The notes to the financial statements are required to disclose important information not communicated by the amounts on the face of the financial statements. The other financial statements report the amounts that occurred during a specified accounting period. The balance sheet reports a corporation's assets, liabilities, and stockholders' equity as of the final moment of the accounting period. Statement of cash flows or cash flow statement.Income statement, statement of earnings, statement of operations, or profit and loss (P&L).Balance sheet or statement of financial position.The output of the accounting system includes five financial statements: First Year Course Chapters 1 3 Answers Pdf Download ACCOUNTING BASICS CROSSWORD PUZZLE FIRST YEAR COURSE. Under the accrual basis of accounting, revenues and assets are reported when they are earned expenses and liabilities are reported when they are incurred. accounting principles and are sure to be. The accrual basis of accounting provides a better picture of a company's financial results than the cash basis of accounting. The accounting system requires that at least one account be debited (amount entered on the left side) and one account be credited (amount entered on the right side). The accounting system is known as double entry, because every transaction will involve at least two accounts in a company's general ledger.
Accountants also strive for the financial reporting to be relevant and reliable. In the USA the lead organization for researching and issuing the accounting rules is the Financial Accounting Standards Board (FASB).Īll of the accounting rules are based on some underlying or basic accounting principles such as cost, matching, economic entity, going concern, revenue recognition, full disclosure, materiality, conservatism, and others.
To make the financial statements more understandable, there are some common rules known as generally accepted accounting principles (GAAP). However, Athena gave discount equivalent to Parthenon's 60% share in Athena's quarterly net income of $ 2M.In commercial enterprises accounting is involved in recording business transactions and then reporting the results in the form of financial statements. It usually offers $ 4.6M additional cost to outside clients. * Athena Construction, its subsidiary, made a special offer to the management of Parthenon. * An outside contractor offers additional cost $ 3.1M aside from the $ 25M budgeted cash outlay. Comparison between costs of constructing regular building and constructing special type (for the company's administrative use) are as follow: * Parthenon may use its facilities to construct the building. Three alternatives regarding additional costs are presented below:
Thus, additional costs aside from the $25M budget might be incurred due to probable factors like increase in wages, increase in materials prices, etc. However, construction may take longer than regular type. The company budgeted $25M for the construction which is equivalent to the cost of constructing regular buildings. However, banks retain the right to cancel or 'call-up' this facility at short notice and, as such, it needs to be recorded as a current liability.Ħ8 The management of Parthenon Construction is planning to construct a new building for their administrative use. goes between debit and credit balances on a regular basis rather than allowing 'hardcore' debt to develop. Banks will allow this (depending on the client's risk rating) provided the client fully fluctuates the account i.e. The bank overdraft is an interesting one as some businesses will set up an overdraft facility that continues to be extended well into the next financial period.
A mortgage facility is usually an indication of a borrowing that is likely to extend into more than one financial period.Ĭertainly Joe's creditors and workers would come hounding him if he held of paying them for twelve months or more. They occurred as a result of some past event and will require the business to forgo some future economic benefit to settle them. All four items are an obligation for Joe's business.
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