Question

In: Accounting

Question 1 (10 marks) Describe the purpose of each Financial Statements and explain the relationships among...

Question 1

Describe the purpose of each Financial Statements and explain the relationships among them?

Solutions

Expert Solution

Generally the financial statements means Balance Sheet, Profit and loss Statement / Income Statement and Cash flow statement.

The Balance Sheet shows the financial position of a particular date. It depicts the assets and liabilities as at the closure of a particular date, generally last day of the financial year. Income Statement or Profit and loss statement shows the operation results for a particular period. It contains income details, expenses and the net of operational results. A Cash flow statement is one which narrates the flow of money into and out of the organisation. It differentiate the cash flows as , related to operation activity, investment activity and financing activity.

The financial statements are related to each other. The items of one financial statement may be present in the other financial statements. For example, closing inventory value is present at both income statement and balance sheet. Profit or loss of the income statement is directly forming part of the retained earnings or the share holders fund. The cash flow from operations is completely dependent on the income statement data. Cash flow from investment activity is related to the assets of the financial statement. Cash flow from financing activities is related to the liabilities of the balance sheet. Hence the financial statements are related to each other.


Related Solutions

Describe the purpose of each financial statement and explain the relationship among them
Describe the purpose of each financial statement and explain the relationship among them
Identify the four financial statements and describe the purpose of each.
Identify the four financial statements and describe the purpose of each.
What is the purpose of each of these financial statements? What is the purpose of the...
What is the purpose of each of these financial statements? What is the purpose of the different types of financial statements
Describe the four financial statements. Discuss the purpose of each financial statement and how one financial...
Describe the four financial statements. Discuss the purpose of each financial statement and how one financial statement is related to the other. please use a different answer than what's on the Chegg database and type out instead of writing for easy reading, thank you!
QUESTION 1 (10 Marks- 5 each)- This question contains two sub questions a and b. Describe...
QUESTION 1 (10 Marks- 5 each)- This question contains two sub questions a and b. Describe five requirements of the COBIT framework. Compare the followings in terms of capacity, expenses, processing power, size and users they support: Supercomputers Mainframe Computers Comparison Element Supercomputers Mainframe Computers
1. Identify the 3 main financial statements? Discuss the purpose of each statement? Explain how income...
1. Identify the 3 main financial statements? Discuss the purpose of each statement? Explain how income statement is linked to the balance sheet? 2. Use this information to prepare a financial statement for company ABC Co for the 12 months ended 31st December 2019 Distribution expenses $ 8,000 Salaries and wages related to selling product $ 16,000 Advertisements and promotions for Product $ 5,000 Salaries and wages for administrative staff $ 7,500 Office supplies expenses $ 1500 administrative utility expenses...
The context and purpose of financial reporting 1 The scope and purpose of, financial statements for...
The context and purpose of financial reporting 1 The scope and purpose of, financial statements for external reporting (a) Define financial reporting – recording, analysing and summarising financial data. (b) Identify and define types of business entity – sole trader, partnership, limited liability company. (c) Recognise the legal differences between a sole trader, partnership and a limited liability company. (d) Identify the advantages and disadvantages of operating as a limited liability company, sole trader or partnership. (e) Understand the nature,...
Question 4.2 (Total: 12 marks; 4 marks each) Financial statements for Space Galaxy Ltd. are presented...
Question 4.2 (Total: 12 marks; 4 marks each) Financial statements for Space Galaxy Ltd. are presented below: Space Galaxy Ltd. Statement of Financial Position December 31, 2020 Assets Liabilities & Shareholders’ Equity Cash $44,000 Accounts payable $28,000 Accounts receivable 39,000 Bonds payable 54,000 Buildings and equipment 154,000 Accumulated depreciation— buildings and equipment (46,000) Common shares 69,000 Patents 24,000 Retained earnings 64,000 $215,000 $215,000 Space Galaxy Ltd. Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from...
Question 8 (10 marks) The following information is extracted from the financial statements of XP Sports...
Question 8 The following information is extracted from the financial statements of XP Sports Limited: Cash $677,423 Accounts Payable $1,721,669 Accounts Receivable $1,845,113 Notes Payable $2,113,345 Inventories $1,312,478 Total Current Assets $3,835,014 Total Current Liabilities $3,835,014 Net Sales $9,912,332 Cost $5,947,399 Briefly explain what you understand by the term ‘operating cycle’.                Click or tap here to enter text. What is the operating cycle for XP Sports Limited?                                           Click or tap here to enter text. What can you say...
1) Describe in 1-2 short paragraphs, a) the purpose of the following types of financial statements...
1) Describe in 1-2 short paragraphs, a) the purpose of the following types of financial statements and b) why as a leader/manager you must be familiar with them:    - Balance sheet    - Income statement    - Capital statement 2) If, as a manager, you could only pick one financial ratio to look at on a weekly/monthly basis, which would it be?    a) Write/type out the equation    b) Discuss (1-2 short paragraphs) why you picked that equation, what information that would give...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT