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User:Jukeboksi/BBA studies/Accounting
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= Balances and flow statements = :*For every '''[[w:fiscal year|fiscal year]]''' ( [[w:fi:Tilikausi]] )a business must produce a '''[[w:annual report]]''' which contains ( in [[w:Finland]] ) :** the annual '''[[w:financial statement]]''' ( [[w:fi:Tilinpäätös]] ) which contains naturally :*** the '''[[w:balance sheet]]''' ( main document of accounts, [[w:fi:tase]] ) :***the '''[[w:income statement]]''' ( main flow document, [[w:fi:tuloslaskelma]] ) :*** the attachments for balance sheet and income statements [[w:fi:liitteet]] :*** the [[w:statement of changes in equity]] (SOCE) :** Textform description of businesses activities ( [[w:fi:toimintakertomus]] ) == Income statement or profit and loss statement == :* '''[[w:Income statement]]''' (also referred to as '''profit and loss statement (P&L)''', '''revenue statement''', '''statement of financial performance''', '''earnings statement''', '''operating statement''' or '''statement of operations)'''is a company's '''[[w:financial statement]]''' that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). ( Wikipedia ) ::<tt>Mnemonic:</tt> ''"The [[w:income statement]] describes the income possibilities of the [[w:entrepreneur]] with 100% of shares <u>not</u> the income of the business, that's called the [[w:top line]] and is only small part of the whole thing."'' ::An '''''[[w:income statement]]''''' (also referred to as '''''profit and loss statement (P&L)''''', '''''revenue statement''''', '''''statement of financial performance''''', '''''earnings statement''''', '''''operating statement''''' or '''''statement of operations''''') is a company's [[w:financial statement]] that indicates how the [[w:revenue]] (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the [[w:net income]] (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). It displays the revenues recognized for a specific period, and the [[w:cost]] and [[w:expense]]s charged against these revenues, including [[w:write-off]]s (e.g., [[w:depreciation]] and [[w:amortization]] of various [[w:asset]]s) and [[w:tax]]es. The purpose of the income statement is to show [[w:Management|managers]] and [[w:investor]]s whether the company made or lost money during the period being reported. ( Wikipedia ) <tt>Formula for income statement</tt> :: <tt> incoming </tt> '''[[w:revenue]]''' == '''[[w:top line]]''' == '''[[w:turnover]]''' == '''[[w:income]]''' == '''[[w:cash flow]]''' :: <tt> minus outgoing </tt> '''[[w:expenses]]''' :: <tt> equals </tt> '''[[w:net income]]''' == '''The [[w:bottom line]]''' == '''[[w:net profit]]''' == [[w:net earnings]]''' :an example of an income statement for a really small business involved in international trade :::''''+ [[w:Revenue]]''' :::'''- [[w:Fixed costs]]''' ( ::::- [[w:Personel]] costs ::::- [[w:Facilities]], [[w:office]] and [[w:bookkeeping]] and [[w:accounting]] [[w:cost]]s ) :::'''- [[w:Variable costs]]''' ( ::::- [[w:Unit price]] x lot size + [[w:VAT]] ::::- [[w:Duty (economics)|Duties]] and [[w:tariffs]] or in case of [[w:single-market]] or [[w:free trade area]] no need ::::- [[w:Logistics]] and [[w:warehousing]] ::::- [[w:distribution]] costs ::: ) :::________________________________ :::== '''[[w:Net income]]''' == Balance sheet == :* A '''[[w:Balance sheet]]''' or '''statement of financial position''' ( in [[w:financial accounting]] ) is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. [[w:Asset]]s, [[w:liability (financial accounting)|liabilities]] and [[w:ownership equity]] are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a ''"snapshot of a company's financial condition"''. ( Wikipedia ) ::: '''Balance sheet terms''' :::::* '''[[w:Asset]]s == [[w:current assets]] + [[w:non-current assets]]''' :::::::A '''[[w:current asset]]''' is an [[w:asset]] which can either be converted to cash or used to pay current liabilities within 12 months. Typical current assets include [[w:cash]], [[w:cash equivalents]], short-term investments, [[w:accounts receivable]], [[w:inventory]] and the portion of prepaid liabilities which will be paid within a year. ( Wikipedia ) :::::* '''[[w:Liability|Liabilities]] == [[w:Current liabilities]] + [[w:non-current liabilities]]''' ::To understand what's going on with a [[w:business]] in addition to having an [[w:income statement]] one must also have knowledge of where the capital is, what is it's cost and it's payoff i.e. the <u>'''''[[w:Balance sheet]]'''''</u>, then you can calculate all sorts of fun [[w:metrics]] like [[w:Return on equity]] and [[w:return on investment]] etc. In [[w:financial accounting]], a '''[[w:balance sheet]]''' or '''statement of financial position''' is a summary of the financial balances of a [[w:sole proprietorship]], a [[w:Partnership|business partnership]], a [[w:corporation]] or other business organization, such as an [[w:Limited liability company|LLC]] or an [[w:LLP]]. '''[[w:Asset]]s, [[w:liability (financial accounting)|liabilities]]''' and '''[[w:ownership equity]]''' are listed as of a specific date, such as the end of its [[w:financial year]]. A balance sheet is often described as a "snapshot of a company's financial condition". Of the four basic [[w:financial statements]], the balance sheet is the only statement which applies to a single point in time of a business' calendar year. ( Wikipedia ) ---- ----
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