities are
debts that
represent
negative future
cash flows for the
enterprise.
12. 2-12
Owners’ EquityOwners’ Equity
Vagabond Travel Agency
Balance Sheet
December 31, 2009
Assets Liabilities & Owners' Equity
Cash 22,500$ Liabilities:
Notes receivable 10,000 Notes payable 41,000$
Accounts receivable 60,500 Accounts payable 36,000
Supplies 2,000 Salaries payable 3,000
Land 100,000 Total liabilities 80,000$
Building 90,000 Owners' Equity:
Office equipment 15,000 Capital stock 150,000
Retained earnings 70,000
Total 300,000$ Total 300,000$
Owners’ equity
represents the
owners’ claims
on the assets of
the business.
Owners’ equity
represents the
owners’ claims
on the assets of
the business.
14. 2-14
An Income StatementAn Income Statement
SalesSales
Minus Cost of Goods SoldMinus Cost of Goods Sold
= Gross Profit= Gross Profit
Minus Operating ExpensesMinus Operating Expenses
Selling expensesSelling expenses
General and Administrative expensesGeneral and Administrative expenses
Depreciation and Amortization ExpenseDepreciation and Amortization Expense
= Operating income (EBIT)= Operating income (EBIT)
Minus Interest ExpenseMinus Interest Expense
= Earnings before taxes (EBT)= Earnings before taxes (EBT)
Minus Income taxesMinus Income taxes
= Net income (EAT)= Net income (EAT)
16. 2-16
The Cash Flow StatementThe Cash Flow Statement
The Cash Flow Statement is used by firms to explain
changes in their cash balances over a period of time by
identifying all of the sources and uses of cash.
Source of cash is any activity that brings cash into the
firm. For example, sale of equipment.
Use of cash is any activity that causes cash to leave
the firm. For example, payment of taxes.
17. 2-17
Cash Flow StatementCash Flow Statement
The format for a traditional cash flow statement is as follows:
Beginning Cash Balance
Plus: Cash Flow from Operating Activities
Plus: Cash Flow from Investing Activities
Plus: Cash Flow from Financing Activities
Equals: Ending Cash Balance
Operating activities represent the company’s core business
including sales and expenses. Basically any activity that affects net
income for the period.
Investing activities include the cash flows that arise out of the
purchase and sale of long-term assets such as plant and equipment.
Financing activities represent changes in the firm’s use of debt and
equity such as issue of new shares, payment of dividends.
There are three fundamental financial statements used in accounting.
The income statement shows revenues and expenses.
The balance sheet is a listing of all asset, liability, and equity account balances that do not appear on the income statement.
The statement of cash flows shows how the company receives and spends its cash.
This chapter will look at the financial statements of a corporation.
The balance sheet (also referred to as the statement of position) describes the financial position of a company at a specific point in time. A balance sheet may be prepared monthly, quarterly, or annually depending on the needs of management and external users. The balance sheet is sometimes referred to as the statement of financial position.
Net income is defined as the excess of revenues over expenses. Financial statements begin with a three-line title comprised of the company name, the name of the statement, and the period covered by the report. The income statement lists revenues and expenses that were incurred over a period of time. Most companies prepare monthly income statements.
In the long-run, revenues will generate positive cash inflows to the company and expenses will result in negative cash flows to the company. Just remember, revenues and expenses that appear on the income statement may not always produce cash flows in the current accounting period. Net income (or net loss) is simply the difference between revenues and expenses. When revenues exceed expenses, the result is net income. When expenses exceed revenues, the result is a net loss.
The statement of cash flows will be covered in detail in a later chapter. The statement of cash flows is divided into three major sections: (1) cash flows from operating activities; (2) cash flows from investing activities, and (3) cash flows from financing activities. The statement describes cash inflows and outflows over a period of time.
The statement of financial position, commonly referred to as the balance sheet, is an inventory of assets, liabilities, and equity at the end of the month. Our total assets are equal to $300,000. This includes cash of $22,500, notes receivable of $10,000, supplies of $2,000, and the balances in the remaining asset accounts.
Liabilities include notes payable of $41,000, accounts payable of $36,000 and salaries payable of $3,000. The accounts in the owners’ equity section of the balance sheet are capital stock of $150,000 and retained earnings of $70,000.
Notice that the total assets are equal to the total liabilities plus owners’ equity.
The business entity principle states that the transactions of individual owners of a business and those of the business must be separate.
Assets are resources owned or controlled by an entity. They include such items as cash, accounts receivable (amounts owed to the company by customers), land, building and equipment, and supplies.
The cost principle tells us that accounting information is based upon actual cost incurred. We refer to this as historical cost.
The going-concern assumption states that in the absence of information to the contrary, the business entity is assumed to continue operations into the foreseeable future.
The objectivity principle states that accounting information must be unbiased and based upon independent evidence.
The stable-dollar assumption tells us that we will only record accounting information that can be expressed in monetary units, usually dollars in the United States.
Liabilities represent the claims of creditors on an entity’s assets. Liabilities include accounts payable (amounts owed to creditors for assets purchased on account), taxes payable, and wages payable (amounts owed to our employees at the end of the accounting period).
The equities of an entity include investments by owners, withdrawals by owners, and earnings retained by the business. Investments by owners and net income increase owners’ equity. Payments to owners and net losses decrease owners’ equity.
The basic accounting equation states that assets are equal to liabilities plus equity of a company. The equation makes sense because it states that assets must be equal to the claims against those assets.
There are two broad categories of claims against an asset: Claims by creditors (called liabilities), or after all creditor claims are satisfied, the residual owners (the stockholders) have a claim on those assets.
Financial statements are only one source of information about the operations of a company. The financial statements of a company can be compared to those of other companies in the same industry, major national or international competitors, and to the norms for the national economy.