Financial statement - Revision history

Quidam65 at 14:31, September 19, 2024

2024-09-19T14:31:46Z

Quidam65: change title of governmental financial statement based on recent GASB change

2024-01-22T23:05:25Z

change title of governmental financial statement based on recent GASB change

Quidam65: /* Private Sector */

2022-07-26T16:25:00Z

Private Sector

Quidam65: /* Balance Sheet */

2022-07-26T16:24:01Z

Balance Sheet

Quidam65: /* Statement of Cash Flows */

2019-04-22T01:21:33Z

Statement of Cash Flows

DavidB4-bot: /* top */Spelling, Grammar, and General Cleanup

2018-04-30T14:28:10Z

top: Spelling, Grammar, and General Cleanup

1990'sguy: /* Balance Sheet */ from Balance sheet article which is now a redirect.

2018-03-02T03:54:22Z

Balance Sheet: from Balance sheet article which is now a redirect.

Quidam65 at 02:05, March 2, 2018

2018-03-02T02:05:37Z

Quidam65: /* Income Statement */

2018-02-24T15:55:29Z

Income Statement

Quidam65: /* Balance Sheet */

2018-02-24T15:55:07Z

Balance Sheet

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 The statements (including the format) may be specified by law or regulation.  Larger companies will also include extensive footnotes (some of which are required by law or regulation) as well as a management discussion and analysis of their contents.
-Governmental entities have similar statements (often referred to as '''Annual Comprehensive Financial Reports''') but differ due to specific and unique requirements for governmental accounting.
+Governmental entities have similar statements (often referred to as '''Annual Comprehensive Financial Reports'''<ref>Prior to 2021 the term used was '''Comprehensive Annual Financial Report''', or '''CAFR'''.  However, that acronym - if pronounced as a word - is a racist term for Black South Africans, similar to "the N-word" in America; thus, the decision was made to discontinue its use.</ref>) but differ due to specific and unique requirements for governmental accounting.
 ==Balance Sheet==

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 The statements (including the format) may be specified by law or regulation.  Larger companies will also include extensive footnotes (some of which are required by law or regulation) as well as a management discussion and analysis of their contents.
-Governmental entities have similar statements (often referred to as '''Comprehensive Annual Financial Reports'''), but differ due to specific and unique requirements for governmental accounting.
+Governmental entities have similar statements (often referred to as '''Annual Comprehensive Financial Reports''') but differ due to specific and unique requirements for governmental accounting.
 ==Balance Sheet==

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 ===Difference in Standards===
 ====Private Sector====
-Any meaningful analysis of a company's finances must include a review of its balance sheets for the current and past operating cycles. Because of the large amount of information that such a summary can provide, United States law requires that all publicly held and traded companies provide balance sheets at regular intervals (usually four times a year).
+Any meaningful analysis of a company's finances must include a review of its balance sheets for the current and past operating cycles. Because of the large amount of information that such a summary can provide, United States law requires that all publicly held and traded companies provide balance sheets at regular intervals (usually four times a year).  However, privately-held companies may only show balance sheets for a current year.
 ====Public Sector====

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 Assets and liabilities are classified as '''current''' and '''non-current'''.
-*Current assets are those which are cash or are highly liquid (i.e., can easily be converted to cash); these include short-term investments (such as certificate of deposits), accounts receivable, inventories, and prepaid expenses.
+*Current assets are those which are cash or are highly liquid (i.e., can easily be converted to cash); these include short-term investments (such as certificate of deposits), accounts receivable (less any estimated amounts for uncollectible accounts), inventories, and prepaid expenses.  If a company has a long-term investment with a portion due to be collected in the current year, that portion is classified as a current asset.
-*Non-current assets include property, plant, and equipment (less amounts for accumulated [[depreciation]] and [[amortization]]), and long-term investments (such as loans made to other entities).
+*Non-current assets include property, plant, and equipment (less amounts for accumulated [[depreciation]] and [[amortization]]), and long-term investments (excluding the portion due in the current year).
 **For non-profit/not-for-profit entities, this category includes assets which are restricted for use (usually for a specific purpose).  The restriction can either be by the donor, or the entity can choose to restrict the asset's use; either way it must be shown separately from unrestricted assets.
-*Current liabilities are those which are expected to be paid within one year or less; these include accounts payable, taxes currently due, and the current portion of long-term liabilities.
+*Current liabilities are those which are expected to be paid within one year or less; these include accounts payable and taxes currently due.  If a company has a long-term liability with a portion due in the current year (such as a building mortgage), that portion is classified as a current liability.
 *Non-current liabilities include capital leases and mortgages (excluding the portion due within the current year).

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 The financing section includes such items as:
-*Loans received from borrowers, and repayments thereon
+*Loans received from borrowers, and repayments of principal thereon (as stated above, interest payments on any loan(s) are shown in the operating section)
 *Payments made on capital leases
 *Dividends paid

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 A '''financial statement''' (or '''financial report''') is a record of the financial activities of a business or other entity.
-In the private sector (including non-profit/not-for-profit entities) there are four basic financial statements:  the '''balance sheet'''<ref>[https://www.accountingcoach.com/terms/B/balance-sheet Balance sheet definition]</ref>, the '''income statement'''<ref>[https://www.accountingcoach.com/terms/I/income-statement Income statement definition]</ref>, the '''statement of retained earnings'''<ref>[https://www.accountingcoach.com/terms/S/statement-of-retained-earnings Statement of retained earnings definition]</ref>, and the '''statement of cash flows'''<ref>[https://www.accountingcoach.com/terms/S/statement-of-cash-flows Statement of cash flows definition]</ref> (in some entities different terms may be used).  Of the four, only the balance sheet represents activities '''''at a single point in time''''' (usually as of the end of the entity's [[fiscal year]]) whereas the other statements represent activities '''''during a period of time''''' (usually an entire fiscal year).
+In the private sector (including non-profit/not-for-profit entities) there are four basic financial statements:  the '''balance sheet''',<ref>[https://www.accountingcoach.com/terms/B/balance-sheet Balance sheet definition]</ref> the '''income statement''',<ref>[https://www.accountingcoach.com/terms/I/income-statement Income statement definition]</ref> the '''statement of retained earnings''',<ref>[https://www.accountingcoach.com/terms/S/statement-of-retained-earnings Statement of retained earnings definition]</ref> and the '''statement of cash flows'''<ref>[https://www.accountingcoach.com/terms/S/statement-of-cash-flows Statement of cash flows definition]</ref> (in some entities different terms may be used).  Of the four, only the balance sheet represents activities '''''at a single point in time''''' (usually as of the end of the entity's [[fiscal year]]) whereas the other statements represent activities '''''during a period of time''''' (usually an entire fiscal year).
 The statements (including the format) may be specified by law or regulation.  Larger companies will also include extensive footnotes (some of which are required by law or regulation) as well as a management discussion and analysis of their contents.

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 ==Balance Sheet==
-The '''balance sheet''' summarizes the financial balances of the entity.
+The '''balance sheet''' summarizes the financial balances of the entity.<ref>[http://www.accountingcoach.com/terms/B/balance-sheet.html Balance sheet definition]</ref>
 [[Asset]]s are listed first, followed by [[liabilities]]; the difference between the two is the '''[[equity]]''' or '''net worth''' of the entity.
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 *Minority (non-controlling) interest in other entities
 *Retained earnings (the amounts earned by the company from its operations)
 ==Income Statement==

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 The statement is divided into three sections: '''operating''', '''non-operating''', and '''irregular'''.
-The operating section is the most comprehensive as it discusses the profitability of the entity's main line of business.  It generally consists of a '''revenue''' line (sales price of goods or services) and one or more '''expense''' lines.  The expense lines consist of:
+The operating section is the most comprehensive as it discusses the profitability of the entity's main line of business.  It generally consists of a '''revenue''' line (sales price of goods or services) and one or more '''[[expense]]''' lines.  The expense lines consist of:
 *'''cost of goods sold (COGS)''', which could be (for a retailer) the purchase price of items held for resale, or (for a manufacturer) costs of raw materials, labor used to turn the materials into saleable items, and overhead (depreciation/amortization of buildings and equipment, utility costs, and such),
 *'''selling, general, and administrative (SG&A)''' expenses, which could be sales salaries/commissions, freight on shipped items sold, depreciation on stores and furnishings, and costs to operate overall company management and back-office (accounting, human resources) operations, and