Archive about 'Financial Statements'
Tweet As we know liabilities are financial obligations of the business to external parties which consists of two major categories namely: Non-current liabilities and Current liabilities NON- CURRENT LIABILITIES CURRENT LIABILITIES Amounts owing by the business that are NOT REPAID WITHIN ONE YEAR. Examples are Long term loan, Mortgage on Property and Debenture Amounts [...]
Tweet As we know assets are property owned by a business which consists of two major categories namely: NON-current assets and Current assets NON- CURRENT ASSETS CURRENT ASSETS Assets bought not for resale but to be used in the operations of the business with useful lives of MORE THAN ONE YEAR. Divided into three categories [...]
Tweet Interestingly, financial statements ( income statement, balance sheet, cash flow statements, notes to the financial statements) is only part of financial reporting.Financial reporting includes not onlyfinancial statements but other means of providing and communicating useful information in making business and economic decision. These information relates to the company’s resources, obligations, earnings and others. Corporate [...]
Tweet In the financial statements which comprise balance sheet, income statement , statement of changes in equity, cash flow and notes to the accounts there are certain principles that are guiding the preparation namely: Aggregation. Each material class of similar items is presently separately. Dissimilar items are presented separately unless they are immaterial No offsetting. [...]
Explain the alternative bases of measurement used to measure the assets and liabilities in the balance sheet.
Tweet Historical cost: The amount of cash or cash equivalent paid to purchase an asset ( plus any cost of acquisition and/ preparation. If asset not bought for cash, historical cost is the fair value of whatever was given in order to buy the asset For liabilities, the historical cost basis of measurement is the [...]
Tweet Special classes of common stocks:-are created by a firm to meet special needs and circumstances. Let’s say we create two classes of common stock namely: Class A which has no voting rights but is entitles to receive dividends before dividends can be paid on Class B common stock Class B for stockholders who have [...]
Tweet Outstanding creditors including government dues Sundry creditors Bills payable Loan Capital
Tweet Earlier article deals with individual classification of assets in a balance sheet. Below assets are classified in accordance to urgency of liquidity: Cash in hand Cash at bank Government securities Bills receivables Sundry debtors Prepaid expenses Stock of finished goods Work –in-progress Raw materials Machinery Furniture Building Patents Goodwill
Tweet To sum up, the cost of goods sold is found by applying the following formula: Opening stock value $XX ADD: Cost of purchases ( for manufacturing concern, the cost of production) $XX ——– $XX LESS: Closing stock value ($X) ——– = Cost of goods sold $XX [...]
On the Assets Side of the Balance Sheet, what is the usual way of listing the format or order of items
Tweet As discussed in earlier article, a balance sheet reflects the financial position of a business as at a certain point of time. It lists all liabilities and assets of a business. Below is the usual way to list the Assets items in the balance sheet : (a) Fixed asets Listed in order of LENGTH [...]