Communicating with Users Flashcards
Users, especially external users, are interested in a company’s what?
Assets, liabilities, shareholder’s equity, revenues and expenses.
What are the four different financial statements that are the backbone of financial reporting?
Income statement, Statement of changes in equity, statement of financial position, statement of cash flows.
Define Income statement, Statement of changes in equity, statement of financial position, statement of cash flows.
Income statement: An income statement reports revenues and expenses to show how successfully a company performed during a period of time.
Statement of changes in equity: shows the changes in each component of shareholders’ equity, as well as total equity, during a period of time.
Statement of financial position: presents a picture of what a company owns (its assets), what it owes (its liabilities), and its net worth (its shareholders’ equity) at a specific point in time.
Statement of cash flows: shows where a company obtained cash during a period of time and how that cash was used.
What is notes to the financial statements?
It is additional information that is reported in the notes to the financial statements that are cross-referenced to the four statements.This explanatory notes clarify information presented in the financial statements and provide additional detail. They are essential to understanding a company’s financial performance and position.
What other financial statements are there?
Statement of comprehensive income: must be prepared when a publicly traded company reports other comprehensive income earned from certain items.
Statement of retained earnings: ……
Are Financial statements produced yearly? Publicly traded companies must
Annually, quarterly, monthly, yearly depending on the nature and purpose of the company.
Nearly 75% of Canadian companies use December 31 for their fiscal year end. Why does every company not use Dec 31 as its accounting year end?
Many companies choose to end their accounting year when their inventory or operations are at a low. This is advantageous because gathering accounting information requires a lot of time and effort from managers. They would rather do it when they are not too busy operating the business. Also, inventory is easier and less costly to count when it is low.
