Professional Documents
Culture Documents
Introduction to Financial
Statements and Other
Financial Reporting
Topics
Salman Masood Sheikh
M.Com, MBA, M.Phil, Ph.D
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(Scholar),
FORMS OF BUSINESS
ENTITIES
Sole proprietorship,
Partnership
Business owned by two or more individuals.
Each owner, called a partner, is personally responsible for
the debts.
A business Corporation
Legal entity incorporated in a particular state.
Ownership is evidenced by shares of stock. A corporation is
considered to be separate and distinct from the stockholders.
Accounting
for
corporations,
proprietorships, and partnerships
sole
same, except
for theTemplates
owners' equity section of balance
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THE FINANCIAL
STATEMENTS
principal financial statements are
Balance Sheet,
Income Statement,
Statement of Cash Flows.
Footnotes (Notes)
To evaluate the financial condition, the profitability,
and cash flows of an entity, the user needs to
understand the statements and related notes.
Exhibit 2-1 illustrates the interrelationship
Balance Sheet
(Statement of Financial Position)
The balance sheet consists of three major sections
Assets, the resources of the firm;
Liabilities, the debts of the firm; and
Owners equity, the owners' interest in the firm.
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THE FINANCIAL
The income statement
STATEMENTS
(Statement of Earnings)
summarizes revenues and expenses and gains and losses.
Footnotes (Notes)
The footnotes to the financial statements are used to present
additional information about items included in the financial
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statements.
THE FINANCIAL
Footnotes (Notes)
STATEMENTS
Footnotes are an integral part of financial statements.
Certain information must be presented in footnotes.
APB Opinion No.- 22 requires that accounting policies be
disclosed as the first note or be disclosed in a separate
summary of significant accounting policies (preceding the
first note).
Accounting policies include such items as the method of
inventory valuation and depreciation policies.
Other information specifically requiring footnote disclosure is
the existence of contingent liabilities and some subsequent
events.
Contingent liabilities are dependent upon the occurrence or
non-occurrence of one or more future events to confirm the
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liability. Powerpoint
The settlement
of litigation or the ruling
of 6a tax
court would be examples of the confirmation of a contingent
Subsequent Events
Subsequent events occur after the balance
sheet date, but before the statements are
issued.
sequence
procedures
aim
of
accounting
completed
during
Recording transactions
2.
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employees,
social accounting
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AUDITOR'S REPORT
Unqualified opinion.
This opinion states that
statements present fairly
respects.
the
all
financial
material
Qualified opinion.
A qualified opinion states that, except for the
effects of the matter(s) to which the
qualification relates.
Adverse opinion.
This opinion states that the financial
statements do not present fairly the financial
position,
Disclaimer of opinion.
A disclaimer of opinion states that the auditor
does not express an opinion on the financial
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statements.
AUDITOR'S REPORT
Managements
Responsibility
for
Financial
Statements
management
statements
to
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of the
consolidated financial statements. Such financial statements were prepared in conformity with generally
accepted accounting principles. Some 4the amounts included in these financial statements are
estimates based upon management's best judgment of current conditions and circumstances.
Management is also responsible for preparing other financial information included in this annual report.
The company's management depends on the company's system Of internal accounting controls to assure
itself of the reliability of the financial statements. The internal control system is designed, to provide
reasonable assurance, at appropriate cost, that assets are safeguarded and transactions are executed
in accordance with management's authorizations and recorded properly to permit the preparation of
financial statements in accordance with generally accepted. accounting principles. Periodic reviews of
internal controls are made by management and the internal audit function and corrective action is taken
if needed.
The Audit Committee of the Board of Directors, consisting of outside directors; provides oversight of financial
reporting.
The
company's internal audit function and independent public accountants meet with the Audit Committee to
discuss financial reporting and internal control issues and have full and free access to the Audit
Committee.
The consolidated financial Statements have been audited by the company's independent .auditors and their
report is, presented on the 'following page. The independent auditors are approved each year the
annuat shareholders meeting based on a recommendation by the Audit Committee and the Board or
Directors.
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Proxy
The proxy,
The solicitation sent to stockholders for the
election of directors and for the approval of other
corporation actions, represents the shareholder
authorization regarding the casting of that
shareholder's vote.
The proxy contains notice of the annual meeting,
beneficial ownership (name, address, and share
ownership data of shareholders holding more
than 5% of outstanding shares), board of
directors, standing committees, compensation of
directors, compensation of executive officers,
employee benefit plans, certain transactions with
officers and directors, relationship with
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independent
accountants.
ETHICS
Ethics and morals are synonymous. While
ethics is derived from Greek, morals is
derived from Latin. They are interchangeable
terms referring to ideals of character and
conduct.
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ETHICS
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HARMONIZATION OF INTERNATIONAL
ACCOUNTING STANDARDS
HARMONIZATION OF INTERNATIONAL
ACCOUNTING STANDARDS
international
accounting
standards
and
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HARMONIZATION OF INTERNATIONAL
ACCOUNTING STANDARDS
SUMMARY
THANK YOU
FOR YOUR
ATTENTION!
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