1. Describe the Purpose a Balance Sheet Essay

1114 Words Mar 9th, 2016 5 Pages
1. Describe the purpose a Balance Sheet
A balance sheet can be described a financial statement that seeks to show the financial position of an organization. It shows the assets, liabilities and the equities of an organization at any given time. The assets of an organization can be described as the resources owned and/or controlled by the organization arising from past transaction and for which the organization can expect future benefits. The liabilities of an organization can be described as the obligations arising from past transaction that the company is expected to forgo future economic benefits to satisfy. Equities of an organization refer to the owners’ contribution to the organization. Equities are composed of owner’s contribution
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Statement of cash flow can be described as a financial report that provides data concerning the movement of cash into the organization and the expenditures for which cash was used. The cash flow statement analyses the changes in cash and cash equivalents for any given period of time. According to the provision of IAS, the cash flow should be analyzed based on its constituents which includes cash flows from operations, investing and financing activities. Cash flows from operating activities has been described as cash from the main revenue –producing activities such as sale of goods, payment to suppliers and employees. Cash flows from investing activities refer to the cash from the sale or purchase of long –term assets and investment. Cash flow from financing activities refers to the activities that result to changes in the equity capital and the debt structure of the entity.
The purpose of cash flow 1. It shows the sources of finance that an organization accessed during the year and shows the pattern to determine the consistency. 2. The cash flow statement reconciles the opening cash balances and the ending cash balances at a glance as a way to show the ability of the firm to convert accounting profit into cash. 3. It shows the various components and cash expenditures based on classification and provide details on changes in non –current assets, debt structure and operations (Brigham, 2014).
5. Brief explanation of

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