Financial Accounting: Case Studies, Concepts and Company Analysis

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author Note

1FINANCIAL ACCOUNTING
Table of Contents
Case 1...............................................................................................................................................2
Answer to Part a...........................................................................................................................2
Answer to Part b..........................................................................................................................2
Case 2...............................................................................................................................................3
Case 3...............................................................................................................................................3
Part 1................................................................................................................................................4
References........................................................................................................................................6

2FINANCIAL ACCOUNTING
Case 1
Answer to Part a
The financial information about the investment company’s holdings that would be most
relevant is the market value of the shares that it buys, holds or sells in order to gain revenue. A
particular share has an issue price and the price at which it is being traded in the market that is
the market price. The market price of the different shares that the enterprise currently holds
indicates the profitability of the enterprise. The difference between the issue price of the shares
and the market price is the point where the revenue generation. Therefore, the balance sheet of
the company must be reviewed and checked in order assess the financial performance of the
company which will indicate the estimated return on the investment done (Points, 2013).
Answer to Part b
The concept of recognition in the conceptual framework refers to the inclusion of a
particular financial transaction in the financial statements based upon certain norms of inclusion.
For instance, a financial statement prepared on the basis of accrual accounting will recognize the
revenue at the point when it is realized, irrespective of the fact as to when the particulars of that
transaction that is the cash in regards to the revenue is received by business. On the other hand,
financial statements prepared on the basis of cash accounting recognize a particular revenue or
expenditure at the point when cash in real is expended or received by business in relation to that
particular transaction.
The concept of recognition would very well apply while checking the financial
performance of the company as it would matter as to how the enterprise has recognized the
revenue from dividends received and investment securities.