Spreading Financial Statements

Question 1

Reasons for Spreading Financial Statements

Answer 1

1. Record Reclassification
2. Simplify format
3. Facilitate Analysis

Question 2

Common Balance Sheet Adjustments

Answer 2

1. Prepaid Expenses separate short and long-term portions of prepaid expense
   Stale Accounts receivable in intangible assets
   Notes Receivable classified as non-current assets
   Overdrafts as a liability
   Accounts Payable to related parties should be spread as a current liability, do not include with regular trade payables
   Notes Payables to officers and owners classified as current liability
   Leasehold improvements classified as intangible assets

Question 3

Common Adjustments to Income Statemetn

Answer 3

Non-operating Income - determine if operating expense
Revenues from discontinue operations
Classify as extraordinary gains or losses
Other Comprehensive income should be shown in the equity portion