Answered: A company is working on reporting its…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter2: Financial Reporting: Its Conceptual Framework

Section: Chapter Questions

Problem 6MC

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A company is working on reporting its net earnings for a fiscal period, to share with investors and creditors. Which financial statement should the company use to report this information?

Expert Solution

Step 1

A financial statement comprises of:

Balance Sheet/Statement of position
Profit/loss Account/Income statement
Statement of Cash Flows
Statement of changes in equity
Notes to Accounts

Balance Sheet provides the financial position of the entity as on a particular date about the assets and liabilities.

Income statement provides details of income & expenses, including it's gross and net earnings for a particular reporting period.

Statement of Cash Flows indicates Cash flows from Operating, investing and financing activities.

Statement of changes in equity consist of changes in equity capital structure including Retained Earnings.

Notes to Accounts consist of policies, accounting methods & principles used in preparation and presentation of the Financial statements.

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