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Financial Reporting

Financial reporting is the identification, measurement, and communication of the financial information about an economic entity.

Annual Report

The annual report is the most important report corporations issue to stockholders. It contains two types of information, a narrative presented as a letter from the chairman describes operations over the past year and financial statement that presents information in standardized accounting format. These include the Balance Sheet, Income Statement, the Comprehensive Income Statement, the Statement of Cash Flows, and the Statement of Retained Earnings.

Quarterly Report

Companies also release less comprehensive reports every three months, as required by the SEC, also called 10-Q.

Balance Sheet

The balance sheet (also known as the Statement of Financial Position and the Statement of Financial Condition) summarizes the assets, liabilities and equity at a specific point in time. The balance sheet gives investors an idea of what an entity owns and owes as well as the amount invested by owners.

The balance sheet helps compute the rates of return, evaluate the capital structure, ascertain risk and cash flows, as well as, analyze the businesses: Liquidity, Solvency, and Financial Flexibility

Income Statement

The income statement summarizes the revenues and expenses generated by the company over the entire reporting period. It is the report that measures the success of a company's operations for a given period of time. It is used to determine profitability, investment value, and creditworthiness of a business. It also helps predict the amounts, timing, and uncertainty of future cash flows.

Statement of Comprehensive Income

The statement of comprehensive income reports all income and expenses recognized during a period, except those resulting from dividends and shareholder investments. Other comprehensive income items include: foreign currency valuation adjustments, pension liability adjustment, and unrealized gains and losses on investments.

Statement of Cash Flows

A cash flow statement is a financial report that describes the sources of a company's cash, detailing cash inflows and outflows over a specified time period. It is useful in assessing the amounts, timing, and uncertainty of cash flows.

Statement of Retained Earnings

The statement of retained earnings reports changes in the retained earnings accounting during a reporting period. The statement begins with the beginning balance in the retained earnings account, and then adds or subtracts items such as profits and dividend payments to arrive at the ending retained earnings.

the Blog

February 17/2014

An entities debts and obligation that are not due within one year or business cycle, whichever is longer. To learn more visit Long-Term Liabilities - Accounting Actualities

February 10,2014

Companies must use the percentage-of-completion methods when estimates of progress toward completion, revenue, and costs are reasonably and dependably; as well as the following conditions exist. Learn more at Revenue Recognition - Accounting Actualities

February 3, 2014

Transactions are initially recorded in a journal (also called the book of original entry). Journals are kept in chronological order and list transactions in terms of debits and credits to accounts. Besides a general journal businesses may have specialized journals: sales journal, purchases journal, cash receipts journal, cash payments journal… For more visit Accounting Cycle - Accounting Actualities

January 17, 2014

The Ledger is a book of accounts in which data from transactions recorded in journals are posted and thereby classified and summarized. A general ledger is a collection of all accounts. A subsidiary ledger contains the details related to a single general ledger account.

The accounting system is built from a collection of components referred to elements. Read about them on the elements page at Accounting Actualities.

January 10, 2014

The assumptions in the Conceptual Framework for Financial Reporting are:

Economic entity assumption- The economic activity of the entity is treated distinct and separate from its owners.

Going concern assumption- The absence of information that the entity is not able to continue indefinitely. That the entity has enough income and assets to cover foreseeable obligations.

Monetary unit assumption- The currency used to measure economic activity is going to remain relatively stable, permitting the disregard of inflation or deflation in the environment the entity operates in.

Periodicity assumption- The life of the entity can be divided into time periods for the providing financial reports, this period is usually a year, a quarter, or a month.

See more at about the Conceptual Framework at Accounting Actualities.

January 3, 2014

Generally Accepted Accounting Principles (GAAP) are the ruling accounting principles, standards and procedures that regulate financial accounting. For an understanding of the Codification and the history of GAAP, visit Account Actualities. You will find it time well spent.