0
Still curious? Ask our experts.
Chat with our AI personalities
Steve
Maxine
LaoAdd your answer:
Earn +20 pts
What are the Purpose and objectives in financial statement?
The main objective of financial statements is to provide relevant and reliable information about the financial performance and position of an entity to a wide range of users to assist them in forming their economic decisions. For example, investors require financial statements to judge the profitability of their investments. Lenders require them to assess the credit worthiness of potential clients. Management requires financial statements to manage the affairs of the company in the interest of shareholders. Government may require financial statements to assess the accuracy of tax returns.
What is the difference between proforma financial statements and projected financial statements?
Pro forma financial statements are based off of historical statements and include a select few changes or exclusions "as a matter of form" (hence the name). For example, addition of debt or exclusion of extraordinary one-time expense. "Projected financial statements" (aka projections) can be made from scratch and are based off of many different assumptions, few or none of which are based on actual performance. Hope this helps! Source: my recent completion of a formal commercial bank credit training program.
Is letter of credit a financial instrument?
A letter of credit is a financial instrument. It should be treated as such and guarded like you would a credit or debit card.
How does the description of accounting as the language of business relate to accounting as being useful for investors and creditors?
creitors are the persons who have extended credit to the company.they are also interested in the financial statements because they wiil help them in ascertaining whether the enterprise will be in a position to meet its commitment towards them both regarding payment of interest and principal... investors: a person who is contemplaing an investment in a business will like to know about its profitability and financial position.a study of the financial statements will help them in this respect
Is an application for credit considered a source document?
A source document is one that originates and provides proof of a financial transaction. My guess is if the amount approved is not indicated on there it is considered correspondence. For bookkeeping purposes though, the source document would be specific check or credit card indicating the amount of credit.
