Corporate Finance
Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
Question
Book Icon
Chapter 2, Problem 1P
Summary Introduction

To discuss: The four financial statements.

Introduction:

Financial statements record the financial activities and financial positions of the business.

Expert Solution & Answer
Check Mark

Answer to Problem 1P

The financial statements of a company are classified into four types:

  1. 1. Balance sheet
  2. 2. Income statement
  3. 3. Statement of cash flows
  4. 4. Statement of stock holder’s equity

Explanation of Solution

Balance sheet shows the detailed information about a company’s assets, liabilities and shareholders’ equity.

Income statement is the report of a company’s expenses, income, profits for a particular period.

Statement of cash flows deals with a company’s cash flow activities in the areas of operating activities, investing activities and financial activities.

The document, which is issued by the company as a part of balance sheet is termed as the statement of stockholders’ equity. It indicates the changes in the shareholders equity

Instructions to be followed to maintain the accuracy of the above statements:

  • All the companies should follow a particular format of rules and regulations while preparing the reports.
  • A private party such as an auditor have to be appointed to check the accuracy of the financial statement.
  • The statements must be in accordance with GAAP (generally accepted accounting principle).
  • In addition to the role of auditors, The SO act needs CEO and CFO to attest the accuracy of a statement and to sign it.
Conclusion

Thus, the financial statement reveals the financial position with the help of the above-mentioned statements.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What are Biblical principles researchers can follow to mitigate Unintended errors in research?How a Christian conduct during a research proposal and study can be a witnessof the Gospel to others.
What is Sears business problem? What cause Sears to collapse and closeout the company? Would you please help to explain, what is the problem statement, and general problem? Could you help to provide four research questions that align with the problem statement, ensuring they are exploratory, not assumptive, and not specific to an organization.
Hilton Hotels Corporation has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can be converted into common shares at a rate of 61.2983 shares of stock per $1,000 face value bond (the conversion rate), or $16.316 per share. Hilton’s common stock is trading (on the NYSE) at $15.90 per share and the bonds are trading at $975. a. Calculate the conversion value of each bond. (Round your answer to 2 decimal places. (e.g., 32.16)). (974.50 was wrong)

Chapter 2 Solutions

Corporate Finance

Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Text book image
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub