Cost Accounting System

A cost accounting system should provide cost figures that will enable management to make decisions such as the following for each type of goods manufactured: How profitable is the product at present prices? Can it be profitably produced to sell at a different price?...

Sources of Financial Information

Thorough analysis of financial statements should include a review of the auditor’s report, where the auditor expresses an opinion as to whether the financial information being presented conforms to generally accepted accounting principles. Any significant...

Financial Statement Analysis

Comparative financial statement analysis involves examination of financial statements for a single company for 2 or more accounting periods (years, quarters, or months) and noting the change in both amount and percentage between periods. The financial statement...

Statement of Cash Flows

What is the purpose of statement of cash flows? According to the Financial Accounting Standards Board, the purpose of the statement of cash flows is to provide information about cash receipts and payments. Information about the operating, investing and financing...

Purchase Method for Accounting

Purchase method is one method of accounting for acquisition of one company by another. This method is used when the stock of a subsidiary is acquired by cash payment. It is also used when a parent issues bonds payable or capital stock to acquire the stock of a...

Consolidation

Consolidation is the presentation as one economic entity of the financial statements of a parent and subsidiary subsequent to the date of acquisition. A corporation which owns more than 50% of the common stock of another corporation is known as a parent company. A...