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different concepts in financial accounting

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1. Describe how the financial statements (the income statement, statement of retained earnings, balance sheet and statement of cash flows) are interrelated. Provide at least two examples.
If you were an investor, would you place more emphasis on any one particular financial statement? Explain your answer.

2.Describe how the bank reconciliation can be used as an internal control tool for cash. Also, should the same person that receives cash payments prepare the bank reconciliation? Give at least one reason to support your answer.

3. Explain the difference between a capital expenditure and a revenue expenditure. Also, give an example of each and explain the difference in the method of accounting for each expenditure. Explain if there are times that it would be in management's best interest to "shift" an expenditure from a capital expenditure to a revenue expenditure?

4. Identify a skill that you learned in this course and explain how you can apply it to increase success in your career in a real-world scenario.
Optional: Share with your classmates your future plans after you have earned this degree. What will be your next step in your professional journey?

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Solution Preview

1. Describe how the financial statements (the income statement, statement of retained earnings, balance sheet and statement of cash flows) are interrelated. Provide at least two examples.
If you were an investor, would you place more emphasis on any one particular financial statement? Explain your answer.
Different financial statements are closely interrelated as information from one flow into another. For example, to balance sheet at the beginning of a period if we add profit (less loss) from operations and add capital raised less dividend paid to owners we get balance sheet at the end of the period. In this income or loss comes from Income statement and capital raised comes from statement of retained earnings.
In terms of cash flow statement, net income is the first line as it is used to calculate cash from operations.
If I were an investor I would not place more emphasis on one particular financial statement as in that case I would only get a part of insight into company's financial condition. Together, all financial statements give a complete picture of financial standing of the company.
2. Describe how the bank ...

Solution Summary

An explanation to different concepts in financial accounting is determined.

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