Question
In: Accounting
Discuss the characteristics of each of the following financial statements: 1) Balance Sheet, 2) Income Statement,...
Discuss the characteristics of each of the following financial statements: 1) Balance Sheet, 2) Income Statement, and 3) Statement of Cash Flows.
Solutions
Expert Solution
Balance sheet :
• A Balance Sheet is only a statement and not an account
• It has no debit side or credit side
•The headings of the two sides are Assets and Liabilities
• A Balance Sheet is prepared at a particular point of time and not for a particular period.
Income statement :
•Income statement in "Cost Summary" or " Cost of Sales" method
•Revenues and costs show related to full reporting period (Continuous data)
•Ordinary and Extraordinary Results shown according to Predefined Chart of Accounts
•Include Valuation methods and opportunities of Window Dressing
Statement of cash flow :
•Overview on actual cash in-and outflows for the full period
•Not required under all GAAPS
•Categories of Cash Flows
•Instrument to check Liquidity and Financing needs
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Consolidated Statements
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Year ended May 31
In Millions
2011
2010
Revenues
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$ 19,014
Cost of sales
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Gross profit
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8,800
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Consolidated Statements of Income
Year ended May 31
In Millions
2011
2010
Revenues
$ 20,862
$ 19,014
Cost of sales
11,354
10,214
Gross profit
9,508
8,800
Demand creation expense
2,448
2,356
Operating overhead expense
4,245
3,970
Total selling and administrative expense
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6,326
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6
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