Financial Statement Essay

1229 words - 5 pages

Examining Financial Statements PAGE \* MERGEFORMAT 1
Examining Financial Statements PaperTeam C PaperVictoria MartinezTiwana NeelyKaren WilsonChuma LewisI. Annette JohnsonUniversity of PhoenixACC/300: Principles of AccountingWH07BMA10Gene A. CooperNovember 03, 2008Examining Financial Statements PaperLandry Restaurant's net income is $45,901. After reviewing the different statements we decided that the Cash Flow Statement sheet explained in more details how the net income was calculated. The components of a cash flow statement is distinct from the income statement and balance sheet because it does not include the amount of future incoming and outgoing cash that has been recorded on credit.Therefore, cash is not the same as net income, which on the income statement and balance sheet, includes cash sales and sales made on credit. Cash flow is determined by looking at three components by which cash enters and leaves a company; core operations, investing and financing.Complementing the balance sheet and income statement, the cash flow statement (CFS), a mandatory part of a company's financial reports since 1987, records the amounts of cash and cash equivalents entering and leaving a company. The cash flow statement allows investors to understand how a company's operations are running, where its money is coming from, and how it is being spent.Measuring the cash inflows and outflows caused by core business operations, the operation component of cash flow reflects how much cash is generated from a company's products or services. Generally, changes made in cash, account receivable, depreciation, inventory, and accounts payable are reflected in cash from operations.Cash flow is calculated by making certain adjustments to net income by adding or subtracting differences in revenue, expenses and credit transactions (appearing on the balance sheet and income statement) resulting from transactions that occur from one period to the next. These adjustments are made because non-cash items are calculated into net income (income statement) and total assets and liabilities (balance sheet). So, because not all transactions involve actual cash items, many items have to be re-evaluated when calculating cash flow from operations.The total assets for 2002 were $933,015,079 and for 2003 total assets were $1,102,785,506. The total assets are found on the balance sheet along with the liabilities and stockholders' equity.The components of a balance sheet consist of what your business owns (assets) and what it owes (liability). The balance sheet reports assets and claims to those assets as a specific point in time. The claims are subdivided into two categories, claims of creditors and claims of owners. The assets section of the balance sheet normally presents assets in order that they will be converted into cash or used in operations.Cash is presented first, followed by receivables, supplies, prepaid insurance, and other assets. The assets of a more permanent nature are...

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