These efforts help promote confidence in financial reporting, which is essential for both government entities and businesses alike. There are similarities between GASB and FASB when it comes to reporting financial statements. Both entities require a statement of activities, which reports all inflows and outflows of an entity, and a statement of cash flow, which
However, if actual performance in a given month or quarter is different from the planned amount, it is difficult to determine whether costs were controlled. Managers use a technique known as flexible budgeting to deal with budgetary adjustments. A flexible budget adjusts to changes in actual revenue levels. Actual revenues or other activity measures are
Yes, provisions are non-cash expenses or accounting loss reservations that are being charged to the current period. We are making entries of provisional debts, discount provisions, warranties provisions, and deferred tax provisions for you. As earlier mentioned, much financial analysis goes into the creation of expense provisions or income provisions. Warranty provision arises at the
If the company had not retained this money and instead taken an interest-bearing loan, the value generated would have been less due to the outgoing interest payment. Retained earnings offer internally generated capital to finance projects, allowing for efficient value creation by profitable companies. However, note that the above calculation is indicative of the value created with
For our hypothetical scenario, we’ll assume that the company operates multiple store locations and generated $100k in monthly sales. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his