The main aim of this assignment is to present an exploration of two major parts of financial statements i.e. Statement of Comprehensive income and statement of financial position. This is done by comparing elements of Balance Sheet and income statement of two separate companies and discussing similarities and difference of Presentation and Disclosures of these two separate organizations.
Furthermore, discussing different methods adopted by two separate entities to measure Assets and Liabilities. Along with key strengths and weaknesses demonstrated by the Balance sheet of organizations. For this purpose we will use key ratios to identify difference between different…show more content… One of the most important factors is reliability of financial statements. Reliability is further ensured by audit of financial statements. At last but not least, financial statements should be made in a comparable format either with previous periods or with the competitors.
Balance sheet displays the financial position of an organization at a specific time.
Financial Position is demonstrated using the fundamental Accounting Equation, i.e. Assets= Liabilities + Equity. Assets and liabilities are bifurcated in current and non-current. Current asset is defined as any asset which can be converted into cash readily and will be used within one accounting period normally 1 year e.g. Receivables, Inventory, Prepaid Expenses. While current liabilities are liabilities which are to be settled within one accounting period or 12 months.
Equity is the internal claim of shareholders over the assets of organization. Equity portion of Statement of Financial Position contains mostly but not limited to Common Stock and Retained Earnings.
Statement of Comprehensive Income:
Statement of Comprehensive income contains information relating to the performance of an organization over a specified time period. Performance means the revenue generation and expense related to all these activities and in the end Net Income generated from these operations.