Chapter 1 Financial Statements

Chapter 1 Financial Statements - Chapter 1 Financial...

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Chapter 1: Financial Statements Sunday, January 29, 2012 10:47 PM 1. Volume of information 1.a. Financial statements are currently prepared according to generally accepted accounting principles (GAAP) 1.a.i. Two authorities mainly responsible for establishing GAAP in the US are the SEC (public-sector organization) and the Financial Accounting Standards Board (FASB; private-sector organization) 1.a. SEC and FASB continue to examine potential rule changes or new rules in a variety of areas but these changes will most likely evolve as a result of joint projects between the US rule-making bodies and the International Accounting Standards Board (IASB) 1.a.i. Goal os IASB: the adoption of uniform international accounting standards 1. Where to find a company's financial statements 1.a. All publicly-held companies must file a Form 10-K annually with the SEC 1.b. Documents filed with the SEC can usually be accessed through the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database 1. The financial statements 1.a. Balance sheet or statement of financial position 1.a.i. Shows the financial position (assets, liabilities, and stockholder's equity) of the firm on a particular date (end of quarter/year) 1.a. Income or earnings statement 1.a.i. Presents the results of operations (revenues, expenses, net profit or loss, and net profit or loss per share) for the accounting period 1.a. Statement of stockholders' equity 1.a.i. Reconciles the beginning and the ending balances of all accounts that appear in the stockholders' equity section of the balance sheet 1.a. Statement of cash flows 1.a.i. Provides information about the cash inflows and outflows from operating, financing, and investing activities during an accounting period 1. Notes to the financial statements 1.a. An integral part of the statements and must be read in order to understand the presentation on the face of each financial statement 1.a.
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