acc theory 7.docx - Statement of Financial Position...

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Statement of Financial Position (balance sheet) reports the assets, liabilities, and equity ofa business enterprise at a specific date. This financial statement provides information about thenature and amounts of investments in enterprise resources, obligations to creditors, and theequity in net resources. It therefore helps in predicting the amounts, timing, and uncertainty offuture cash flows.The statement of financial position provides a framework for the estimation of returnrates and the assessment of the enterprise's capital structure. Analysts also use information in thestatement of financial position to determine the risk and potential cash flows of a business.Analysts use the financial position statement in this respect to determine the liquidity, solvency,and financial stability of a firm.The balance sheet restriction is that most assets and liabilities are listed at historical cost,assumptions and estimates are used, many financial value items are excluded.

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Term
Fall
Professor
NoProfessor
Tags
Balance Sheet, statement of Financial Position

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