Concept introduction:
Financial statements:
Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.
Balance Sheet:
The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
To choose:
The correct statement about FASB comprehensive income.
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Cornerstones of Financial Accounting
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- Why is pro forma earnings reporting coming under scrutiny? How can you mitigate the "bad press" associated with using pro forma data in valuing an organization?arrow_forward1. Of the following, choose the one that describes a situation where liabilities and expenses are manipulated to make a company appear less profitable? A. Liabilities are capitalized to increase revenues. B. Failure to record insurance expense for the period. C. Failure to record employee payroll earned but not paid as of period end. D. Failure to record warranty costs when the facts suggest that disclosure is more appropriate accounting treatment. E. None of the above.arrow_forwardDescribe pro forma income and the importance of pro forma income in the evaluation of the income statement. Choose at least two items that are excluded from pro forma income. Suggest to management why including the items would be misleading to investors and creditors.arrow_forward
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- Which statement is false? * Revenues and expenses result from regular activities of the business. Gains and losses result from incidental transactions of the business. Generally, revenue is recognized when the earning process is complete and a valid promise of payment has been received. An expense is recognized immediately in the income statement when an expenditure produces no future economic benefitsarrow_forwardHow does subjective accounting policies at General Electric assist in hiding poor decision-making results on the Income Statement and Balance Sheet?arrow_forwardEconomic consequences of accounting standard-setting means: a. standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard. b. standard-setters must ensure that no new costs are incurred when a new standard is issued. c. the objective of financial reporting should be politically motivated to ensure acceptance by the general public. d. accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.arrow_forward
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