Accounting Assignment: Analysis of Financial Statement Notes

This accounting assignment analyzes the importance of notes to financial statements and their impact on shareholder investment decisions. The assignment specifically examines the financial statements of Bell, focusing on the significance of notes related to revenue recognition, inventory valuation, and depreciation and amortization. The solution explains how Bell uses fair value for revenue measurement, weighted average cost for inventory valuation, and the straight-line method for depreciation. It emphasizes that these accounting methods have a considerable influence on the financial position of the company and the decisions of shareholders. The assignment highlights the importance of understanding these notes to gain a comprehensive understanding of a company's financial health. The student has provided a detailed analysis of the notes provided with the financial statements.

Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING
Table of Contents
Answer to Question 4......................................................................................................................2
Answer to Question 5......................................................................................................................3
References........................................................................................................................................4

2ACCOUNTING
Answer to Question 4
The presence of notes can be seen in the financial statements of every company. Notes to
the financial statements refer to the additional information provided by the business
organizations (Scott, 2015). With the help of the notes in the financial statements, the companies
use to report the items left out from the main reporting documents like balance sheet, income
statements and others. It needs to be mentioned that all these notes have major importance for the
financial statements of the companies, as the main purpose of these notes is to provide further
clarification on the accounting procedures used by the companies (Scott, 2015). Another main
aim of the publication of so many pages of notes to the financial statements is to make the
information occurred during and immediate after the closing of the accounting period known to
the use shareholders. It implies that the notes to the financial statements are added to bring
clarity in the financial statements. It needs to be mentioned that it is very much important for the
shareholders to read all these notes carefully as they contain important information related to
various financial methodologies of the business entities like different reporting transactions,
stock options, tax effects and others (Henderson et al., 2015). Most importantly, all the financial
phenomena in the notes can have significant impact on the investment decision-making process
of the shareholders. Apart from this, all these aspects have material effect on the financial
position of the companies in case they are ignored. It indicates that only information in the
financial statements is not suffice for the shareholders as the information in the notes have
material effect on the financial condition and investment decision of the shareholders.

3ACCOUNTING
Answer to Question 5
The financial statement of Bell contains large number of endnotes. Among all of them,
there impart notes related to the Recognition of Revenue, Inventory Valuation and Depreciation
and Amortization. There are certain factors behind considering them the significant item. From
the notes related to the recognition of revenue, it can be seen that Bell uses fair value for the
measurement of the revenues. In addition, revenues are recorded when they are received from the
customers (Horngren et al., 2012). In case, the company use historical price for the measurement
of revenues, it would create significant difference in the revenue received of the company that
will affect the decisions of the shareholders. The notes related to the inventory of Bell states that
the company uses weighted average cost formula for the determination of the cost of the
inventory (May, 2013). It needs to be mentioned that it would affect the asset position of the
company of Bell in case the company use different method like LIFO or FIFO for valuing the
costs of inventory. Lastly, the notes related to depreciation and amortization states that the
company uses straight-line method for the calculation of depreciation of assets. In case, the
company used diminishing balance method for depreciation, there would be huge difference for
depreciation (May, 2013). For all these reasons, all these aspects create huge impact on the
financial statements of Bell.

4ACCOUNTING
References
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting.
Pearson Higher Education AU.
Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D., & Tan, R. (2012). Financial
accounting. Pearson Higher Education AU.
May, G. O. (2013). Financial accounting. Read Books Ltd.
Scott, W. R. (2015). Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.