Financial Statements

How to interpret financial statements for better business decisions?

Interpreting financial statements is a skill that all investments and shareholders require. It consists of evaluating each statement individually and combinedly. By doing so, investors can receive information crucial for their relationship with the company. More specifically, interpreting the financial statements allows investors to make better business decisions. However, the process does not have a …

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9 Popular Ways for Manipulating Financial Statements

Financial statements are a link between a company and its stakeholders. Through this link, companies can present a picture of their operations. Usually, they show this picture through four primary financial statements. These include the balance sheet, income statement, cash flow statements and statement of changes in equity. Companies can use these statements to communicate …

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How Do I Account For Cash Dividends? (Explained)

Dividends represent the distribution of resources to shareholders. Usually, these resources include cash or stock that a company pays from its profits. At the end of each accounting period, companies decide how much dividends to pay to their shareholders. Usually, this process occurs annually. In some cases, however, companies may also pay quarterly or ad-hoc …

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What Is the Appropriated Retained Earning? (Explained)

The primary reason why shareholders invest in a company is the returns they get. While capital gains on share prices are crucial, dividends make a more stable type of earning. For most shareholders, these returns provide more certainty on their earnings. However, these distributions are usually at a company’s management or board of directors’ discretion. …

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Cash Flow From Financing Activities: What Is Included and How To Calculate?

It is an understood fact that the business entities report their earnings, expenses, and financial side of their operations in the financial statements. In the cash-based accounting system, appropriation of cash gone and entered in the business is easy. However, the accrual-based account system requires a more rigorous approach to cater to all aspects. Therefore, …

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What is the LIFO Conformity Rule? Definition, Explanation, and More

Companies need revenues to stay in business. Usually, these revenues come from the sales of products and services. While services are perishable, companies can store products and sell them to various customers. These products form a company’s inventory or stocks. For product-based companies, inventories are crucial in generating sales and satisfying customer demand. There are …

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How Are Bonds Payable Presented on the Cash Flow Statement?

Companies raise finance from various sources. One of the primary sources includes equity, which refers to any investment in a company from its shareholders. Usually, companies rely more on equity than any other finance. However, companies also have the option to raise finance from debt. Debt refers to finance acquired from third parties other than …

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