Operating cash flow is the money generated by a firm to perform its regular operations in a specific period of time. It tells about the operational health of the firm. If a firm generates positive cash flow, it means that the firm can’t remain solvent in long run. If the ... Read More

Single step income statements represent company’s revenues, expenses and income in simple way. It is easy to calculate as not many steps are involved. Small companies, sole proprietorships uses this kind of statements often.FormulaNet income = revenues – expensesAdvantages are given below −Firm prepares sing step income statement to analyse ... Read More

Income statement tells about firm’s revenues, expenses and profit/ loss in a period or an accounting year. In other words, it tells about firm’s probability in a particular period, it may be quarterly or annually. It is also called as profit and loss statement, revenue statement, statement of financial performance, ... Read More

Dr. ($)Cr. ($)Premises26000Furniture14000Vehicles7000Inventory3000Bank5300Capital45000Loan from bank8000Trade receivables1500Trades payables2800Net profit10000Drawings90006580065800SolutionThe solution is given below −We know the equation => Assets = capital + liabilitiesIn vertical style, it is re written as −Non-current assets + current assets = capital + non-current liabilities + current liabilities (Or)Non- current assets + current assets – current ... Read More

Dr. ($)Cr. ($)Premises26000Furniture14000Vehicles7000Inventory3000Bank5300Capital45000Loan from bank8000Trade receivables1500Trades payables2800Net profit10000Drawings90006580065800SolutionThe solution is given below −Balance sheet of a company As on 31st March XXXXNon-current assets$$Liabilities and capital$$Premises26000Capital45000Furniture14000Net profit10000Vehicles70005500047000Drawings(9000)46000Current assetsNon-current liabilitiesInventory3000Loan from bank8000Trade receivables1500Bank5300Current liabilities9800Trade payables28005680056800Read More

Balance sheet is one of the important aspect in financial statements. Balance sheets tells about firm’s assets, liabilities and equity. By analysing balance sheet tracks firm’s performances, need of improvements, financial obligations etc. can be identified. We can also compare previous years’ balance sheet with present to know the firm’s ... Read More

In a business, decision making is very important aspect. Decision making can direct the business in a successful way or in an unsuccessful way. So, if a business wants to be successful, correct decisions should be taken in given circumstances.A lot of independent variables are involved in decision making mainly ... Read More

Financial statements are the reports prepared by a firm to represent their financial activities in an accounting year. These gives how the firm carries its activities, maintain its cash flows and how well the firm is doing in the market.Nature of financial statements includes −Recording facts.Accounting conversions.Assumptions.Personal judgements.Objectives of financial ... Read More

Money is an important factor in the business. A firm should maintain a clear record about income and outing of money to evaluate and estimate their performance. A cash flow statement is a record, which records firms in and out flow of cash in detail. Monitoring, analysing and optimising the ... Read More

The term forecasting refers to predication of future with the given circumstances. In forecasting, both macro and micro economic factors will be considered. Financial forecasting tells about company’s future action.Financial forecasting made through projected financial statements (income statements, balance sheets and cash flows). It helps to make decisions like capital ... Read More