Critically Assess the Uses and Limitations of Financial Statements Essay Example for Free

Critically Assess the Uses and Limitations of Financial Statements Essay Critically assess the uses and limitations of financial statements The definition for a financial statement is a written report which quantitatively describes the financial health of a company. (www. investorwords. com) It consists of a balance sheet, income statements and a cash flow statement. This essay will critically asses the uses and limitations of each of these types of financial statements for a business. A balance sheet shows the financial condition of a business at a specific date (Langemeier Klinefelter 2008). It shows what is owned by the business, what is owed and the owner’s share (net worth) of the business. The balance sheet has three main uses. Firstly, it is used for reporting purposes as part of a limited company’s annual accounts. These must be shown to Companies House, HM Revenue and Customs and any shareholders unless agreed otherwise. It is also used to let potential investor’s or lenders asses the worth of a business at any given time. This way they can judge whether they think they should be investing money into the business according to how solvent the business is, how liquid its assets are, how the business is financed and how much capital is being used. Finally they can be used by the business itself to analyse how to improve its management. There are a few limitations of a balance sheet as some values of current assets are estimated (www. businesslink. gov. uk); therefore the balance sheet does not reflect a 100% accurate financial position of a business. Also, the fixed assets in the balance sheet have taken the depreciation of the asset into consideration and so the true value is not shown. Finally, intangible assets such as goodwill cannot be measured and are therefore estimated figures too and may be very inaccurate thus causing the whole balance sheet to be incorrect. Therefore a balance sheet is useful in many ways as long as whoever is interpreting the figures takes into consideration that a few of the figures are not accurate. An income statement, also known as a profit and loss account, measures the profits or losses a business has made over a certain period of time (money-zine. com). If a business wishes to expand and needs a bank loan they will need to produce their profit and loss accounts for the previous three years so the bank can see whether they will be able to repay the loan. These must be accurate records or it will be taken into account as fraud. There are many advantages of keeping accurate and up to date records. Firstly, it gives a business the information it needs to be managed and help it grow. If a business can see where its strong or weak points are then it can find ways to improve for example by cutting down on expenses. It also enables a business to produce their income statement quickly if required and filling in their tax return easier and quicker which in turn reduces the risk of interest for late tax payments. These financial statements are usually available to the public which means competitors can see how each other are doing, however very few people understand them when all transactions are recorded in larger companies. There are also some limitations of income statements one being that its data does not tell the user anything about what may happen in the future or factors that may affect future growth of the company. It is simply limited to accounting data. The second limitation is that not all businesses use an acceptable accounting method. An example from www. money-zine. com states that â€Å"if a business decides to accelerate depreciation then they hurt short-term net income and earnings (depreciation expense is larger). If they use straight line depreciation, net income in earlier years will be higher but it will be lower in the future (all things being equal)†. The final type of financial statement is a cash flow statement. It records the inflow and outflow of cash over a period of time. The cash flow statement allows investors to understand how a companys operations are running, where its money is coming from, and how it is being spent. According Hertenstein Article 26 there are three main people that want to see a business’s cash flow statements. Firstly stockholders want to know if the business is generating enough cash to pay dividends. Secondly suppliers want to know if their customers will be able to pay if offered credit. Thirdly investors want to evaluate future growth potential. These types of financial accounts are cheap to maintain because you do not have to be a trained accountant to produce them as they are not a complicated as the other types of financial accounts. Though the cash flow statement is a very useful tool of financial analysis, it has its own limitations which must be kept in mind at the time of its use. The main limitation is that the cash flow statement only records cash transactions and so ignores the basic accounting concept of accruals and tems bought on credit and therefore are not suitable for judging the profitability of a business. Also cash flow statements are prepared using historical information which is in the past. Therefore it does not asses what may happen in the future to a business’s accounts. In conclusion, there are many uses for financial statements as they provide a solid picture of a business’s performance when compared to each other, and the users can easily spot flaws in the entity’s financial position and manage these accordingly. However their limitations must be considered when analysing the data as they only supply the reader with past and present quantitative data and do not address any of the qualitative economic variables such as the morale of the employees or the quality of the management team. There is currently no way of measuring these intangible assets, even though a business’s human resources are some of its most valuable assets.

Megachurches and Theologies of Consumption :: Religion Christian

Last weekend, while attending Lexington, KY’s Southland Christian Church, I received an invitation to attend a â€Å"Poor Man’s After-Tax Dinner.† Located on a 115-acre plot that occupies a stretch of the rapidly disappearing farmland between Lexington and Jessamine County, Southland will host the gala, which includes a catered meal and a performance by the Dale Adams Band. On the church’s website, an announcement for the event asks, â€Å"Did you have to pay when you filed taxes? This month’s Gathering is designed to help you to forget your IRS woes.†[1] The After-Tax Dinner will minister to those still reeling from the April 15th deadline, and, with any luck, it will foster solidarity among Southland’s flock, the majority of whom are members of the tax bracket whose wallets ache most severely after just having rendered unto Caesar the money that belongs to him. Southland Christian Church, one of several worship centers in the United States that has earned the moniker â€Å"Six Flags over Jesus,† is Lexington’s largest megachurch. With a weekly attendance of 8,000 people and an operating budget that supports a staff of over eighty members, Southland far exceeds most U.S. congregations in terms of financial resources and social clout. In recent years, popular and scholarly studies have attempted to situate the megachurch movement within a broad cultural context. Although the majority of these analyses dispute the precise definition of a megachurch, most distinguish these multiplex sanctuaries from smaller worship communities by using the same criteria—i.e. weekly attendance, campus acreage, annual budget, etc.—that megachurches themselves draw on to represent their own success. [2] However, the essence of a megachurch is not its large buildings, but rather the theology of consumption that informs it s programming.[3] In this way, a megachurch ethos has infiltrated even the smallest congregations in the United States and has helped to solidify Christianity’s inextricable connection to consumer capitalism. To those who see megachurches as symptomatic of a flawed Christianity, market-minded church growth confounds one of the faith’s oldest dualities, the contradiction of living in the world without conforming to its ways, as Paul puts it in Romans 12. Megachurches at once reject â€Å"the world† and participate in it by seeking to win the lost and wow the consumer at the same time.

The Modern Researcher

Both authors, Jacquez Barzun and Henry Grafff are historians and are faculty members of Columbia University. They finished this book by year 1969. THE BOOK- Summary and Purpose: This book is primarily intended to â€Å"guide and instruct students in the arts of research   and writing†(note on the revised edition), with special emphasis on historiography. The book is divided into three parts, with the titles: The First Principles, Research and Writing . The idea for the first principles is to lay down the necessary frame of thought, the attitudes and qualifications of a (modern) â€Å"researcher†- apparently, to distinguish him from an antiquated one. It combines both the technique of research and writing. Unlike common writing/research manuals that concentrate only on the â€Å"how to’s† ,   Barzun & Graff, offered all the necessary ingredients for excellent history writing that is based on fastidious effort to search for â€Å"the truth†. It is a book on historiography that develops the idea that â€Å"facts alone do not constitute history† but that these need to be interpreted and ably written. Writing   should consist an effort on the writer to communicate as close as possible his   own ideas to the reader. It gives a very convenient outline summary for all the great philosophical systems  Ã‚   that influenced historians and their writings. This background could further enhance an understanding of historians’ very human tendency to reduce patterns into ‘laws’ in order to make them coherent and unified. However, such laws overly simplify   phenomenon and , if possible, should be avoided by the writer. Barzun convincingly provides strong bases for his ‘principles’ through excellent  Ã‚  Ã‚   choice of examples. An anecdote on how a historian was able to establish the authorship of the â€Å"Diary of a Public Man† is such a good example on how   one investigates and verifies his data. This historian was able to come up with a  Ã‚  Ã‚   probable answer to his problem through trial and error that took him more than thirty years- visiting libraries, interviewing key people mentioned in the diary, verifying documents written during the period in question (Lincoln Administration). In the end the historian found out that the author employed both fact and fiction in his diary entry and therefore   this (diary)   would not be useful as a historical document. Another is about a researcher who investigated the origin of the motto: â€Å"In God We Trust† written on dollar currencies. He noticed that there was a period when such a motto was absent,   and he wanted to investigate, first -its origin and then,   the reason   for its absence; then, its revival in the present currencies. Through painstaking investigation he found out that it was Stuart Chase, the Secretary of Treasury who , being a clergyman, mandated its inclusion on all currencies during his incumbency. When his term expired, his successor had this motto deleted only to reappear later when the American Congress saw the wisdom of restoring it. Such examples on the process of research reinforces the idea that research is a worthy endeavor and   is indeed exciting. Moroever, the book stresses on the importance of having the proper perspective in writing history, i.e. â€Å"Book concentrates on principles of thought and analysis of difficulties and aims at imparting the fundamentals of informed exposition.† The authors repeatedly expounds on these throughout the book. Another important tenet which Barzun convinces his reader is that it is by way of probability that all scholars, including scientists can claim the truthfulness of their work. Thus, patterning in history is intended not to arrive at â€Å"laws† or generalizations that are â€Å"unbreakable† and immutable but rather to serve as guidepost that may give coherence to an ,otherwise, confusing motley of data. They are therefore made for convenience, just as periodizations in history are. The menacing issue on subjectivity and objectivity in historical writing was given adequate attention by Barzun. He avers that   these words apply â€Å"not to persons and opinions but rather to sensations and judgments† and are better avoided by historians and their critics. â€Å"An objective judgment is one made by testing in all ways possible one’s subjective impressions, so as to arrive at a knowledge of subjects.† A corollary principle will be that â€Å"competence, not majority opinion, is decisive. There have been collective hallucinations that deceived large majorities’† (p.166). This obviously happens, specially with political issues and with politicians who exploit public opinion to suit their ends. Analysis: Barzun & Graff’s Modern Researcher is, indeed, not an ordinary manual on research and writing. But I have only one comment, why did they entitle the book â€Å"The Modern Researcher†? Nowhere in this book did they explain the title. Does the word â€Å"modern† means a historical period? Or a frame of mind? I would assume that the work being about historiography may connote a historical period. But it could also be a frame of mind, i.e. progressive and liberal.

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