Academic Skills for Accounting

Questions: Discuss the different purposes for which financial information provided by the following statements are required: 1. Statement of profit or loss.2. Statement of financial position.3. Statement of cash flow.4. Sustainability and integrated reports. Answers: 1. The statement of Profit and loss (P/L) summarizes the expenses, costs and revenues incurred in a specific time period; quarterly or yearly. P/L statement provides financial information about the company and shows the net profit or the net loss of the company. The purpose of P/L statement reducing the is to get the information about the ability of the company to generate profit by reducing costs of the company or increasing the revenue options of the company. The creditors, debtors, suppliers and prospective investors to get a highlight of the performance of the financial positions use this statement and they can make their move accordingly. The profit and loss statement can be compared with the other companies of same sector and the performance of the company can be reviewed accordingly. Important decisions related to the strategy and finance of the company can be taken through the statement. 2. According to Brooks and Mukherjee (2013), Statement of financial position commonly known as the Balance sheet, shows the financial position of an entity in a given period of time. The assets, liabilities and the owners equity of the concern can be determined and the balance sheet is prepared on a yearly or a quarterly basis. Balance sheet is helpful in making different financial analysis and for financial reporting. Management takes the help of the balance sheet to evaluate the operations of the company and make strategic moves accordingly. Creditors and investors look at all the data in the balance sheet and get a hint of the direction in which the company is moving and they take their decisions based upon the data. Generally, five years data is analyzed so as to reach at a decision and they can also advice the company regarding the steps needed to be taken to make the financial performance strong (Chui 2014). 3. Statement of Cash flow gives the information on the cash payments, cash receipts and the net change in the cash position of the company resulting from the investing, financing and operating activities. The main purpose of cash flow statements is to give information about the gross payments and gross receipts of the company for a defined time period; quarterly or yearly. The cash flow statement reports the changes in the cash and cash equivalent of the company in a given period and the income and the expenses of the company can be tracked according to the different heads. Cash flow statements discloses other information relating to the amount of interest paid, significant financing and investing activities which does not require the use of cash and the taxes paid (Farshadfar and Monem2013). 4. Sustainability and integrated reports is a way of evaluating, disclosing and being accountable to the external and internal stakeholders of the organizational performance against specific social, environment and the governance goals and metrics that support the sustainable development policy and states how the sustainability is doctrined in the overall policy and strategy of the company. Integrated reporting helps to make us informed about the company the business model, performance analysis and strategy. Integrated reporting gives a forward looking information to help facilitate stakeholders, make a informed assessment of the future value creation of the company. The resource utilization and the relationships used by the company can be found and explained in detail as to how the company interacts with the external environment (Lapsa and Nichols 2014). This report is becoming a requirement due to the strict regulatory policies and the strong actions of the government. The awarene ss of the customers, government and other stakeholders have led to this reporting. Conclusion This report focuses on the importance of the stakeholders in a business and the role they play in a business. The Pestel analysis of Frizzyco is made to check whether it is viable to open up a new distributuion channel in the United Kingdom or not. The form of the organizational structure has a great impact on the culture of the company, the different types of organizational structures are highlighted, and its effect on the culture of the company is analyzed. The financial statements provide an overview of the functioning of the company and the purpose it serves to the end users. References Brooks, R. and Mukherjee, A.K., 2013.Financial management: core concepts. Pearson. Chui, M.K., Fender, I. and Sushko, V., 2014. Risks related to EME corporate balance sheets: the role of leverage and currency mismatch.BIS Quarterly Review September Farshadfar, S. and Monem, R., 2013.Further evidence on the usefulness of direct method cash flow components for forecasting future cash flows.The international journal of accounting,48(1), pp.111-133 Lapsa, M.V. and Nichols, T.A., 2014.ORNL Annual Sustainability Report(No. ORNL/TM-2013/527).Oak Ridge National Laboratory (ORNL); Building Technologies Research and Integration Center.