Important Concepts in Financial Statement

Important concepts regarding Financial Statements offer an in-depth insight into the ideas which play vital roles at the time of making financial statements and reports.
Following are regarded as some of the important concepts regarding Financial Statements:

Earnings: Evaluate the overall performances and operations of a particular company. Earning is more or less the same concept as that of the income statement, maintaining records of a company’s earning details. EPS or Earnings per share forms an important aspect of the concept, which denotes the earnings returned on the initial amount invested.

 

Revenue: Revenue is nothing but a collection of accounting rules, which controls the sales-oriented operations of a company. In today’s commercial world, Revenue indeed plays a vital role, scrutinizing in great detail, the collective financial restatements of the high-profile corporations across the globe.

 

Working Capital: The reserve of liquid cash of a company is termed as its Working Capital. This capital reserve is immensely beneficial for a company, during financial uncertainties and emergencies. In fact, Working Capital is a represention the amount of operating liquidity of a commercial firm on a daily basis. It is calculated as:

Working Capital = Current Assets – Current Liabilities
 

Long Lived Assets: They refer to those financial resources, on the basis of which the future benefits of a company are expected for several years. It also includes some non-current assets, such as equipments, intangibles and buildings. Long Lived Assets are found on the balance sheet of a company in the form of the non-current assets.

 

Long Term Liabilities: They are nothing but company obligations, extending beyond the current year or the company’s current operating cycle. Normally, such liabilities indicate long-term debts such as company-issued bonds. Payment of the Long Term Liabilities must be made in more than a year. To calculate Long Term Liability, it is subtracted from the fixed assets and the net current assets to derive the net assets. Mortgages, debentures and bank loans are regarded as some of the common instances of such liabilities.

 

Pension Plans: They are one of the diverse types of retirement plans. Characterized as a type of Long Term Liability, Pension Plans allow a person to reserve a part of his income as savings during his/her service period, and enjoys the benefits of the pension funds in the post-retirement days.

 

More Information Related to Basics of Financial Report
Concepts in Financial Report Earning Statement Basics in Financial Statement
Long Term Assets Long Term Liabilities Pension Plan
Working Capital Statement Financial Statement :Revenue Stock Holder Statement

 

More Information Related to Financial Report
Financial Report Basics Balance Sheet Income Statement Cash Flow statement
Organisational Financial Report Financial statement Financial Statement Assertions User of Financial Statement
Annual Financial Report Financial Status Report Monthly Financial Report Stock Financial Report

Last Updated on : 26th June 2013

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