...Financial Statement Differentiation Paper Jasmine Unger ACC/561 April 8, 2013 Professor Timothy Jared Financial Statement Differentiation Paper Financial statements provide documentation of a company’s financial history for a set timeframe. One of the financial statement used by investors, creditors, and mangers is the balance sheet. The second statement used by accountant’s income statement, which is also important to shareholders. The third statement is the retained earnings statement, and the fourth financial statement is the statement of cash flows. Each financial statement has a different purpose and shows different aspects of the company’s finances. However, these financial statements are integrated and work together to provide shareholders financial information. This paper will defines the four financial statements while explaining the financial statement most suitable for either an investor, creditor, or management. The Four Financial Statements The first financial statement is the balance sheet. The balance sheet provides a portrait of the company’s assets and liabilities. The balance sheet is the statement of financial position at a given point (Quick MBA, 2010). The second financial statement, the income statement, reports the revenues, and expenses during the same timeframe as the balance sheet. Revenue is the monies the company is gaining after expenses. The third statement is called the retained earnings statement, which explains changed in retained earnings...
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...that most or even all companies have got a legal obligation to prepare financial statement in many countries. The requirements for preparing financial reporting are usually based on adequate mixture of legislation, accounting standards and specific requirements such as stock exchange rules. Those requirements often give different reporting obligation to entities according to their characteristics such as scope and social or economic substance, and business sector. Therefore, Accounting regulators have required different form of reporting and disclosures depending on entities. That is to say, many regulators broadly enforce different reporting obligations to entities in the private and public sectors, while reporting requirements for entities which operate in not for profit sector are less developed. Such different reporting obligation might have brought related issues to entities and furthermore regulators. Because entities have concerned about significant costs relating considerable reporting and compliance. In additions, as getting into step with globalization, the international harmonization of reporting has been increasingly focused on though; regulators still have a tendency to develop different approaches to reporting requirements for entities with different aspects. With recognition of such complication, some accounting regulators have started to re-define and re-examine regarding differential reporting in order to overcome the difficulties so that can help entities...
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...Is the RDR the future in differential reporting for for-profit entities? By Scott Sharp In March 2012, the External Reporting Board (XRB) proposed a number of changes to the New Zealand Accounting Framework, which enabled them to come to a decision in terms of differential reporting for for-profit entities. The XRB have chosen to align New Zealand with Australia and implement NZ IFRS Reduced Disclosure Regime (RDR). Is this the right decision moving forward in differential reporting? There is to be a four-tier structure with different reporting standards applying to each tier, however the bottom two tier are only transitional which will be removed according to legislative changes enforced. This allows us to focus on tier 2 for differential reporting which in order to qualify for the new RDR approach entities must be not publicly accountable or non-large public sector entities which elect to be in tier 2. Entities that are publicly accountable either trade in the capital markets and/or holds assets for a broad group of outsiders as one of its primary businesses. For a for-profit public sector entity to be considered “large” and thus placed in tier 1, it must have expenses exceeding $30 million. Under the current approach to differential reporting that was issued in 1994, entities must; not be publicly accountable, have all of its owners as member of the governing body at the end of the reporting period, and be not large. The criteria for “large” is a little different being that...
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...Managing Customers and Time Organisation: Burger King This report discusses managing customers and time. It will evaluate the value of customers for chosen organisation and the focuses on Burger King. Research will examine how target customers influence the company. The main purpose is to research which type of customers has the potential to influence BURGER KING®. This organisation will increase customer value created, and relate to the theoretical concept to give some usefulness information. Burger King was founded in 1953. BURGER KING® is the second largest fast food hamburger chain in the world, after McDonald. Currently, the BURGER KING® operates more than 12,300 locations serving over 11 million customers daily in over 76 countries worldwide. The target customer can be grouped which are children, blue collar worker and young adult. The main targeted population are children. BURGER KING® offers toys in Big Kid Meals to attract its target customers, which is children. Blue collar workers are people who have the busiest lifestyles; possibly balancing life and one job other job to be able to earn living. These customers look for quick and convenient meals because of their busy lives to minimise their own time and gain on working hours. Young adults mostly studying and some may have a part time job. BURGER KING® provides the fastest and cheapest meals to customers who own low wages, an example of this is teenagers and low income workers. In relations to porter’s competitive...
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...Financial Statements 1. List the components that comprise a typical financial statement. a. Income Statement i. Reflects Net Income and Net Loss ii. Is a moving picture of operations during the period b. Statement of Owners Equity iii. Changes in owners equity during a time period iv. Increases from Net Income v. Decreases from Withdrawals and Net Loss c. Balance Sheet vi. “Statement of financial position” vii. Lists all Assets, liabilities, and owns viii. As of a specific date + d. Statement of cash flows ix. Cash receipts and cash payments 2. Describe how changes to a company’s revenue and expenses affect their Income Statement and Balance Sheet. Revenues & Expenses on the income statement affect the Net Income, by increase whith revenue and decreasing with expenses. All of which effect the Owners Equity on the balance sheet. 3. How do changes in the Income Statement and Balance Sheet data affect a Statement of Cash Flows? Revenues in the form of payment receipts and expenses in the form of payments are both reflected on the cash flow statement from operating activities which are derived from the P&L. Cash flows from investing activities are which increase or decrease the cash flow come from the balance sheet. 4. Explain how you can evaluate the financial condition of a firm by reviewing the Balance Sheet. To discover the total entities...
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...estimate the feasibility of a Coors distributorship for a two-count area in Delaware. The second problem is a decision on whether or not the distributorship is feasible or, in other words, a go/no-go decision by Brownlow regarding his application. This problem is largely implicit in the case, but it is the problem you are to address in your analysis. In fact, you should employ the following problem statement in your case report: “Does the South Delaware Coors distributorship offer sufficient investment potential given Mr. Brownlow’s current business and personal situation?” Attached you will find the results of all studies mentioned in the case. You may employ any or all of these to make your recommendation. Do not worry about exceeding Mr. Brownlow’s research budget. We will assume that he has sufficienct funds to commission all available studies. Information in this case guide is adopted from materials developed by the authors of the text and is used with permission. 1 Questions for Analysis Questions 1 through 7 below are intended to assist you in developing the appropriate financial analysis for the case. As with every case we examine in this course, a major...
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...NiCE Working Paper 09-108 April 2009 Quality of Financial Reporting: measuring qualitative characteristics Ferdy van Beest Geert Braam Suzanne Boelens Nijmegen Center for Economics (NiCE) Institute for Management Research Radboud University Nijmegen P.O. Box 9108, 6500 HK Nijmegen, The Netherlands http://www.ru.nl/nice/workingpapers 1 Abstract We construct a compound measurement tool to comprehensively assess the quality of financial reporting in terms of the underlying fundamental qualitative characteristics (i.e. relevance and faithful representation) and the enhancing qualitative characteristics (i.e. understandability, comparability, verifiability and timeliness) as defined in ‘An improved Conceptual Framework for Financial Reporting’ of the FASB and the IASB (2008). The operationalization of these qualitative characteristics results in a 21-item index. Using 231 annual reports from companies listed at US, UK, and Dutch stock markets in 2005 and 2007, we test our compound measurement tool on internal validity, inter-rater reliability (Krippendorff’s alpha) and internal consistency (Cronbach’s alpha). Our findings suggest that the measurement tool used in this study is a valid and reliable approach to assess the quality of financial reports. The measurement tool contributes to improving the quality assessment of financial reporting information, fulfilling a request from both the FASB and the IASB (2008) to make the qualitative characteristics operationally...
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...Intermediate Financial Accounting I Course Outline – Fall 2014 Instructor: Carla Carnaghan, Ph.D., CISA, CMA Office & Hours: Calgary Campus office, 5:00 – 6:00pm Thursdays. Please email for appointment, and for alternative times. Office hours may be done in person, with Webex, or by phone, and for smaller issues with email. E-mail: Carla.Carnaghan@uleth.ca (emails received in the evening, particularly after 10 PM, may not be responded to until the next day) Telephone: 1- 403-329-2351 (Lethbridge office – Please use e-mail where possible) Class Times: Y Section: Th 1800-2050 (S6013A) Course Web Page: on Moodle Course Pre-requisites* Prerequisites: MGT 2400; ECON 1010 and 1012 and STAT 1770 or admission to the CA Bridging Program/Professional Diploma in Accounting; a minimum C- grade is required in all prerequisite courses; MGT 3040 (co-requisite) * It is the responsibility of students to check the prerequisites for courses before registration. If students are registered in a course for which they do not have the prerequisites, and they have not received prior permission from the appropriate program chair, they can be de-registered. If this occurs after the drop/add date, tuition will not be refunded. Course Objectives Building from MGT 2100, this course examines the accounting concepts, principles, judgments, and techniques used in recording business events and preparing and presenting financial statements...
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...I. SUMMARY OF THE CASE Prestige Telephone Company is a public utility business. Since it is operated as a public utility, it is subject to the regulations of the Public Service Commission, as such, the rates charged by Prestige Telephone Company for telephone service could not be changed without the approval of the Public Service Commission. The state Public Service Commission had encouraged all public utilities under its jurisdiction to seek new sources of revenue and profits as a step toward deregulation and to reduce the need for rate increase, which higher costs would otherwise bring. In 1995, The Prestige Data Services started its operation as a subsidiary of Prestige Telephone Company. It is established to perform data processing for the parent company and to sell computer service to other companies and organizations. From the start of its operation, Prestige Data Services experienced several problems, to wit; delayed deliveries of equipment, personnel commanded higher salaries and most importantly, customers were lesser than the earlier estimates. By the end of 1996, the company had a very low income that revealed the lowest Return on Investment in seven years. Because of this, Daniel Rose, the president of Prestige Telephone Company, felt it was time to reassess Prestige Data Services. The reports for the quarter revealed a persistent problem; available hours, which were unprofitable, remained HIGH. Revenue and cost data were summarized in the quarterly report on results...
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...University) In this real life case, students are asked to discuss the merits of historical costs vs. replacement costs. Actual note disclosure from a company’s financial statements is provided as background material. Case 3 (adapted from a case prepared by Peter Secord, Saint Mary’s University) A Canadian company prepares two sets of financial statement: one based on Canadian GAAP, and the other on U.S. GAAP. The reasons for some of the differences in numbers are investigated. Case 4 This case is based on Homburg Invest Inc.’s 2006 financial statements. A reconciliation of differences between two sets of financial statements is required along with a brief note explaining why differences exist. Case 5 This case is adapted from a CICA case. It provides details regarding a company`s activities as well as financial details that were revealed as part of planning and interim work performed in the context of an audit of the financial statements. It places the student in the role of CA, reporting to the audit partner, and asks for a memo on the results of the interim audit work as well as any issues that should be raised in an upcoming meeting between the partner and the client. PROBLEMS Problem 1 (40 min.) A single asset is acquired, and students are asked to prepare and compare financial statement numbers during the life of the asset using both a historical cost and a current value model. Problem 2 (40 min.)...
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...show initiative and effort on the part of the preparers. Significant changes in the corporate external reporting environment have led to proposals for fundamental changes in corporate reporting practices. A variety of new information types are been demanded, in particular forward-looking, non-financial and soft information. Openness and transparency in annual reporting on an unprecedented scale may be inevitable with the adoption of International Financial Reporting Standards (IFRS) and Nigeria’s commitment to adopt IFRS; Nigerian companies will have no alternative but to bring themselves up to speed. One way is to ensure that company’s reports actually reflect good governance. INTRODUCTION Good corporate reporting is generally an indication of competitiveness and superior corporate governance. Good reports show initiative and effort on the part of the preparers. “The better reports always address all the required relevant information concisely, and disclose thoroughly the measures taken – including on activities, corporate policy, strategic plans, the company’s prospects and current initiatives to protect the environment,” (Pushpanathan, 2010:15). In recent times the demand for financial disclosure of listed companies has dramatically increased and the failures of large companies listed on the most important stock exchanges have placed extra pressure on listed companies and standard setters for the increase in the quality of...
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...Following is a comprehensive analysis of the financials of the profitability, competitiveness and overall stability of the Competition Bikes, Inc. based on their finance statements. This analysis provides information based on working capital, horizontal analysis, vertical analysis, ratio analysis and trend analysis. This analysis provides essential information on forecasting budget limits and overhead expenses based on overall sales potential. The analysis is based on the last three fiscal years of data provided by Competition Bicycles, Inc. A.1.A. : Horizontal Analysis A horizontal analysis is used to see variations in account line items from year to year. Strictly speaking, according to Accounting for Management (2014), a horizontal analysis “shows changes in the amounts of corresponding financial statement items over a period of time.” The formula utilized to calculate this change is Dollar change = Comparison Year Balance – Base Year’s Balance. The percent change is, therefore, calculated as the dollar change / Base Year’s Balance and multiplied by 100 for a strict percentage. At Competition Bikes, the numbers tell an interesting story. Sales dramatically increased 33.3% between years 6 and 7 before taking a loss of 15% in years 7 to 8. This still puts Competition Bikes at a solid increase of 13.3% in sales from years 6 to 8. Gross profits show a similar trend, increasing by 37.5% between years 6 and 7, while dropping by 16.3% between years 7 and 8 – the net profit increase...
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...TB EXAM QUESTIONS Chapter 1 True False 1.Napoleon found the Italian system of accounting to be inefficient. 2.Venice’s commerce was driven by sea traffic. 3.The Genoese system was the first to imply that unlike items could be compared in terms of a common monetary unit. 4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it in the 1400s. 5.When hyperinflation exists, alternative systems to historical cost become necessary. 6. The International Accounting Standards Board, an international organization dedicated to the diversity of accounting standards worldwide. 7. One trend in European securities markets is consolidation. 8. The continental accounting system is closely linked to the tax collection system. 9. The first step into international business is usually the creation of a foreign subsidiary. 10. If a firm is not involved in international commercial transactions, knowledge of international business is unnecessary. Multiple Choice Learning Objective #1.1: Identify the key trends in the development of accounting through history 1. The Crusades were important in the development of accounting, because __a. the Arabs first developed double entry accounting, which was then adopted by the Italians. __b. the Christians needed double entry accounting to keep track of the relative profitability of the different Crusades. __c. the trade routes shifted the commercial center from Italy to Constantinople ...
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...The Relevance of the Value Relevance Literature For Financial Accounting Standard Setting: Another View Mary E. Barth Graduate School of Business Stanford University William H. Beaver Graduate School of Business Stanford University Wayne R. Landsman Kenan-Flagler Business School University of North Carolina – Chapel Hill January 2001 We thank Dan Collins, Brian Rountree, participants at the 2000 Journal of Accounting & Economics conference, and the editors, S. P. Kothari, Tom Lys, and Jerry Zimmerman, for helpful comments and suggestions. We appreciate funding from the Financial Research Initiative, Graduate School of Business, Stanford University, and Center for Finance and Accounting Research at UNC-Chapel Hill, Stanford GSB Faculty Trust, and the Bank of America Research Fellowship. Corresponding author: William H. Beaver, Graduate School of Business, Stanford University, 518 Memorial Way, Stanford, CA 94305-5015, (650) 723-4409, fbeaver@leland.stanford.edu The Relevance of the Value Relevance Literature For Financial Accounting Standard Setting: Another View Abstract This paper explains that value relevance research assesses how well accounting amounts reflect information used by equity investors, and provides insights into questions of interest to standard setters. A primary focus of financial statements is equity investment. Other uses of financial statement information, such as contracting, do not diminish the importance of value relevance research...
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...or electronic form. EDITH COWAN UNIVERSITY Use of Theses This copy is the property of the Edith Cowan University. However the literary rights of the author must also be respected. If any passage from this thesis is quoted or closely paraphrased in a paper or written work prepared by the user, the source of the passage must be acknowledged in the work. If the use desires to publish a paper or written work containing passages copied or closely paraphrased from this thesis, which passages would in total constitute an infringing copy for the purposes of the Copyright Act, he or she must first obtain the written permission of the author to do so. USERS AND ACCOUNTING INFORMATION PREFERENCES OF GOVERNMENT DEPARTMENT FINANCIAL REPORTS by Helen R Mignot B (Bus) A thesis submitted in partial fulfilment of the requirements for the award of Master of Business (Accounting) at the Faculty of Business Edith Cowan University Date of Submission: 05 February 1996 ACKNOWLEDGMENTS AND DEDICATION I wish to thank all those who provided...
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