Accounting For Managers

Shariq Abdali

Faiza Qaisar

Shehryar Ali

Faiza Arshad

Shahzad Firdous
The purpose of a financial statement is to enable a
business to establish the result of its operations over a
period of time and to determine its worth at a specific
date. Financial statements are often prepared by business
people to assist them in evaluating their financial
condition.
The purpose of financial statements are to provide
pertinent information on the financial position (Balance
Sheet), profitability (Income Statement) and the operating,
investing, and financing activities (Cash Flow Statement)
of a company.



The financial statements are used by different
categories of people for different purpose. The
various users of financial statement are
classified and detail below

1. Internal users
2. External users

Internal Users:
The internal users of financial statements are individuals who
have direct bearing with the organization. They may include:

Managers and Owners: the managers and owners need the
financial reports essential to make business decisions. So
as to provide a more comprehensive view of the financial
position of an organization,


Employees: The financial reports or the financial
statements are of immense use to the employees of the
company for making collective bargaining agreements.
Such statements are used for discussing matters of
promotion, rankings and salary hike.

External Users:
The external users comprise of:
Institutional Investors: The external users of financial statements are
basically the investors who use the financial statements to assess the
financial strength of a company. This would help them to make logical
investment decisions.

Financial Institutions: The users of financial statements are also the
different financial institutions like banks and other lending institutions who
decide whether to help the company with working capital or to issue debt
security to it.

Government: The financial statements of different companies are also used
by the government to analyze whether the tax paid by them is accurate and
is in line with their financial strength.

Vendors: The vendors who extend credit to a business require financial
statements to assess the creditworthiness of the business.

General Mass and Media: The common people as well as media also make
part of the users of financial statements.

A balance sheet is a statement of the total assets and
liabilities of an organization at a particular date -
usually the last date of an accounting period.
BALANCE SHEET
PURPOSE OF BALANCE SHEET


The purpose of the balance sheet is to show a company's
Assets, Liabilities and Equity at a given point in time,
usually the company's fiscal year end. This is as opposed to an
Income Statement, for example, which shows earnings throughout the year. A balance
sheet is as of a given day. it does not show activity for a whole year, although you can
compare year-to-year balance sheets to deduce some information.

A balance sheet is divided into two sides. On one side is the total assets of the
Company, such as cash, working capital, fixed assets (machinery, land, equipment,
autos, etc), and other assets. On the other side is the Liabilities, such as accounts
payable, debt, and other liabilities. Assets minus liabilities equals equity, which is the
remaining ownership in the company - that accorded to shareholders.

FIVE STAR TRADERS & Co.
Balance Sheet
As at March 10,2012
Assets Liabilities & Owners Equities
Current Assets Liabilities
Cash 23000 Accounts Payable 20000
Account Receivables 30000 Salaries payable 3000
Office Supplies 12000 Rent Payable 1200
Merchandise Inventory 10000 Unearned Commission 1300
Prepaid Insurance 2750 Interest Payable 700
Prepaid Rent 1300
Notes Receivables 400
Fixed Assets Owners Equity
Land 400000 Owners Capital 550000
Building 50000 Net Profit 29750
Trucks 45000 Drawings 3500
Equipments 35000
Total Assets 609450 Total Liabilities & O.E 609450