i need anser this 4 qustion i will do it in my fainal exam so i need good qustio
ID: 2470516 • Letter: I
Question
i need anser this 4 qustion i will do it in my fainal exam so i need good qustion spically for chegg no need from google please
Question 2:
1 .Discuss the important of financial statements to a company and its investors and creditors and why management may take steps to improve the appearance of the company in its financial statement
2, Describe how short term investments are reported in the balance sheet and account for transactions involving marketable securities
3. Identify the steps in the accounting cycle and discuss the role of accounting records in an organization
4. Explain the concept of materiality
Explanation / Answer
Answer to Q. NO.1
Importance of Financial Statements:
Financial statements itself represents the company. It tells you about the health of the company. All economic decisions are taken based on the financial statements. From companies perspective, financial statements helps it how the company has performed in current year against previous year.It also helps in forecasting and budgeting for near future and long term future. From investors perspective, it helps the investor determining whether its feasible to invest in the organization and whether the organization will deliver the required return on their investment. From Creditors perspective , it allows them to understand the companies ability to pay their dues on time.
Management would like that the financial statements shows the healthy picture of the company as it will help it negotiate better pay terms with its creditors. It will also help him to attract new investments which will eventually helps the organzation ot grow
Answer to Q. No.2
Short term investments are reported under current assets in the balance sheet. Short term invetsments include both debt and equity securities . These short term investments are reported at their market value in Balance sheet. Shorty term investments are intended to be sold within one year by management
Answer to Q. No. 3
Steps in Accounting Cycle
Role of Accounting records in an Organization
Accounting records are the key source of information in any organization. These are the evidences to prepare the finacial statements. It helps in conducting audit and verfication of the financial statements. The survival of an organization depends on how well it maintains its accounting records. Poor accounting records can bring down the raid of Internal revenue service . Proper accouting records give access to easy information which helps in quick decision making. Various forms of accounting records include : Journal , Ledger; Invoices ; Vouchers; Bank Statements ; Agreeements etc. Accounting records can be kept in physical or electronic format.
Answer to Q. No. 4
Concept of Materiality:-
Financial information are considered material if they could influence the economic decision of the user. The concept of Materiality is relative in size and importance. Some financial information might be material to one company but might not be material to another company. This is correct in case when it is compared between large and small company. A large and material expense to a small company might be small an immaterial to a large company because of their size and revenue. Thus the material concept can be explained as that whether the financial information makes a difference to financial Statement user. If not, the company doesn't have to worry about including it in their financial statements because it is immaterial.
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