Financial Statements Archives - Page 10 of 15

Audited Financial Statements – Why Is It Importance?

Introduction: When an independent auditor gives his opinion/ report on the financial statements of the company its true and fair presentation is called audited financial statements. It is the responsibility of the company’s management is to prepare the company’s financial statements and related disclosures. These audited financial statements are then verified and audited by an […]

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Inventories Vs. Fixed Assets: Why and What Are They Different?

Fixed Assets, Inventories

Introduction Business is the asset of every businessman and businesswoman, and the assets of the business are fixed assets and inventory. At the start of business studies, most students are confused about fixed assets and inventories. In actual business, there are clear differences in both of the terminologies. Here are the definitions and the differences

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Why Don’t We Depreciate Inventory? (Explained)

Financial Statements, Fixed Assets, Inventories

No one can deny the importance of assets in the business world. Because assets create profit and also grow the business from a low to a high level. Assets have different types, but the most important are current and fixed assets. Fixed assets work for a long period of time, and current assets work in

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What is a contra account? 3 Examples of Contra Accounts

Financial Statements

Definition: A contra account is a ledger account related to another specific ledger account. In fact, as the name “contra” suggests, it is the opposite of a specific class of account. A contra account is used to reduce the value of the opposite related account. This means if the associated account is a debit, the

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How Does Goodwill Affect Statement of Cash Flow?

Statement of Cash Flows

Introduction: Everyone knows that cash is the king whether it’s a small retail shop or a large multinational organization. How large accrual income a business may be, but it might not be able to operate its operations without holding sufficient cash. Now, let’s have some brief idea of what happens in a typical cash flow

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How Does Treasury Stock Affect Cash Flow Statement?

Statement of Cash Flows

Introduction: Treasury stock is the share or stock that is repurchased by the company that issued them in the first place. It reduces the paid-up capital and is also known as equity reduction. Treasury stock is recorded in the equity section of the balance sheet. For example, a company has a paid-up capital of $200,000.

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How Do Unearned Revenues Present in Statement of Cash Flow?

Financial Statements

Introduction: Unearned revenues are money received against a particular service or obligation that has to be performed in the near future i.e. within 12 months usually. In simpler words, these are advance payments received in the current period for services or goods to be provided in the future. For example, company A signs a contract

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How Do The Paid Interest Expenses Present In The Statement Of Cash Flow?

Statement of Cash Flows

The cash flow statement is a report of all the transactions which affect the cash account. The effect may be in a favorable way unfavorable way. It provides all the summarized information about the cash receipt and payment. The cash flow statement is very important to managers because they can make a future strategy about

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How Do Accrual Expenses Present in Statement of Cash Flow?

Statement of Cash Flows

Introduction: Any revenue expenditure that has been incurred during a specific period of time (a month, quarter or a year) but has not been paid for is referred to as an accrued expense. In simpler words, accruals are amount payable against operating expenses. Any revenue expenditure, whether accrued or paid, is reported in the income

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How do Inventories Present in Statement of Cash Flow?

Inventories, Statement of Cash Flows

Introduction: Inventory or stock-in-trade is the goods or commodities held by an entity for the purpose of resale or trade. At the end of an accounting year, companies usually have unsold goods in their warehouses which are referred to as closing inventory or closing stock-in-trade. This item is not reported in the income statement, but

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