ACCOUNTING FOR DECISION.

Running head: ACCOUNTING FOR DECISION
Accounting for Decision
Name of the Student:
Name of the University:
Author’s Note:
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1ACCOUNTING FOR DECISION
Table of Contents
Part 1:...............................................................................................................................................2
Part 2:...............................................................................................................................................3
Requirement 1:.............................................................................................................................3
Requirement 2:.............................................................................................................................4
References:......................................................................................................................................6

2ACCOUNTING FOR DECISION
Part 1:
A balance sheet statement is involved in reporting the assets, liabilities and owners’
equity of an organisation at a specific period, which is generally at the end of the accounting
year. On the other hand, a balance sheet statement is titled as the statement of financial position
as well, since it reveals the position of an organisation in relation to its assets and the claim of
such assets at a particular point like “Balance Sheet as at 30 June 2018” (Kieso, Weygandt &
Warfield, 2016). The claims could be internal claims (equity) or external claims (liabilities).
An income statement, on the other hand, depicts the income, expenses and resulting profit
or loss for a particular timeframe (Robinson et al., 2015). Unlike the balance sheet statement,
which is titled at a particular date, the title of the income statement covers a timeframe rather
than a point in time like “Income Statement for the year ended 30 June 2018”. This statement is
termed as the statement of financial performance as well, since it discloses the performance or
accounting return of the organisation over a specific period.
Therefore, the different line items in the balance sheet statement could be compared with
each other for obtaining the liquidity of an organisation, while the totals in the income statement
are contrasted with sales for ascertaining the percentage of gross margin, operating margin and
net margin. The management uses the balance sheet statement of an organisation for ascertaining
whether an organisation has adequate liquidity for meeting its obligations , while the income
statement needs to investigate outcomes along with finding finance or operational issues, which
are in need of rectification (Wahlen, Baginski & Bradshaw, 2014). However, the users prefer
income statement over the balance sheet statement owing to the fact that the income statement
discloses the results of the organisation.

3ACCOUNTING FOR DECISION
Part 2:
Requirement 1:

4ACCOUNTING FOR DECISION
Requirement 2:

5ACCOUNTING FOR DECISION

6ACCOUNTING FOR DECISION
References:
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Intermediate Accounting, Binder Ready
Version. John Wiley & Sons.
Robinson, T.R., Henry, E., Pirie, W.L., & Broihahn, M.A. (2015). International financial
statement analysis. John Wiley & Sons.
Wahlen, J. M., Baginski, S. P., & Bradshaw, M. (2014). Financial reporting, financial statement
analysis and valuation. Nelson Education.