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The Accounting Concepts and Practice The CASE STUDY APPROACH
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FINANCIAL ANALYSIS
INCOME STATEMENT
THE MESSAGE OF A BALANCE SHEET
THE MESSAGE OF A BALANCE SHEET
What is the financial message of an Income Statement? The stockholders of every business entity wants to know the return on their investment in the company. The Income Statement determines return on investment. After investors equity is used to generate revenues and the associated cost of the revenues, the equity owner share in the profits. The Income Statement determines the profitability of business entity.
See our accounting concept and practice training materials.
THE MESSAGE OF A BALANCE SHEET
THE MESSAGE OF A BALANCE SHEET
THE MESSAGE OF A BALANCE SHEET
The message of a Balance Sheet is reveals in what accountants called Accounting Equation, which states that at any point of time if a business entity is dissolved, the Balance will be the first document to messaged how creditors and stock holders will allocate the assets of the dissolved entity.
See our accounting concept and practice training materials.
CASH FLOW STATEMENT
THE MESSAGE OF A BALANCE SHEET
CASH FLOW STATEMENT
The message of a Cash Flow Statement is that at some times of business entity, the stakeholders want to know the sources of cash of the entity of their investment, whether, from operations, financing or investment. The message of cash flow statement is clearer if the company is losing money.
See our accounting concept and practice training materials.
YOU TUBE BLOG
YOU TUBE BLOG
SECURITY AND EXCHANGE COMMISSION
SECURITY AND EXCHANGE COMMISSION
Reading Financial Statements Review
SECURITY AND EXCHANGE COMMISSION
It is wise to research SEC if we planned to invest into any public company that is trading on the exchange. Check the Red list to make sure the company is actually registered.
SEC.gov
Reading Financial Statements Review
Reading Financial Statements Review
Reading Financial Statements Review
2. Balance Sheet
The second basic type of financial statements, is the Balance Sheet. It recaps the company’s cash, prepaid expenses, equipment, patents, and other valuable properties at a specific moment in time. This statement is related to the Accounting Equation, which states that the Assets of an entity should be equal to its liability plus owner’s equity or Assets=Liability + Owner’s Equity. This statement provides a picture of what a business owns after the business creditors are paid at a specific moment in time.
Reading Financial Statements Test
Reading Financial Statements Review
Reading Financial Statements Review
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Statement of Shareholder Equity
- Is the owners' residual claim on assets after all debts are paid.
- Shareholder equity is equal to a firm's total assets.
- minus its total liabilities.
- Retained earnings are part of shareholder equity as is any capital Invested.
The Act of Applying GAAP
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Principle of Regularity
This principle states that Accountants must abide by all established rules and regulations.
Example:
As of December 31, 2022, ABC, LLC had Sales of $26,000,000.
Material $10,000,000
Labor $ 5,000,000
Direct Overhead Cost $2,000,000
Administrative Expenses $1,500,000
Corporate Tax Rate 16%
Accrual Vacation amounted to $850,000.
ABC, LLC decided not to include the accrual into the financial statements on December 31,2022. Net Profit before tax, Tax Expense, Net Profit after Tax.
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1. The above chart shows total revenue of $1, 190,000 which is 100%,
2. Materials equals $514,300 or 43% of total revenue, labor equals $594,214 or 50% of total revenue, overhead equals $27,000 or 2% of total revenue,
3. Total operating cost is $1,170,000 or 98% of total revenue,
4. Net profit equals $29,000 or 2% Net Profit Margin.
Cash Flow Statement
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Analysis of three (3) Years Short-Term Cash Budget
Accumulated Cash Balance
FY 2020 Positive Cash Balance $28,315.08
FY 2021 Positive Cash Balance $24,980.00
FY 2022 Positive Cash Balance $19,596.00
Accumulated Positive Cash Balance $72,891.08
Total Cash Inflow $51,771,775.08
Total Cash Outflow - $51,698,884.00
Accumulated Positive Cash Balance $72,871.08
Second Item
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