Balance Sheet and Public Sector Reform Essay

2087 Words Jan 9th, 2013 9 Pages
Unit 5007 Financial control
1.1 Assess the relationship(s) between a financial system or function and other systems or functions in an organisation
Answer: Information and records are of critical importance to the functioning and controlling of systems in general, including organisational systems. Given the central importance of information and records to systems operation, including public sector organisations and the societies they exist to govern, we should not be surprised to learn that public sector reform efforts that overlook the information component often fail to meet their immediate objectives and the longer-term goal of establishing a framework for good governance.
Efforts to improve the management of
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Long-term liabilities are less important to analysts, since they lack the urgency of short-term debts, though their presence does indicate that a company is strong enough to be allowed to borrow money.
The balance sheet also commonly includes stock-holders' equity accounts, which detail the permanent capital of the business. The total equity usually consists of two parts: the money that has been invested by shareholders, and the money that has been retained from profits and reinvested in the business. In general the more equity that is held by a business, the better the ability of the business to borrow additional funds.
In contrast to the balance sheet, the income statement provides information about a company's performance over a certain period of time. Although it does not reveal much about the company's current financial condition, it does provide indications of its future viability. The main elements of the income statement are revenues earned; expenses incurred, and net profit or loss. Revenues consist mainly of sales, though financial analysts may also note the inclusion of royalties, interest, and extraordinary items. Likewise, operating expenses usually consist primarily of the cost of goods sold, but can also include some unusual items. Net income is the "bottom line" of the income statement. This figure is the main indicator of

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