Accounting and Finance Essay - 275 Words

Accounting and Finance (Essay Sample) Content: [Name of the Writer][Name of Instructor][Subject][Date]Accounting and FinanceThis paper aims to describe the difference between accounting and finance with respect to emphasis on cash flow. From this perspective, accounting is a sub-function of finance, and it collects and records information about operations in business. It emphasizes on recording and reporting (Das, p.n.d). The key functional area by the end-product of accounting is financial income declarations, which include Income Statement, Balance Sheets, Comprehensive Income and Statement of Equity. All the declarations deal with profit and loss accounts, Changes in financial position, Funds declarations concerning with assets, liabilities and any outcomes are reported in reports. Finance is any transaction, or a transfer of money that comprises cash inflow or outflow for the purpose of financing activity can be included in finance. One of the major differences between accounting and finance is associated with decision making and the treatment of funds. All the Revenues and expenses are assumed and are based on accrual accounting system. Revenue is recognized when it is realizable or realized at the point of sale and not at the time of collection. Expenses are recorded once they incurred only. However, in finance, recognition or determination of funds is based on cash flows (Nurnberg, pp. 1-7). Revenues are recognized during the cash-in, and expenses are acknowledged at the point of cash-out.Statement of Cash Flows usually represents three types of activities.Operating ActivityInvesting ActivityFinancing Activity Any transaction of Cash inflow or outflow that represents business operations is record as an operating activity. Cash... Accounting and Finance Essay - 275 Words Accounting and Finance (Essay Sample) Content: Ratio analysis and cash flow statementNameInstitution19. Gross profit (2010) = sales- cost of goods sold=7920-4200=3720Time interest ratio = earnings before interest and tax /interest expenseTotal expenses (2010) =depreciation +interest exp+operating expense=400+280+2130=2810Earnings before int. and tax= gross profit à ¢Ã¢â€š ¬ (operating expenses +depreciation)=3720-2530=119020. Interest expense=280=1190/280=4.2521.Return on equity =net income /shareholdersà ¢Ã¢â€š ¬ equityNet income before tax=3720-2810=910Shareholder equity =Asset = ownerà ¢Ã¢â€š ¬s equity +liabilitiesAssets =1660+75+4390+6920=13045Liabilities=320+165+4500+600=5585Equity= asset-liabilities=13045-5585=746021.ROE=910/7460*100=12.1984%22. Cash flow from operating activities (2011) = EBIT+DEPRECIATION- TAXESGross profit (2011)=8980-4700=4280Less expenses=+2210+560=2770Earnings before int and tax=4280-2770=1510Cash flow from operating activities=1510+560-460+300=1910Working capital changes = (decreas e in inventory) =4390-43050=340Decrease in receivable=1660-1610=50Increase in accruals = (300-165) =13523. Cash flow from investing activities==7180-6920=26024. Cash flow from financing=300+450=750Profit before tax =9940Add depreciation=11000Add decrease inventory =1650Increase in accruals =70Increase in payables=1890=2455025.Cash flow from operating activities =2455026. Cash flow from investing activitiesCommon stock 500Less retain earnings-180Cash flow from investing activities=32027.Cash from financing activities.=2960Balance sheetCash50000Accounts receivable200000Inventory60000Net fixed asset325000Depreciation75000Gross fixed asset400000Notes payable18000