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Financial statements Essay Topics & Paper Examples

Financial Statement

The first issue to discuss is the four different types of financial statements and the use of each that a business will use. The second issue to discuss is what financial statements that an investor will review. The third issue to discuss is what financial statements a creditor will review. The fourth will be what financial statements that management within a company will review. The first financial statement is the income statement (Kimmel et al, 2009). The income states will show the success or the failure of a company’s operations for a certain period. The income statement will have the revenue the company will make, the expenses the company will spend, and the net income of the difference of each….

How the Profit Measured and Is It More Important Than Cash

In the work I reveal to the concept of profit, discuss how the profit measured, analyse cash flow and conclude is it more important than cash or not. Essay includes such key concepts as revenue, expenses, profit, loss, a profit and loss account, balance sheet. According to Meckin (2007) ‘the objective of financial management in the majority of businesses is to take business idea and turn it into profit’. And we also need to understand the importance of cash flow. As Meckin (2007) mentioned ‘there are two essential criteria for a regular trading business to survive: 1. It must generate profit. 2. It must generate cash flow’. It is very important not to mix these two key concepts and differ them…

Financial Performance Analysis

Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. It is a tool in decision-making processes related to stocks, bonds, and other financial instruments. Analysis of financial statements provides valuable information for managerial decision. Financial analysis is commonly called analysis and interpretation offinancial statement. Analysis of financial statements means establishing relationship between the items in financial statements for determining the financial strength and weakness of business. It is the process of scanning of the financial statements to judge profitability solvency, stability, growth of prosperity of a firm. According to Myer “Financial statement analysis is largely a study of relationship among various financial factors in a business as disclosed by a…

Critically Assess the Uses and Limitations of Financial Statements

Critically assess the uses and limitations of financial statements The definition for a financial statement is a written report which quantitatively describes the financial health of a company. (www. investorwords. com) It consists of a balance sheet, income statements and a cash flow statement. This essay will critically asses the uses and limitations of each of these types of financial statements for a business. A balance sheet shows the financial condition of a business at a specific date (Langemeier & Klinefelter 2008). It shows what is owned by the business, what is owed and the owner’s share (net worth) of the business. The balance sheet has three main uses. Firstly, it is used for reporting purposes as part of a…

Assessing the Quality of the Financial Statements

•Reading the Financial Statements and Creating a Data File Our experience, and that of our students, is that careful and thorough reading of the financial statements yields a great deal of information about the firm. The financial statements, the notes, and management’s discussion and analysis provide valuable insights into the business strategies, profitability, and risk of the firm. Many firms explicitly disclose elements of the business that are performing well or poorly, also providing explanations about the performance. Many firms explicitly disclose projections of future business activities, such as expected future sales growth rates or capital expenditures, which are helpful information for projecting future financial statements. Analysts who do not carefully read the financial statements stand to miss this valuable…

Testing a Model of Islamic Corporate Financial Report

1. Introduction Religion can exert a profound influence on individuals and societies. There has been a growing religious commitment during the past two decades which has led to more Muslim countries seeking to manage their economies in line with the precepts of Islam (Hassan, 1998). Central issue in Islamic accounting is weather the external financial reporting system currently adopted by Muslim countries serves the needs of Muslims. Baydoun and Willett (1994 and 2000) who argued that the influence of Islam on accounting was more likely to be in the disclosure aspect of accounting proposed a model of Islamic Corporate Financial Reports. Their model, based on what Muslims ought to desire, need to investigate if such model is aligned with what…

Adoption of IFRS in Financial Institution

The IASB describes its pronouncements under the label “International Financial Reporting Standards”, though it continues to recognise (accept as legitimate and adopted by them) the IAS issued by the defunct IASC. With the adoption of IFRS in Nigeria, a lot stands to be gained from the seemingly distressed global economy. With successful implementation of IFRS, Nigeria will benefit economically by receiving a boost on foreign direct investments (FDIs). In 2010, the Central Bank of Nigeria (CBN), in a bid to integrate the banking system into the global best practices in financial reporting and disclosure, commenced partial adoption of the International Financial Reporting Standards (IFRS) in the Nigerian banking system. The move, according to the CBN, was to enhance market discipline…

According to the American Institute of Certified Public Accountants

According to the American Institute of Certified Public Accountants (AICPA) website, it was founded in 1887. Accountancy was established as a distinguished profession with thorough educational requirements, high standards and a strict code of ethics. According to the Financial Accounting Standard Board (FASB), private non-profit organization responsible for developing and interpreting the (GAAP) in the United States but it is not affiliated with US government. Two committees were created by the AICPA in 1971. The Wheat committee was in charge of determining how the accounting principals were to be established. This committee suggested that the original accounting principal board be eliminated and it was replaced with the FASB “this new board was to comprise representatives from various organizations” (Schroeder, R….

The major purposes of financial statements

The major purpose of financial statement is to provide an overview of the company’s overall performance of the company’s operations and also assess the company’s worth during the year. Financial statement not only assists the financial managers but also the outsiders like creditors, stockholders etc. After reviewing the financial statements of the company all the stakeholders assess the company growth, investment opportunity ,dividend profile etc after that note all the stakeholders made appropriate decisions regarding the firm’s future’s perspective.. Financial statements are also helpful in submitting the tax return of the year (Besley, Brigham, 2001). In basic terms financial statement is comprises on Profit & Loss Statement, Balance Sheet, and on Statement of cash flows. There could be several reasons…

A Primer on Sarbanes-Oxley

This paper identifies issues, activities and practices, in financial reporting by public companies that were sanctioned by the Sarbanes-Oxley legislation Act of 2002 (SOX). This act was passed with the intent to restore public confidence and increase transparency in financial reports of publicly held companies, due to the aftermath of the financial scandals that plagued companies such as Enron and Worldcom (Jennings, 2012). The problem to be investigated is the ethical issues that were legislated by SOX, the cost associated with the implementation of the new act on different stakeholders, and new governance practices required of public companies to insure compliance with the new act. Introduction SOX was implemented in 2002 as “an act to protect investors by improving the…

Accounting Materiality Case

After the release of the SFAC No. 8, your definition of materiality has been brought into question. In the past, your rule for determining materiality was based solely on quantitative data, where an event was only material if its impact was more than a given percentage of the income statement amounts. Using a quantitative measure is effective because it keeps the process objective; however there are also times when the quantitative difference doesn’t adequately demonstrate the true effect of an action. For this reason, “materiality is an entity-specific aspect of relevance based on the nature [quality] or magnitude [quantity] or both items,” as stated in Q:11 of the SFAC No. 8. For The Framework Company each of the following closing…

Uniform accounting standards produce

In the last decade, various countries around the globe have shifted towards a uniform accounting standards or the International Financial Reporting Standards (IFRS). The main motive behind this movement is to come up with a global language for accounting which will be comparable and understandable beyond the borders of a nation. As of today about 120 countries require IFRS for domestically listed companies, although only about 90 countries have fully conformed to IFRS . While some argue that it is necessary to have a system of accounting that is clear and transparent to global investors and companies, some others are skeptic about it being efficient. Furthermore, some feel that the costs of implementing IFRS can be too high and hence…

Accounting Regulation Essay

Over the years there has been a continual debate over the necessity of accounting regulations. Some people have many reasons favouring accounting regulations such as the belief that accounting conventions are needed in order to allocate and control the economic outcomes of resource allocation and information stipulation in the market. However, others have arguments against the use of accounting regulations, such as regulation leading to oversupply of information as users who don’t bare any cost tend to overstate their needs. Accounting regulation arose shortly after the 1920s, where researchers wanted to classify commonly accepted accounting regulations. Examples of these include the entity assumption and the matching principle. It was in 1946 that the institute of charted accountants in Australia released…