22107 Lecture Notes - Lecture 2: Financial Statement, Gross Profit, Public Company
Document Summary
Financial statements: major forms of business (major difference is in equity section) Public company (shareholders e. g. bhp: generally accepted accounting principles. Gaap covers standards/rules/procedures (developed overtime: classified statement of financial position. Groups together accounts of similar nature in a few classifications. Order of liquidity (cash, st investments, receivables, inventories: main sub-totals on income on income statement. Single-step (calculates total net income - service companies) Multi-step (several income subtotals info on various operations) Profit before/after tax (important: horizontal/vertical analyses (balance sheet/income statement) Dollar & percentage changes calculated on each item. Income statement: account balance/net sales: purpose of statement of changes in equity. Increased in equity (from profits) and decreases (dividends) Shows how/why each equity account changed from year to year. Retained earnings: earnings that have not been paid out: types of information disclosed with financial statements. Information beyond fs (useful for investors and creditors) Notes: accounting policies adopted (disclosure, details about numbers, additional/non financial info.