Question

Financial Reporting III Choose two concepts (Consolidations and Partnership) you have learned in this course and explain how you may use them in a future accounting position. Make sure you provide details to include how each concept will help you support the financial goals of the company you currently work for or will work for in the future.

*Consolidations:

-Subsequent to the Date of Acquisition

-Ownership Patterns and Taxes

*Partnership:

-Formation and Operation

-Termination and Liquidation

In your reflection, include at least one current scholarly article about each concept you have chosen. Research the Shapiro Library for current peer-reviewed articles (within the last five years) on your chosen topics. Then, consider the following:

-What do the authors say about the subject? Do you agree or disagree with their position?

-How does the author’s view impact your understanding of the concept as it was covered in the course? What are the ethical implications of how these concepts are used?

Answer 1

Financial reporting is the disclosure of financial results and related information to management and external stakeholders (e.g., investors, customers, regulators) about how a company is performing over a specific period of time.

Financial reports are usually issued on a quarterly and annual basis and include the following:

• Balance Sheet or Statement of Financial Position – reports on a company’s assets, liabilities, and owners’ equity at a given point in time, usually the end of a fiscal quarter or year.
• Income Statement or Profit and Loss Report – reports on a company’s income, expenses, and profits over a period of time, such as a fiscal quarter or year. This includes sales and the various expenses incurred during the stated period.
• Statement of Changes in Equity or Statement of Retained Earnings – reports on the changes in equity of the company during the stated period, such as a fiscal quarter or year.
• Cash Flow Statement – reports on a company’s cash flow activities, including its operating, investing, and financing activities. These are typically referred to as sources and uses of cash.
• Consolidated financial statements are financial statements of an entity with multiple divisions or subsidiaries. Companies can often use the word consolidated loosely in financial statement reporting to refer to the aggregated reporting of their entire business collectively.
• However, the Financial Accounting Standards Board defines consolidated financial statement reporting as reporting of an entity structured with a parent company and subsidiaries.
• The accounting for a partnership is essentially the same as is used for a sole proprietorship, except that there are more owners. In essence, a separate account tracks each partner's investment, distributions, and share of gains and losses.
• When a partnership closes its books for an accounting period, the net profit or loss for the period is summarized in a temporary equity account called the income summary account.
• This profit or loss is then allocated to the capital accounts of each partner based on their proportional ownership interests in the business.
• For example, if there is a profit in the income summary account, then the allocation is a debit to the income summary account and a credit to each capital account.
• Conversely, if there is a loss in the income summary account, then the allocation is a credit to the income summary account and a debit to each capital account.