...Chapter 01 - Financial Statements and Business Decisions Chapter 01 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and...
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...There are four basic financial statements that support the model of the financial accounting process. Each of these statements measures the total number of assets, liabilities, expenses, and revenues of a given company and documents them according to the respective statement. The four basic financial statements that make up financial accounting are the income statement, retained earnings statement, balance sheet, and the statement of cash flows. Each statement serves its own unique purpose, yet has a direct relationship with each of the other statements. Each can operate independently, or be used in conjunction with its other associated statements. The income statement reports the success or failure of the company's operations over a period of time by reporting its revenues and expenses. The retained earnings statement shows the amounts and causes of changes in retained earnings during the period, where the time period used is the same as what is used for the income statement. This statement is also indicative of distributed income amongst owners in the form of dividends and the amount of retained growth for future development. The balance sheet reports assets and claims to assets at a specific point in time, divided by two categories, claims of creditors and claims of owners. The statement of cash flows provides financial information about the cash receipts and payments of a business for a specific period of time and how it was used (Kimmel, Weygandt, & Kieso, p. 12-15...
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...UK COLLEGE OF BUSINESS AND COMPUTING Module Booklet Course: EDEXCEL BTEC (HND) BUSINESS Group: Ed excel Level 4 Module: Unit 2 – Managing Financial Resources & Decisions Module type: Core Module Code: H/601/0548 Module Credit: 15 Teaching Period: (15+6 weeks) Level: 4 (QCF) Contact Hours: (21*3 = 63) Lecturers: 15 weeks Support and guidance: 3 week Assessment and feedback: 3 weeks MODULE LEADER: MR GEORGE MUWONGE Lecturer: Mr Solomon A Odegbesan Start date: 28th January 2014 Day: Tuesday Time: 10:00-13:00 Campus: Park Royal Term: Winter CONTENTS 1. INTRODUCTION, AIMS AND OBJECTIVES 2. MODULE OUTLINE AND TEACHING METHODS 3. READING AND COURSE PREPRATION 4. LECTURE WITH DETAILED COURSE PROGRAMME AND OBJECTIVES 5. ASSESSMENT DETAILS INTRODUCTION This unit is designed to give learners a broad understanding of the sources and availability of finance for a business organisation. Learners will learn how to evaluate these different sources and compare how they are used. They will learn how financial information is recorded and how to...
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...UK COLLEGE OF BUSINESS AND COMPUTING Module Booklet Course: EDEXCEL BTEC (HND) BUSINESS Group: Ed excel Level 4 Module: Unit 2 – Managing Financial Resources & Decisions Module type: Core Module Code: H/601/0548 Module Credit: 15 Teaching Period: (15+6 weeks) Level: 4 (QCF) Contact Hours: (21*3 = 63) Lecturers: 15 weeks Support and guidance: 3 week Assessment and feedback: 3 weeks MODULE LEADER: MR GEORGE MUWONGE Lecturer: OLAJUMOKE TAIWO Start date: 30th September, 2014 Day: Mondays Time: 10:00 – 5:00 Hrs Campus: Kilburn Term: Winter CONTENTS 1. INTRODUCTION, AIMS AND OBJECTIVES 2. MODULE OUTLINE AND TEACHING METHODS 3. READING AND COURSE PREPRATION 4. LECTURE WITH DETAILED COURSE PROGRAMME AND OBJECTIVES 5. ASSESSMENT DETAILS INTRODUCTION This unit is designed to give learners a broad understanding of the sources and availability of finance for a business organisation. Learners will learn how to evaluate these different sources and compare how they are used. They will learn how financial information is...
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...ASSIGNMENT COVER SHEET 1. ASSIGNMENT DETAILS: | | | Student ID: | 22009138 | Submission Date: | 5th June 2012 | Assignment Number: | | Assignment Type | Essay | Word Count: | 1690 | 2. PROGRAMME DETAILS: | | | Programme of Study: | BA (HONS) BUSINESS AND MANAGEMENT/Combined Studies | Lecturer / Tutor: | Posi Olatubosun | Module Title: | Principles Of Finance | Module Code: | OUBMC 1507 | 3. STATEMENT OF AUTHENTICITY: | | | I have read and understood the regulations regarding plagiarism, and in handing in this work testify that unless otherwise acknowledged, the work submitted herein is entirely my own. Student signature: | Gerard Reyford | Date: | 5TH June 2012 | Work which is not submitted by the date / time specified will incur the automatic penalty of being capped at 40% (lowest possible pass). This means 40% is the highest grade that piece of work will receive. It is vitally important that you plan your time to ensure that you submit your work on time. This means making allowance for possible delays in transportation, printing, and any other potential problems which may be planned for, and therefore do not constitute just grounds for mitigation. If you wish to apply for mitigation, you should make sure you have read the guidelines in the Student Handbook, and obtain a form from the office. Work which is late, and accompanied by an application for mitigation, will be capped until the outcome of the mitigation application...
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...Course Outline Programme: International Masters of Business Administration Cohort: 57 Academic Year/Trimester: 2015/2016 Trimester II Course Code and Course Name: INBA 6370 - FINANCIAL STATEMENT ANALYSIS FOR GLOBAL FIRMS Course Type: Core Level: Year 1 Lecturer: Mr. Andre Taitt Lecturer’s e-mail: andre.taitt@fac.gsb.tt Lecturer’s phone #: 1-868-685-5631 Learning Assurance Officer: Alana Ifill Prerequisite/co-requisite course (s): Introduction to Financial Accounting Workshop Involvement of other institutions for delivery: None 1 1.0 Vision and Mission of the Lok Jack GSB Our purpose is to contribute to the development of the human and institutional capacity required to transform the business landscape and shape our own destiny. Through our comprehensive and integrated programmes and consultancy services, we provide a framework for developing new pathways for achieving sustainable growth and competitiveness The mission of the School is to improve the international competitiveness of people and organisations in the Caribbean through business education, training, consulting and research. 2.0 Quality Statement In today’s organization the non financial manager can no longer avoid financial information. Profit statements, operating budgets, and project analyses are constant part of a manager’s day. The concept of the finance and non financial manager has now become very blurred. The modern manager must have the ability to utilize the appropriate...
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...Hair Emporium Chain Management and Franchising Decide on the types of accounting and financial records that Rolando and Rosa should and should not share with their franchisees. Provide a rationale with your response. The operating profit is the profit that a company makes from its primary business activity. The firm's balance sheet reflects the operating profit. Because firms can make a profit from a variety of sources, including investments, understanding how much operating profit the primary business makes gives an accurate picture of the company's success at delivering its particular product or service. Can determine the operating profit by looking at the difference between the operating revenue, or how much money the company makes from its main business activity, and its operating costs. The cash flow statement shows where a company receives its cash, and how it spends it. Understand that the cash flow of a company changes rapidly as the business ebbs and flows, and the cash flow statement reflects the change from one statement to another. Revenue the company receives from customers, revenue from investment sales and money that comes into the business from loans are all sources of cash inflow reflected on the cash flow statement. Outflows of cash can include cost of goods sold, depreciation, purchases of machinery or buildings and loan payments. An owner's equity statement gives a picture of the changes that occur in an investor's ownership of the company, and how...
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...Type | C | Given a company’s financial statements and intangible assets transactions, the student should able to understand and explain them to other accountants, managers and business people. Their understanding and explanation should include concepts relating to the acquisition, amortization and disposal of intangible assets – (organizational cost, patents, franchises, R & D, goodwill and computer software costs, among others) and an analysis of the effect of intangible assets on financial statement reporting. | 25 | 12.5% | Multiple Choice | C | Given a company’s financial statements and intangible assets transactions, the student should able to understand and explain them to other accountants, managers and business people. Their understanding and explanation should include concepts relating to the acquisition, amortization and disposal of intangible assets – (organizational cost, patents, franchises, R & D, goodwill and computer software costs, among others) and an analysis of the effect of intangible assets on financial statement reporting. | 45 | 22.5% | Essay | D | Given a company’s financial statements and current and long-term liability transactions, the student should able to understand and explain them to other accountants, managers and business people. Their understanding and explanation should include concepts relating to the borrowing process (debt finance), the legal basics of debt and transactions that bring debt into the company’s financial structure...
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...Chapter 1 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and a welfare organization. A...
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...Financial Statements Paper Atiya Paige ACC/290 June 27, 2013 Kofi Amoateng A financial Statement means an authorized documentation of the financial actions of an individual. These are reports that have been written that measure the financial depth, routine and cash flow of a business. Financial Statements reveal the financial results of business connections and procedures on the individual businesses. There are four types of financial statements that business can use to make records of business earnings and loses when making or receiving transactions from other business. The four basic financial statements are the followings; balance sheet, income statement, statements of owner’s equity, and statement of cash flows ("Quickmba", 1999-2010). A balance sheet is a statement of financial statuses at a given time and period. As for an income statement is a report that shows revenues with the subtraction of payments for a set time period ending at a given period. The statement of owner’s equity is also identified as the statement of taken earnings or the equity statement ("Quickmba", 1999-2010). This is reports that give details of changes that are kept in the earnings that can be found on the balance sheets. The final basic financial statement is the statement of cash flow, which is a statement that has a full list of sources and the uses of cash proof of purchase. This statement points toward whether enough cash is presented to transmit...
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...This paper is all about financial statements. An introduction to financial statements is presented to give a background to the reader. In the introductory part, the fundamental accounting concepts used in the preparation of financial statements are included together with the explanation of their basis. Examples are also given as an illustration of its application. This consist the first part. On the other hand, the second part is about the evaluation of the role of financial accounting in aiding the decision-making processes of the four different non-management stakeholder groups. An explanation of the nature of these decisions is also included. The paper ends with the issue on the conflicts arising from the diverse interest of the said entities to the financial statements. Introduction to Financial Statements One of the steps included in the accounting cycle is the preparation of the principal financial statements. They are the Income Statement and the Balance Sheet. These financial statements are a means by which the information accumulated and processed in financial accounting is periodically communicated to the users. Once the worksheet is completed, it is easy to prepare the financial statements as the necessary data have already been summarized. A third financial statement, which is the Statement of Cash Flows, provides information about cash receipts and cash payments into operating, investing, and financing activities. A Balance...
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...Chapter 1 Financial Statements and Business Decisions ANSWERS TO QUESTIONS 1. Accounting is a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. 2. Financial accounting involves preparation of the four basic financial statements and related disclosures for external decision makers. Managerial accounting involves the preparation of detailed plans, budgets, forecasts, and performance reports for internal decision makers. 3. Financial reports are used by both internal and external groups and individuals. The internal groups are comprised of the various managers of the entity. The external groups include the owners, investors, creditors, governmental agencies, other interested parties, and the public at large. 4. Investors purchase all or part of a business and hope to gain by receiving part of what the company earns and/or selling the company in the future at a higher price than they paid. Creditors lend money to a company for a specific length of time and hope to gain by charging interest on the loan. 5. In a society each organization can be defined as a separate accounting entity. An accounting entity is the organization for which financial data are to be collected. Typical accounting entities are a business, a church, a governmental unit, a university and other nonprofit organizations such as a hospital and a welfare organization. A business typically...
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...u Running head: Accounting Understanding Accounting and Financial Statements 23 September 2010 ACC 280/ Michael Pagano Understanding Accounting and Financial Statements Businesses can be impressive institutions. There are many factors that are combined to make a successful business. These businesses usually have strict code of conducts and ethics that guide the company in its daily practices. Some areas of the business receive more attention than others. One department that receives constant attention is the accounting or finance department. This is a department that is responsible for many aspects of the business. This department gives managers and employees the monetary status of the company enabling them to make important decisions to guide the company. It is important that individuals are able to understand basics of accounting and the four basic financial statements. Purpose of Accounting Accounting serves many important functions in a business. First an individual needs to have a basic understand of accounting. Accounting consists of three very basic activities which are identifies, records, and communicates financial information within a given period. The first activity is to identify events relevant to the company during that time period. Accounting also records events in order to provide history of its financial activities. This activity of records must be systematic and in chronologically. The last major activity that accounting demonstrates is...
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...A set of financial statements for a company includes three related accounting reports. These reports are called; Statement of Financial Position, Income Statement, and Statement of Cash Flows. A statement of financial position, also known as a balance sheet, displays the financial position of a company at any given date/time. It consists of three key categories: assets, equity, and liabilities. Statement of financial position aids the users of these statements in evaluating the financial reliability of a company in terms of its risk; financial, credit, and business risk. These statements can help identify underlying trends in the financial position of the company which would assist the manager. The investor would be interested in determining the company’s financial risk. An income statement is a summary of performance as reflected in its profitability (or lack thereof) of a company over a certain time. The income statement accounts all profits for a business during this given period (monthly, quarterly or annually), as well as the operating overhead cost for the business. This would assist a manager because he/she would be able to determine the operating performance of the business over a period of time. The investor would likely be looking at the same information as a manager, but using it to determine if the company is making money or losing money. Statement of cash flows describes the cash flow into and out of the business. Its specific emphasis is on the types of activities...
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...Business Information Management Academy of Finance BIM Exam Review February 2012 Exam Structure Total 2 hours 15 minutes Total 3 questions to answer 2 questions of a “calculative” nature 1 question of a “theoretical” nature, where you will have to explain something in words Closed-book (no textbooks, notes, computers, or cell phones allowed) You will need a non-programmable calculator Academy of Finance MBA Program - Business Information Management 2 Study material Lecture notes Classroom exercises Building up an extended trial balance Inventory costing Vinafarms example (IAS 7 cash flow statement) Sample exams and additional exercises Textbook Academy of Finance MBA Program - Business Information Management 3 Accounting concepts The main accounting concepts Going concern Accruals/Matching Consistency Business Entity Duality Prudence Realization Accounting period Academy of Finance MBA Program - Business Information Management 4 Legal form of companies The three main legal forms: Sole Proprietorship Partnership Limited Liability Company What are the key differences (organization structure, owner’s liability, management, tax treatment) What are the advantages/disadvantages of each form What are the consequences of going public Academy of Finance MBA Program - Business Information Management 5 Users of Financial Statements To understand what specifically the following groups would be interested in when reviewing...
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