Corporate Accounting: Income Statement and Cash Flow Statement Analysis

Corporate Accounting

Abstract
This report is about the topic Corporate Accounting which involves the important
concepts of finance. This report provided an insight about the useful content in the income
statement and the cash flow statement of the company and how it is useful for the investors. Both
these statements provides the relevant information on account of the revenue and expenditure of
the business in a specific period along with the different sources of funds and application of the
same in the business. With the help of the statement of the cash flow of the three company, the
given questions were answered which highlighted the cash flow position and performance level
of the companies. Also, by analysing the cash flow statement helped in determining the financial
strength of the company and according to it the BHL limited is selected as the company for the
lending purpose.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Part A...............................................................................................................................................4
Critical examination of the information content of income statement and statement of cash
flows. Usefulness of income statement and the statement of cash flows...............................4
Part B...............................................................................................................................................5
1..............................................................................................................................................5
2............................................................................................................................................10
2 Evaluation of financial strength of all companies.............................................................10
3............................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Corporate accounting is referred to as the branch of accounting which related to the making and
preparing for the cash flow statements and the final accounts for the analysis of financial
position (Schaltegger, Etxeberria and Ortas, 2017). This is essential in order to take decision
relating to the financial position of the company and to develop strategies for its
improvement. The current report will discuss the information relating to the income and
cash flow statements and this purpose and usefulness. Further the analysis of the financial
reports of BHP Ltd, Funtastic Ltd and the Santos Ltd will be done to analyse the financial
positon of the company for the past three years. Further the financial strength and the
lending purpose of all the three companies will be listed.
MAIN BODY
Part A
Critical examination of the information content of income statement and statement of cash flows.
Usefulness of income statement and the statement of cash flows.
All concerned and active participants have interest to varying extent in financial affairs of
the business enterprise. Financial statement refers to blue print of the financial affairs. Owners of
the company reveal the progress through earnings and the current financial conditions to
investors by its financial statements. Investors assess mainly the income statement and the cash
flow statements for reviewing the financial performance and position of the company.
Profit or loss or income statement presents revenues, expenses and the net income from
carrying out business for the year. The statement provides summary of the revenues sources and
the expenses incurred during the year (Knežević, Mitrović and Ilić, 2016). It allows the investors
to identify whether company has made adequate profits or not during the period by carrying out
the business. Operating section of the statement consists of the incomes and expenses that are
incurred for business activities. Incomes are earned from the sales and enhancement of assets and
expenses consists of the outflows or use of assets for manufacturing products or carrying out the
business.
Non operating section of the income statement presents non primary activities which are
infrequent or unusual such as finance cost and tax expense.