1. How does the income statement articulate with the Balance

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1. How does the income statement articulate with the Balance sheet?

2. Comment on the major changes in expenses between the two financial years.

3. Distinguish between depreciation and amortisation

4. When is hospital service income regconised in the income statement? please
explain.

5. There was a significiant increase in"other operation income" from 2008 to
2009. What was the main contributing factors that explains this increase?

6. An asset is similar to an expense. Do you agreed? please explain with reason.

7. Although the income statement is a record of past achievement, the calculations required for certain expenses involce estimates of the future". what is meant by this statement? Can you think of examples where estimates of the future are used???

8." Depreciation is a process of allocation and not valuation" what it meant?

9. How would you suggest a bunsiness determine the bad and doubful debts' expenses for a given period?

10. The cash flow statement provides an explanation of the change in cash for the reporting entity. what is included in cash?

11. In what ways is the cash flow:
- Similar to the income statment?
- different from the income statement?

12. For the three categories of sources / uses of cash summarised in the cash flow statement, comment on the significant changes between 2009 and 2010.

13. What factors could give rise to the accounting "accrual profit" exceeding the cash flow from operating activites?

14. If you reviewed the cash flow statement for an organisation over several years and what would you expect to observe about the net flow from each of the three different activites?

1. How does the income statement articulate with the Balance sheet?

The balance sheet, income statement, and statement of cash flows all articulate with each other. In terms of the income statement and the balance sheet, the income statement articulates with the balance sheet because the income statement shows the income, expense, and net income (bottom line), which is balanced by the assets, liabilities, and equity of the organization. For example, the higher the income (on the income statement), the greater the owner equity. Each statement ties-in to the other statements. When all three statements are compiled together - the income statement, the balance sheet, and the statement of cash flows, you have a complete, comprehensive set of financial statements to work with.

2. Comment on the major changes in expenses between the two financial years.

Inventories and consumables increased by 2,108 between the two years, which can be directly attributed to an increase in revenue of $20,513. Purchased and contracted services, staff costs, operating lease expenses, and other operating expenses all accordingly increased, which is also to be expected with an increase in revenue, because the company is spending more money to make a greater amount in revenue.

3. Distinguish between depreciation and amortization.

Depreciation expenses the cost of the asset over it's useful life. A piece of equipment purchased for $500,000 with a given lifespan of 10 years will be expensed at the rate of $500,000 over 10 years. Generally, current GAAP requires depreciation in the form of MACRS for assets. The asset is then depreciated over the useful life. At the end of the useful life, the asset is either kept and no longer depreciated, or is traded in, sold, etc. Amortization is used for intangible assets (goodwill, patents, trademarks, intellectual property, etc), and is expensed in the same way. The value is established of the asset, with an approximate useful life. The asset is then expensed ...