(a)
A financial statement is the complete record of financial transactions that take place in a company at a particular period of time. It provides important financial information like assets, liabilities, revenues and expenses of the company to its internal and external users. It helps them to know the exact financial position of the company. There are four basic financial statements; they are:
- The income statement: This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a
profit and loss statement. The net income is the excess of revenue over expenses. - The
retained earnings statement: This is a financial statement that shows the amount of net income retained by a company at a particular point of time for reinvestment and pays its debts and obligations. It shows the amount of retained earnings that is not paid as dividends to shareholders. - The balance sheet: This is a financial statement that shows the assets, liabilities, and
stockholders’ equity of a company at a particular point of time. It reveals the financial health of a company. Thus, this statement is also called as theStatement of Financial Position . It helps the users to know about the creditworthiness of a company as to whether the company has enough assets to pay off its liabilities. - Statement of
cash flows : This is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financial activities of a company.
Annual Report: It is a comprehensive financial report that shows all the business activities that takes place throughout the previous financial year. Its purpose is to provide the complete financial information of a company’s financial activities to its users in order to help them analyze and take well informed decisions.
To determine: the company’s net income and the time period of measuring it
(b)
the company’s total sales and the time period of measuring it
(c)
the company’s industry
(d)
the names of the four companies of this industry.
(e)
the name of the one of the competitor of A Incorporation, its total sales and net income.
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FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
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- Which of the following can be used to do an industry and company analysis?a. Business publicationsb. Description of the company’s business in the annual reportc. Management’s Discussion and Analysis section of the annual reportd. All of the listed optionsarrow_forwardWhen employees choose a company through financial statements, which parts ,point and ratio should be analyzed?at least 6arrow_forwardDirections: THE EVENTS COMMON TO THE ACCOUNTING FUNCTION OF A BUSINESS ENTITY ARE LISTED BELOW. ON THE NUMBERED SPACES PROVIDED, PLACE THE LETTERS OF THE EVENTS IN THE SEQUENCE IN WHICH THEY WOULD LOGICALLY OCCUR, 1 BEING THE FIRST, AND 10 THE LAST. ACCOUNTING FUNCTIONS A – Determining ledger account balances F – Posting from the journal to the ledger B – Analyzing the transactions G – Preparing a business document C – Preparing the Statement of Financial H – Preparing a Statement of Comprehensive Position Income D – Preparing the trial balance I - Journalizing the transactions E – Occurrence of a business transactions J - Preparing the statement of owner’s equityarrow_forward
- An information system that provides reports to stakeholders about the economic activities and condition of a business is called _______________________. Group of answer choices communication networking financial statements accountingarrow_forwardAn identifiable part of the company for which financial information is available is called __________. ANSWER a business segment the contribution margin the gross profit the profitability analysis I DON'T KNOW YETarrow_forwardWhich of the following is an internal user of a company's financial information? a. company treasurer b. stockholder in the company c. bank lending to the company d. union Which characteristics applies more to financial accounting than to managerial accounting? a. primarily segmented reports b. primarily quantitative information c. internal decision focus d. statement format determined by companyarrow_forward
- Compute and analyse the trend analysis of the company. attached the Income statement and balance sheetarrow_forwardFor each of the following users of financial ače accounting information, specify whether the user would primarily use financial accou information or managerial accounting information or both.arrow_forwardGive an example of how financial statements can be used internally by themanagers of a company.arrow_forward
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