...APPLICATION OF FINANCIAL STATEMENT A balance sheet will give me the opportunity to take a closer look at my personal assets and liabilities like a snap shot; evaluate whether I should loan money to family and friends and view my net worth while I still living and when I die. When I prepare a balance sheet listing my assets, I will list the following: ~ Cash I have on hand ~ How many different bank accounts I currently have opened ~ How much to I owe to debtors ~ How many retirement accounts and with whom ~My investments (ex. Rental properties, stocks and bonds) ~Net worth of my life insurances policy(s) ~How many vehicles I own and their net worth My liabilities would include the following: ~Loans that I have from financial institutions ~Any unpaid taxes (IRS) ~Number of credit cards that have balances or currently opened to use. A balance sheet will assist me in my everyday financial planning by actually seeing what I actually have and what I owe to others. Before taking this class, I never sat down to create a balance sheet for myself, but I did create one in excel. After preparing this sheet, I was really surprised of what assets I owe that would go to my family in the case of my death, and the biggest eye opener; what I owe in debit. Reviewing my debit income opened my eyes to know that in the next five years, I want to be DEBIT FREE! I would like for my cash on hand and in my bank accounts to increase, and the only way this will happen...
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...Abstract This paper explores the uses of financial statements, specifically the balance sheet and income statement. It explores them from a personal point of view and how the balance sheet is used in an everyday life of an individual using his own assets and liabilities and determining his net worth. As it also discusses how a manager can benefit his company by understanding the concept of a balance sheet and using it to determine how well the company is doing and its ability to pay its debts and continue in the business. This paper also discusses my understanding of the balance sheet and income statement and how they may be applied to my future position of planning to start a small business. Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. The accounting balance sheet is one of the major financial statements used by accountants and business owners. The balance sheet is also referred to as the statement of financial position. The balance sheet presents a company's financial position at the end of a specified date. Some describe the balance sheet as a "snapshot" of the company's financial position at a point in time. For example, the amounts reported on a balance sheet dated December 31, 2011 reflect that instant when all the transactions through December 31 have been recorded. (2012, Averkamp) Because the balance sheet informs the reader of a company's financial position as of one moment in time, it allows...
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...Introduction Balance sheet is a report on financials that summarize company’s assets, what the company owns, the liabilities of the company, what the company owes. Most Company’s still use balance sheet in the daily running of organization because it enables managers in knowing whether balance sheet balances out on both sides. This makes sense since the company must pay all things it uses such as the assets by borrowing money (liabilities) or getting the money from the shareholders that are the shareholders’ equity. Application of balance sheet to my daily life Balance sheet can help me to grasp the financial health in a given business organization and it also provides me with a snapshots for my potential investors and lenders (Hawkins & Turner, 2010). Whether the business is in debts or it considers the assets, a balance sheet can still help me to keep the tracks my current situations as well as how I can plan well for what will happen in coming years. Keeping of accurate balance sheet requires maintaining the outgoing records, for example, the assets plus liabilities at once using some strategies of balancing the checkbook, and also keeping my tracks on statements of the credit cards, as well as bank accounts (Spurga, 2004). Benefits of a business manager in understanding balance sheet Balance sheet in organizations helps the managers to know what is in the business (assets) also to know what is not in the business (liabilities). The balance sheet, on the other hand, provides...
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...Application of Financial Statement Peter Johnson Strayer University ACC 557 Abstract This paper talks about how a balance sheet is an important financial statement. The balance sheet can be applied to every day life. The balance sheet can be used to help somebody see they ways that they have made financial decisions in their lives. The balance sheet also helps businesses function. A business manger uses the balance sheet to make important decisions. These decisions help the business run functionally. With out a balance sheet the business manager’s decisions become harder. Companies need to understand what the financial documents are telling them. Application of Financial Statement Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. A balance sheet is a financial statement that summarizes a company’s assets, liabilities and shareholder’s equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well ad the amount invested by the shareholders. A balance sheet can be applied to everyday life by allowing a person to get a quick handle on the financial strength and capabilities of their life. If a person keeps a balance sheet they are able see what steps they need to take in their personal lives. The balance sheet will allow the person see if they are overspending on credit compared to paying cash to...
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...Application of Financial Statement Angela Lance Professor Kim Dillman Financial Accounting-ACC557 Assignment # 1 Due Date: February 26, 2012 Application of Financial Statement Today’s working environment displays different cultures throughout an organization. Companies need to be aware of their financial obligations and responsibilities. The opening of a business has many different perspectives that need to be addressed. Once you open a business you want to stay in business and a way you can do this is by maintaining your financial records and not overspending your earnings. Companies have to be aware and accurate of maintaining their records in accordance with Generally Accepted Accounting Principles (GAAP) and or Financial Accounting Standards Board (FASB). Financial accounting provides economics and financial information for investors, creditors, and other external users.1 Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. Businesses record their performance in standard formats called financial statements. The most common is the Balance Sheet, the Income Statement, and the Cash Flow Statement. The balance sheet contains information at a moment in time about resources (assets) that are owned or controlled by the firm. Assets have probable future economic value usually through use or sale, are controlled by the firm and are related to a prior transaction...
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...Assignment #1 – Application of Financial Statement Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. According to Weygandt, Kimmel, and Kieso (2010), “an income statement presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time” (p. 21). Using an income statement in one’s personal everyday life allows you to document and track monthly or annual income and expenditures for personal budgets. Income statements can be used to gauge your incoming funds and match them to the amount of funds that you’ve limited yourself to use for a determined amount of time. There are many beneficial incentives to using personal income statements. Using income statements is a great way to monitor both monthly and annual expenses. Just as income statements contain the list of expenses for a business (e.g. salaries expense, rent expense, and utilities); income statements can also be used on a personal basis to list one’s car payments, rent/mortgage, groceries, auto fuel and even entertainment. Monitoring monthly expenses, as well as income, income statements permits oversight of one’s financial health. You are able to see where you are spending in excess and where you can cut back on unnecessary expenditures. A well-structured and managed monthly or annual income statement will allow one to budget better and save more for those unexpected emergencies. Utilizing...
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...importance of an income statement and how a person can apply it to their daily life. It is a very useful financial tool to keep them organized and on track. Also, included is how a business manager may benefit from understanding how to proficiently execute an income statement and how it would keep them cost-effective while allowing them to recognize where they might have went wrong. Lastly, I will explain how I plan on using an income statement in my life as well as any management job I am to have in the future. Application of Financial Statement Explain how the use of an income statement may be applied to your everyday life. Income Statements are used by families that may not even know what an Income Statement is. It is essentially an itemized list of income and expenditures to keep ones finances organized and accounted for. It is not much different from balancing a check book. I believe this should come as second nature to every household in order for them to accurately manage their finances and keep track of their expenditures. It can truly keep a family from becoming economically lost and insecure but rather keep them self-sufficient and living within their means. An income statement will keep from extreme and preventable spending and will contribute to a more sensible saving plan. Discuss how a business manager may benefit from an understanding of an income statement. A business manager can understand the benefits of an income statement which can be thought...
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...Application of Financial Statement – Balance Sheet Sharrone Caldwell Financial Accounting Strayer University – Online Campus Professor Lori Perez February 22, 2012 Abstract This paper focuses on the importance of a balance sheet and how it can be applied to everyday life. Managers can also benefit from the understanding of the balance sheet when making importance decision about the operations of a business. Additionally, financial statements such as the balance sheet and income statement both will serve as significant components in the operation of my own future talent agency business. Introduction The financial statement is essentially the ending result of the accounting process, which gives a summary of the financial position and performance of an organization in an organized way. A financial statement provides a summary of the operations of the business. Furthermore, financial statements provide information on where a company’s money originated from, how it is used, and where it is currently. Financial statements are also used in formulating companies’ annual reports. Corporate managers/management communicate financial information to its, owners, and various external concerned parties (stockholders/investors, employees, government, IRS, etc.). With that in mind, there are two primary types of financial statements: balance sheets, and income statements (Investopedia...
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...Q1. Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life? I have selected balance sheet to examine in this assignment. Balance sheet consists of the assets, liabilities and equity held by a firm. Both assets and liabilities are classified into short term and long term depending on the time period. Liabilities are what company owes to its creditors, customers and suppliers whereas assets are what company own. The shareholders equity is mainly the investments of investors and owners in the firm. The balance sheet can be applied to our day to day life in the following ways – a) Balance sheet gives a clear picture of our financial strength in terms of cash availability or liquidity. The liquidity helps us to plan better in short term as well as long term. b) Balance sheet tells us how much our debtors owe to us in terms of the accounts payable. This would help us to calculate the turnover rate and plan the forecasting. c) Balance sheet also gives the amount of debt we have from external borrowings. The debt to asset ratios help us the understand the health of the firm and future borrowing power d) The key ratios like inventory turnover ratios, accounts receivable ratios, accounts payable rations, debt to equity ratios, liquidity and quick ratios help us to understand how leveraged the firm is and indicates the financial strength. Q2. Using the same concept selected above, discuss how a business manager may benefit...
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...Application of Financial Statements: The Balance Sheet Tonesha Gadson Strayer University Financial Accounting (ACC 557) Professor Mary Johnson May 27th, 2012 Abstract Many people may ask why Financial Accounting is needed and is so prevalent in the business world and in personal living. What is its importance and activities involved? Why is it so crucial in commerce performance and individual responsibilities? Most significantly, which financial statements are of great magnitude in work and life? To the point, financial accounting is the process of summarizing financial data taken from an organization's accounting records and publishing in the form of annual (or more frequent) reports for the benefit of people outside the organization. This financial data are then entered into financial statements, which is based on the main accounting equation: Assets = Liabilities + Owners’ Equity. Financial statements show you the money and show you where a company’s money came from, where it went, and where it is now (U.S. Securities and Exchange Commission, 2007). With that said, there are four basic financial statements in calculating an organization’s and one’s own financial stability: -Balance Sheet -Income Statement -Cash Flow Statement -Statement of Owners’ Equity In this report, a major emphasis will be placed on the initial basic financial statements and how it’s applied in the business world and personal use-the Balance Sheet. Not only...
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...Chapter 01 Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Entities True / False Questions 1. Special purpose governments generally provide a wider range of services to their residents than do general purpose governments. True False 2. Examples of general purpose governments include cities, towns, and public schools that receive tax revenue to finance the services they provide. True False 3. The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all state and local governments, both general purpose and special purpose. True False 4. The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all government entities. True False 5. The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities. True False 6. Neither governmental nor not-for-profit entities have residual equity that can be distributed to owners. True False 7. A characteristic common to governmental and not-for-profit organizations is that they do not exist to provide goods or services at a profit or profit equivalent. True False 8. The needs of users of government financial reports are the same as those of users of business entity financial reports. True False 9. The Federal...
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...Auditing and Assurance Standards Council Philippine Auditing Practice Statement 1003Ph GUIDANCE IN DEALING WITH REPORTS REQUIRED BY THE SEC RELATING TO INCREASE IN AUTHORIZED CAPITAL STOCK OF A CORPORATION PAPS 1003Ph PHILIPPINE AUDITING PRACTICE STATEMENT 1003Ph GUIDANCE IN DEALING WITH REPORTS REQUIRED BY THE SEC RELATING TO INCREASE IN AUTHORIZED CAPITAL STOCK OF A CORPORATION CONTENTS Paragraph Introduction………………………………………………………………… 1-2 Objective…………………………………………………………………… 3 Types of Engagements that May be Performed…………………………….. 4-14 Acceptance of an Engagement Relating to Increase in Authorized Capital Stock……………………………………………….. 15-16 Defining the Terms of an Engagement to Perform Agreed-Upon Procedures………………………………………………………………. 17-20 Reporting on Agreed-Upon Procedures Engagements……………………… 21-23 Wording of the Auditor’s Representation Letter to Accompany the Agreed-Upon Procedures Report……………………………………. 24-25 Effective Date……………………………………………………………….. 26 Appendix 1: Required SEC Procedures Relating to an Application for Increase in Authorized Capital Stock as Contained in SEC Memorandum Circular No. 6, Series of 2008 Appendix 2: Example Auditor’s Reports on Agreed-Upon Procedures Engagements Appendix 3: Illustrative Auditor’s Representation Letters 2 PAPS 1003Ph Philippine Auditing Practice Statements (PAPS or Statements) are issued by the Auditing Standards and Assurance Council (AASC)...
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...Gaviola, Harold Dave B. BSA-V Assignment in COMED421/0180/8:30-9:30PM PSA 401: Auditing in a Computer Information Systems Environment - The increasing availability of computer-based accounting systems that is capable of meeting both functional and economic circumstances of even the smallest entity impacts on the audits of those entities. Small entities’ accounting systems often make use of personal computers. Philippine Auditing Practice Statement 1001, “CIS Environments—Stand-Alone Personal Computers” gives additional guidance regarding the special considerations of such an environment. - Small entities are likely to use less sophisticated hardware and software packages than large entities (often “packaged” rather than developed “in house”). Nevertheless, the auditor has sufficient knowledge of the computer information system to plan, direct, supervise, and review the work performed. The auditor may consider whether specialized skills are needed in an audit. - Because of the limited segregation of duties, the use of computer facilities by a small entity may have the effect of increasing control risk. For example, it is common for users to be able to perform two or more of the following functions in the accounting system. • Initiating and authorizing source documents. • Entering data into the system. • Operating the computer. • Changing programs and data files. • Using or distributing output. • Modifying the operating systems. - The use of computer information...
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...principle of IFRS 1 is full retrospective application of all IFRS standards that are effective as of the closing balance sheet or reporting date of the first IFRS financial statements. IFRS 1 requires companies to: • Identify the first IFRS financial statements; • Prepare an opening balance sheet at the date of transition to IFRS; • Select accounting policies that comply with IFRS and to apply those policies retrospectively to all of the periods presented in the first IFRS financial statements; • Consider whether to apply any of the 15 optional exemptions from retrospective application; • Apply the five mandatory exceptions from retrospective application; and • Make extensive disclosures to explain the transition to IFRS. There are 15 optional exemptions to ease the burden of retrospective application. There are also 5 mandatory exceptions where retrospective application is not permitted. The exemptions provide limited relief for first-time adopters, mainly in areas where the information needed to apply IFRS retrospectively may be most challenging to obtain. There are, however, no exemptions from the demanding disclosure requirements of IFRS and companies may experience challenges in collecting new information and data for retroactive footnote disclosures. Many companies will need to make significant changes to existing accounting policies in order to comply with IFRS, including in such key areas as revenue recognition, financial instruments and hedging, employee benefit...
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...near year-end are recorded in the financial statements in the proper period. For example, the auditor may want to test proper cutoff of revenue transactions at December 31. This can be done by examining a sample of shipping documents and sales invoices for a few days before and after year-end. Audit evidence: Audit Evidence is evidence obtained during a financial audit and recorded in the audit working papers. In the audit engagement acceptance or reappointment stage, audit evidence is the information that the auditor is to consider for the appointment. For examples, change in the entity control environment, inherent risk and nature of the entity business, and scope of audit work. Subsequent Event: Subsequent event is the accounting term for a financial transaction that occurs after completion of the balance sheet for a specified period but before the company’s full set of financial statements is prepared. Subsequent events clarify information about a business’ financial picture as reflected by the balance sheet, a financial report that includes all transactions through the report date. The Financial Accounting Standards Board, the authority entrusted with establishing generally accepted accounting principles, publishes detailed requirements for defining and recording subsequent events in financial records. Adjusting Event or Post Balance Sheet Events: Material events that occur between the date of preparation of financial statements and the date of their approval by...
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