Master Note of Accounting and Finance

Introduction Net worth is the remain assets value claim by shareholder's after discharging all the liabilities i.e. long-term and short term liabilities. Net worth is what is owns minus what is owed. Net worth is total assets (include both financial and non-financial assets) minus any total debts you owe. It acts as an indicator of your financial health. Types of Net Worth Basically there are two types of net worth explained as bellows: Personal Net worth: Personal net worth is the amount of a person that is calculated by subtracting total liabilities from total assets. The assets include bank deposit, investment in stock, real estate property, gold, insurance etc. While liabilities include home loan, mortgage loan, car loan, credit card loan, personal loan etc. Business Net Worth: It is also known as book-value of company or shareholder's equity. Business prepare the balance sheet which is also known as net worth statement. The business net worth or shareholder's equity...

Introduction Forecast is a predict or estimate a future event or trend. In other words, it is the prediction of future data based on past data and/or human judgment. Financial forecasting describes the process by which firms think about and prepare for the future. The forecasting process provides the means for a firm to express its goals and priorities and to ensure that they are internally consistent. It also assists the firm in identifying the assets requirements and needs for external financing. The financial forecasting is the major part of the financial planning under Financial Management. The financial planning includes major three types of planning are listed as below: Strategic Planning: It defines, how the firms plans to make money in the future. It is the process of formulating, implementing and evaluating and controlling the implementing strategies. Long-term Financial Planning: Generally, it prepares three to five years projected income statements and balance sheet. It is...

Meaning of Financial Statement Analysis Financial Statement analysis is the process of analyzing financial statements of a company so as to obtain meaningful information about its survival, stability, profitability, solvency, and growth prospect.The financial statement analysis can be performed by using a number of techniques such as Horizontal (Comparative Statements) analysis, Vertical (Common Size Statements) analysis, Trend Analysis.  and Ratio analysis . Ratio analysis is the most popularly and widely used technique of financial statement analysis. Ratio analysis is a widely used tools of financial analysis. The systematic use of ratio helps to interpret the financial statements so that the strength and weakness of a firm can be determined and assessed. The ratios describe the significant relationship that exits between figures shown on a balance sheet and income statement or any part of a financial statement. List of Financial Ratios Liquidity Ratios Current or Working ...

Introduction to Financial Statements Any join stock company or corporation has established with its own a legal entity and performs various business activities for the purpose of earning profits. There are a number of stakeholders includes shareholders, BOD, management of the company, Government agencies, creditors, etc. who are keen to know about the results of its financial activities performed during a certain period of time. Therefore, in order to communicate the results of business operations and financial position to its stakeholders, the company prepares and publishes the statements of its financial affairs on a periodic basis. The entire financial activities has published though the documents called Financial Statements. Meaning of Financial Statements The financial statements are written reports of a financial affairs of a company. It include its trading and profit and loss account known as Income Statement, Balance Sheet, and Cash Flow Statements. To known about its compone...

Introduction Business uses cash book that records cash as well as bank transactions. A cash book is one of the type of subsidiary book (Day Book) that records original entry of all cash receipts and payments including bank deposits and withdrawals. Cash book has both debit and credit column representing cash and bank column hence it acts as a ledger account. Bank also records the transactions of customers. They keep all the deposits transaction in credit side and withdraws transactions in debit side of bank book.   Sometime bank as per cash book and cash as per bank book does not match. Hence it is necessary to reconcile it to fix the error of accounting. A bank reconciliation statement is a summary of banking and business activity that reconciles an entity's bank account with its financial records. Importance of Bank Reconciliation Statement Although, it is not necessary to prepare it and not fixed date to prepare it. It is only prepared due to the following reasons: To mat...

Introduction Inventory is one of the most visible and tangible aspects of doing business. Raw material, Goods in process or Work-in-Process and Finished goods all represents various forms of inventory. Each type represents money tied up until the inventory leaves the company as purchased products. Likewise, merchandise stocks in a wholesale or retail store contribute to profits only when their sale puts money into the cash register. In literate sense, inventory refers to stock of anything necessary to do business. These stocks represents a large portion of the business investment and must be well managed in order to maximize profits. Meaning and Nature of Inventory Every business organization needs inventory for smooth running of its activities. It serves as link between production and distribution processes. Inventory is the quantity of goods held by a merchandising company for resale to customers. Merchandising companies determine the quantity of investment items by a physical counts...