bacnthi assignment#1

7/25/2019 BACNTHI Assignment#1

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Aoanan, Sedric Jed M. 1/10/12

BACNTHI/HBH HW#1

4 Financial Statements

a. Income Statement - a company' !inancia" aemen $a indicae $o% $e re&ene

(money recei&ed !rom $e a"e o! prodc and er&ice )e!ore e*pene are a+en o,

a"o +no%n a $e op "ine- i ran!ormed ino $e ne income ($e re" a!er a""

re&ene and e*pene $a&e )een acconed !or,

a"o +no%n a $e )oom "ine-. I dip"ay $e

re&ene reconied !or a peci!ic period, and $e

co and e*pene c$ared aain $ee re&ene,

inc"din %rieo!! (e.., depreciaion and

amoriaion o! &ario ae- and a*e. T$e

prpoe o! $e income aemen i o $o%

manaer and in&eor %$e$er $e company made

or "o money drin $e period )ein repored.). Balance Sheet - a mmary o! $e !inancia" )a"ance o! a o"e proprieor$ip, a

)ine parner$ip or a company. Ae, "ia)i"iie and o%ner$ip eiy are "ied a

o! a peci!ic dae, c$ a $e end o! i !inancia"

year. A )a"ance $ee i o!en decri)ed a a

nap$o o! a company' !inancia" condiion.

! $e !or )aic !inancia" aemen, $e

)a"ance $ee i $e on"y aemen %$ic$

app"ie o a in"e poin in ime o! a )ine'

ca"endar year. A andard company )a"ance

$ee $a $ree par3 ae, "ia)i"iie and

o%ner$ip eiy. T$e main caeorie o! ae are a""y "ied !ir and ypica""y in

order o! "iidiy. Ae are !o""o%ed )y $e "ia)i"iie. T$e di!!erence )e%een $e ae

and $e "ia)i"iie i +no%n a eiy or $e ne ae or $e ne %or$ or capitalo! $e

company and accordin o $e acconin eaion, ne %or$ m ea" ae min

"ia)i"iie.c. Cash Flow Statement - !inancia" aemen $a $o% $o% c$ane in )a"ance $ee

accon and income a!!ec ca$ and ca$ ei&a"en, and )rea+ $e ana"yi do%n o

operain, in&ein, and !inancin aci&iie. 4enia""y, $e ca$ !"o% aemen i

concerned %i$ $e !"o% o! ca$ in and ca$ o o! $e )ine. T$e aemen capre


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)o$ $e crren operain re" and $e

accompanyin c$ane in $e )a"ance $ee. A

an ana"yica" oo", $e aemen o! ca$ !"o% i

e!" in deerminin $e $orerm &ia)i"iy o! a

company, paric"ar"y i a)i"iy o pay )i"".

Inernaiona" Acconin Sandard 5 (IAS 5- i

$e Inernaiona" Acconin Sandard $a dea" %i$ ca$ !"o% aemen.d. Statement of Changes/Capital Statement - T$e aemen e*p"ain $e c$ane in a

company' reained earnin o&er $e reporin period. T$ey )rea+ do%n c$ane in $e

o%ner' inere in $e oraniaion,

and in $e app"icaion o! reained pro!i

or rp" !rom one acconin period

o $e ne*. 6ine iem ypica""y inc"de

pro!i or "oe !rom operaion, di&idend paid, ie or redempion o! oc+, and any

o$er iem c$ared or credied o reained earnin.

Definition of Accounting/Accountancy

Accountancy i i aproce o! commnicain !inancia" in!ormaion a)o a )ine eniy o

er c$ a $are$o"der and manaer. T$e commnicaion i enera""y in $e !orm o!

!inancia" aemen $a $o% in money erm $e economic reorce nder $e conro" o!

manaemen7 $e ar "ie in e"ecin $e in!ormaion $a i re"e&an o $e er and i re"ia)"e.

T$e princip"e o! acconancy are app"ied o )ine eniie in $ree di&iion o! pracica" ar,

named acconin, )oo++eepin, and adiin.I i a"o $e ar o! recordin, c"ai!yin, and

mmariin in a ini!ican manner and in erm o! money, ranacion and e&en %$ic$ are,

in par a "ea, o! !inancia" c$aracer, and inerprein $e re" $ereo!.

egal fo!ms of Business "!gani#ation

a. Sole $!op!ieto!ship - ype o! )ine eniy $a i o%ned and rn )y one indi&ida"

and in %$ic$ $ere i no "ea" diincion )e%een $e o%ner and $e )ine. T$e

o%ner recei&e a"" pro!i ()8ec o a*aion peci!ic o $e )ine- and $a n"imied

reponi)i"iy !or a"" "oe and de). 4&ery ae o! $e )ine i o%ned )y $e

proprieor and a"" de) o! $e )ine are $e proprieor'. T$i mean $a $e o%ner

$a no "e "ia)i"iy $an i! $ey %ere acin a an indi&ida" inead o! a a )ine. I i

a o"e proprieor$ip in conra %i$ parner$ip.


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Ad%antages&a)i"iy o raie capia" ei$er p)"ic"y or pri&ae"y, o "imi $e perona" "ia)i"iy o!

$e o!!icer and manaer, and o "imi ri+ o in&eor

Disad%antages&9aiin capia" !or a proprieor$ip i more di!!ic" )ecae an nre"aed

in&eor $a "e peace o! mind concernin $e e and ecriy o! $i or $er in&emen

and $e in&emen i more di!!ic" o !orma"ie7 o$er ype o! )ine eniie $a&e more

docmenaion.

). $a!tne!ship - an arranemen %$ere parie aree o cooperae o ad&ance $eir ma"

inere. I i a nominae conrac )e%een indi&ida" %$o, in a piri o! cooperaion,

aree o carry on an enerprie7 conri)e o i )y com)inin propery, +no%"ede or

aci&iie7 and $are i pro!i. :arner may $a&e a parner$ip areemen or dec"araion

o! parner$ip and in ome 8ridicion c$ areemen may )e reiered and

a&ai"a)"e !or p)"ic inpecion. In many conrie, a parner$ip i a"o conidered o )e

a "ea" eniy, a"$o$ di!!eren "ea" yem reac$ di!!eren conc"ion on $i poin.

Ad%antages&T$e )ie ad&anae o! a enera" parner$ip i $e a* )ene!i. Binee

rcred a parner$ip do no pay income a*. Inead, a"" pro!i and "oe are paed

$ro$ o $e indi&ida" parner. T$e parner$ip i"" !i"e a a* rern ain $e

)ine' pro!i and "oe, ) i doe no pay a*e on $e income. T$e parner m

a"o !i"e a* rern $a $o% $eir indi&ida" $are o! $e company' pro!i and "oe

a"$o$ parner are no reaed a emp"oyee.

Disad%antages&

egal lia'ility&I! yo're no rcrin yor )ine a a corporaion, rea"ie $a a

enera" parner$ip )rin %i$ i perona" "ia)i"iy !or a"" $e )ine' o)"iaion and

de). I! $e company e ed or $a"ed ino )an+rpcy cor, a"" !ine are $e

reponi)i"iy o! $e indi&ida" parner. A"o, mo parner$ip a""o% any parner or

o%ner in $e company o ma+e deciion on )e$a"! o! $e company in enera". 4&en i! a

parner i acin on $eir o%n, a"" parner are reponi)"e !or $e ocome o! $oe

deciion. (anagement issues&Becae parner can ma+e in&emen !rom $eir perona"

!inance and $e money in&eed i $en o%ned )y a"" parner, i' eay !or eion o!

reim)remen o arie. W$a i! one parner didn' %an $e company o a+e $a money

and doen' %an $e company o pay i )ac+; T$e ame +ind o! ie can arie %i$


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prc$ae !or $e company or e&en %i$ deciion on %$ic$ pp"ier or c"ien o a+e

on. Ha&in a"" parner ea" in po%er and reponi)i"iy can cae pro)"em n"e

proper ide"ine are e o.c. Co!po!ation - i creaed nder $e "a% o! a ae a a eparae "ea" eniy $a $a

pri&i"ee and "ia)i"iie $a are diinc !rom $oe o! i mem)er. T$ere are many

di!!eren !orm o! corporaion, mo o! %$ic$ are ed o condc )ine. 4ar"y

corporaion %ere ea)"i$ed )y c$arer (i.e. )y an ad hocac paed )y a par"iamen

or "ei"are-. Mo 8ridicion no% a""o% $e creaion o! ne% corporaion $ro$

reiraion. An imporan () no ni&era"- conemporary !eare o! a corporaion i

"imied "ia)i"iy. I! a corporaion !ai", $are$o"der may "oe $eir in&emen, and

emp"oyee may "oe $eir 8o), ) nei$er %i"" )e "ia)"e !or de) o $e corporaion'

credior.

Ad%antages&

Limited liability for the owners. Since a corporaion i a eparae and diinc "ea" eniy,

o%ner o! a corporaion are on"y inde)ed o $e e*en o! $eir inere in $e corporaion. T$i

mean $a $e credior o! a corporaion can on"y rn a!er $e ae o! $e corporaion and no

$e perona" ae o! $e oc+$o"der in $e e"emen o! $e corporaion


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Disad%antages&

Complexity in organization and regulation. To incorporae a )ine, an app"icaion %i$ $e

Secriie and 4*c$ane Commiion m )e !i"ed and appro&ed. A $i$er capia" reiremen

i a"o omeime reired !or o$er ype o! corporaion. nce appro&ed, $e corporaion m

comp"y %i$ $e nm)er o! re"aion and repororia" reiremen %$ic$ are peci!ica""y

imp"emened !or corporaion.

Double taxation. A poi)i"iy o! =do)"e a*aion may arie on $e di&idend i pay. T$e

corporaion i a*ed on i income. T$en, i! $e corporaion diri)e ome o! $e ne income o

$e oc+$o"der a a di&idend, $e di&idend %i"" )e a*ed aain on $e stockholdersperona"

income a* rern.

Limited liability may weaken credit capacity.A corporaion %$ic$ doen

bacnthi assignment#1

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