Financial Statements Represent More Than One Corporation Essay

The purpose of this paper is to define accounting, and identify the four basic financial statements. The paper also explains how the different financial statements are interrelated to each other and why they are useful to managers, investors, creditors, and employees.

NOTE: In addition to the in-chapter and end-of-chapter exercises which serve as short cases you will find the following short cases arranged by course title that can also be utilized as short cases that require the student to access the authoritative literature to address the issue presented in the case. Solutions to the cases below are available to instructors on the Weirich Accounting & Auditing Research 8e instructor website at www.wiley.com/college/weirich. Other excellent sources of longer and more detailed cases include the Deloitte Trueblood cases and cases provided by various other firms.

2. (TCO 2) What are the four basic financial statements? Describe the balance sheet, and explain why it is important

The amount of control the firm has over its subsidiary will be the determining factor in deciding when to consolidate financial statements annually. If the firm acquires another company, the firm must own fifty percent or more of the subsidiary’s outstanding voting stock in order for the two to consolidate. With this ownership level, the firm will be able to persuade the subsidiary into making decisions that would not only benefit the subsidiary, but also benefit the firm (parent) as well. “When majority of voting stock is held, investor-investee relationship is so closely connected that the two corporations are viewed as a single entity for financial reporting” (Hoyle, n.d.). Thus with this control in place both companies will combine their

Two traditional approaches to fund programs are grants and donations. Grant funding is typically the largest revenue source for a human service organization. Vast arrays of different grants are available for funding purposes. The XYZ Corporation can utilize these funds from government private foundations. The second traditional fundraising method to fund programs is donations. Building a relationship with the community and having a confident CEO that will reach out for donations can impact the amount of donations your organization receives annually. The XYZ Corporation has a large clientele and therefore should be able to gain recognition within the community and gain donations.

Consolidated financial statements are the statements gives a combination of the accounts of a business and all the subsidiaries during a financial period.

In this paper I will identify the four basic financial statements, discuss how they are interrelated with each other, and why they are useful to managers, investors, creditors, and employees.

The Board of Directors declared a quarterly cash dividend of $0.20 per share on the company’s common stock. This increase in dividend was payable to shareholders of record on closed of business on May 11, 2016. In the first quarter of this year, the company brought back 1.0 million shares of its common stock at a cost of $50.0 million, with the expectation that it will return its free cash flow to shareholders in this year in the form of dividends and share of repurchases. The Cheesecake Factory knows the importance of success, therefore they schedule conference calls and webcast live on the company’s website throughout May 26, 2016. This ensure stakeholders that the company was not in the red, and continue to profit.

Consolidated financial statements require preparation of a three-part consolidated worksheet consisting of a balance sheet, income statement and statement of retained earnings which aides in combining the amounts of the separate companies and allows for adjustments necessary to combine balances to reflect the amounts that will essentially be reported as a single company. Balances of relevant accounts from Greene and the subsidiaries are entered into the consolidation worksheet prior to preparation of the consolidated financial statements. All accounts within the consolidated worksheet are presented in the standard sequence of a companies’ financial statements, however, two additional consolidation columns are added so that appropriate double-entry form adjustments can be entered. A completed consolidated worksheet reflects a “consolidated” column in which entries are summed algebraically across the individual accounts. Totals from the consolidated worksheet, are then presented in their respective consolidated financial statements. Overall guidance on consolidations is provided by Accounting Standards Codification Topic 810-10 and additional guidance to address presentation matters is provided by ASC 810-10-45.

Tenured teachers are employees who have a few years of experience in the same workplace. Because of this experience, they are able to stay in their job until retirement. “It provides job security for teachers, which many believe, translates to happier teachers and teachers who perform at a higher level” (Meador, Derrick). The tenure system sounds great for people who want to have a stable career when, nowadays, it is difficult to find a job with a good salary. However, some argue that because of the system, it is impossible to fire a teacher who does not treat students right and also affects the school’s environment. According to the website, Teachers Union Exposed, when asked “does tenure mean that a teacher has worked hard and proved themselves

Financial Statements basically show the historical performance or record of the company at some previous point of time. By the time when financial statements are made public, changes are many economical areas such as market conditions, currency exchange rate and inflations can change the values of assets and liabilities. In this case there often exist discrepancies between book value of assets and their market values.

The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four areas of information, which we can collect from a company's financial statements. They are: Ÿ

The balance sheet and Income statement are the most important financial statements of the company that help conduct current analysis of company and evaluate its trends overtime. The balance sheet represents the company snapshots of its financial position on the last days of accounting period. Apple balance sheets, which represent a snapshot of its ending balances in asset, liability and equity account as of the date stated on the report, are changes each year from 2003 to 2014. On the other hand, the income statement shows its financial performance over 2003 to 2014. Apple basically ends its accounting period in September. Most of the long-term debts are in the form of the bonds. According to appleinsider.com, Apple recently issues a new euro bond worth about $2.26 billion with a maturity date on January 17, 2024 and coupon rate of 1.375% payable annually. The first payment will occur on January 17, 2016. Moody’s recently assigned a rating of Aa to Apple Inc. 's senior unsecured note issuance. Thus, Apple recent capital expenditure amount to 11,488 million according to morningstar.com. The analysis of financial statements is conduct to compare Apple with one of its closest rival Hewlett-Packard and twelve ratio were calculated. From table1 and chart1, the current ratio that determine the company ability to meet its short term obligation shows Apple’s current ratio is higher than that of Hewlett-Package from 2003 to 2014. That is, Apple is solvent than Hewlett Packard. Table

In any business operations, full financial disclosure refers to the provision of the necessary information about a company for better decision making by the people accustomed. It is the financial revelation of a given company. There are some financial disclosures in any business that ensure proper understanding of financial statements to the financial readers, or potential auditors. Examples are the annual financial reports and the financial declarations of the company. The annual financial reports of the enterprise are very useful since they discloses the revenues recognized in the business, and the accountability of the inventories plus the income taxes accounted for during that period of operation. Second, is the disclosure of this financial statements which gives the actual revelation of the company 's stock options, liabilities and the effects of foreign currencies?! This disclosure includes the company 's balance sheet of the year, income statements and also the cash statements flows of that year. This information gives a proper understanding of the financial status users about the effects of inflation and price change on property and inventories (Berger, 2011).

Financial statements have several key components and specific criteria into them to relay the detailed information for auditors and management. A deeper look into financial statements and the many concepts surrounding them are needed to explain in more detail. It’s also important to recognize the Auditor’s opinion letter, balance sheet, operating statement, statement of changes in net assets, and statement of cash flows and footnotes of their involvement in the process. Relevant accounting articles are a useful supplement to financial statements and how they enhance concepts in the financial statement. The meaningful uses of financial statements for health care organizations are the epitome of current and future success of financial health.