Discuss Some Of The Accounting Aspects: Balance Sheet, Revenues, Cost, And Expenses (Research Paper Sample)

Accounting Aspects
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1. Balance Sheet and Income Statement:
A Balance sheet is the most important document since it shows the financial position of the company. It gives a summary of the company’s assets, equity, and liabilities. The balance sheet shows how the company is using its assets and managing its liabilities in its quest of making a profit.
The income statement only shows the profit or loss accrued by the company over a given period of time which can be monthly, quarterly or yearly. It is an indicator of the performance whether the company has made a profit or a loss. The cash flow statement is an indicator of the flow of cash in the company showing where the cash of the company came from and where it went.
2. Revenues, cost, and expenses.
Revenue
The revenue increases the owners’ equity through the company’s sale of products or services. This also is seen in the increase in cash or the accounts receivable from the customers. This is possible when the company selling has met the requirements in the agreement with the potential buyer who is committed to paying for the goods or services. The company then delivers the ordered goods and received payment on delivery by the buyer. The flow of revenue takes place on the completion of sale agreement by the seller and not the flow of cash.
Cost and expenses
The company producing goods and offering services often incur some costs in coming up with the goods and in the provision of the services. Consumers of goods and services usually agree to pay for the price which is the amount deemed necessary and satisfactory for the transaction. The difference in the sale price and the cost is the gross margin which the company usually aim to gain profit. The cost of goods sold is portrayed in the income statements as other costs.
Expenses are incurred in the operations of the company in its quest of staying in business and generating revenues. The operating expenses come into being when the company has obligation to pay them. The expenses at the end of the year for a company includes the cost of equipment and the life assets purchased in the prior years. The cost allocations are known as the operating revenue and often referred to as a depreciation.
3. Financial Statement and Ratio Analysis.
Financial statements users often use the financial ratios in developing insights into the performance of compa...