The Financial Statement Summarizes A Company S Assets

Category: Finance, Financial Planning.

Accounting has been defined as, by Professor of Accounting at the University of Michigan William A Paton as having one basic function: "facilitating the administration of economic activity. And 2) communicating the results of this process to interested parties. " As an example, a company s accountants periodically measure the profit and loss for a month, a quarter or a fiscal year and publish these results in a statement of profit and loss that s called an income statement.

This function has two closely related phases: 1) measuring and arraying economic data. These statements include elements such as accounts receivable( what s owed to the company) and accounts payable( what the company owes) . This at the higher levels of accounting and in the organization. It can also get pretty complicated with subjects like retained earnings and accelerated depreciation. Much of accounting though, is also concerned with basic bookkeeping. Every bill paid, every dollar and, every dime owed cent spent and accumulated.

This is the process that records every transaction. But the owners of the company, which can be individual owners or millions of shareholders are most concerned with the summaries of these transactions, contained in the financial statement. A value of an asset is what it cost when it was first acquired. The financial statement summarizes a company s assets. The financial statement also records what the sources of the assets were. Profits are also an asset of the business. Some assets are in the form of loans that have to be paid back.

In what s called double- entry bookkeeping, the liabilities are also summarized. The management of these two elements is the essence of accounting. Obviously, a company wants to show a higher amount of assets to offset the liabilities and show a profit. There is a system for doing this. The result would be chaos! Not every company or individual can devise their own systems for accounting.

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The Way In Which Asset Allocation Dovetails With Ancient Wisdom Is That It Turns Our Focus Inward Rather Than Outward - Graciela Dino about Finance and Financial Planning:

Advances in investment theory have dovetailed nicely with ancient wisdom to present investors with a new and exciting paradigm for investing. Markowitz.