The Corporate Financial Account course has provided me with the opportunity to understand the Financial Statement to include;
- Income statement
- Statement of financial position
- Statement of Cash flow
- Statement of changes in equity
- Notes to the Financial Statement
Also, I now know the importance of categorizing assets into income generating cash flow and non-income generating cash flow. In addition, I have come to realize that there are non-interest bearing liabilities.
Accounting equation is another learning for me, in which the addition of liability and owner equity makes up assets as represented below;
Assets = Liability + Owner Equity.
Also more concepts were learnt during the ration analysis session, this will be discussed in future write up.
In addition, I now have understanding of some key terms in Corporate Financial Accounting, these key terms are briefly explained below.
Asset – is a resource controlled by an entity in which economic benefit is expected to flow to the entity as a result of past event.
Liability – is a present obligation of an entity as a result of past event in which economic resources is expected to be transferred by an entity.
Revenue – is an income earned by an entity from its operating activities of rendering services or selling goods.
Expense – is cost incurred by an entity in the normal course of its day to day activities.
Equity – is the owner’s stake in an entity resulting from their investment in the business.
Profit – is the excess of revenue over expenses and other related cost of conducting a business in a given financial period
Loss – this occurs when the revenue generated by an entity is lower than expenses and other related cost attributable to the entity in a given financial period.
Financial Statements – are records of financial performance of an entity comprising of; Income Statement, Statement of Financial Position, Statement of Cash Flow, Statement of Changes in Equity and Notes to the Financial Statement.
Financial Year – is a period of 12 months in which an entity prepares and presents it Financial Statements.
Entity – the concept of entity means that the business is separate from the owners and other businesses, therefore, its accounts should be prepared on that basis.
The learnings in Corporate Financial Accounting also afforded me the opportunity to understand the key accounts and subsections contained in an annual report. Below are examples of extracts of the key accounts and subsections contained in an annual report of a commercial Bank in Nigeria.
2021 and 2020 figures of 3 key Accounts or subsections:
| Income Statement | Group | Group | ||
| 2021 | 2020 | |||
| Accounts or subsections | N’millions | N’millions | ||
| Interest and similar income | 427,597 | 420,813 | ||
| Depreciation of property and equipment | (25,305) | (25,125) | ||
| Total Comprehensive Income for the Year | 256,415 | 263,497 | ||
| Statement of Financial Position | Group | Group | ||
| 2021 | 2020 | |||
| Accounts or subsections | N’millions | N’millions | ||
| Treasury bills | 1,764,945 | 1,577,875 | ||
| Customers’ deposits | 6,472,054 | 5,339,911 | ||
| Share premium | 255,047 | 255,047 | ||
| Statement of Cash Flows | Group | Group | ||
| 2021 | 2020 | |||
| Accounts or subsections | N’millions | N’millions | ||
| Net increase in loans and advances | (536,014) | (385,651) | ||
| Purchase of property and equipment | (34,109) | (23,950) | ||
| Cash inflow from long term borrowings | 712,420 | 872,332 | ||
| Statement of Changes in Equity | Group | Group | ||
| 2021 | 2020 | |||
| Accounts or subsections | N’millions | N’millions | ||
| Fair value reserve | 45,473 | 42,101 | ||
| Statutory reserve | 275,993 | 231,307 | ||
| Retained earnings | 607,203 | 521,293 | ||
| Notes to the Financial Statements | Group | Group | ||
| 2021 | 2020 | |||
| Accounts or subsections | N’millions | N’millions | ||
| Information technology | 28,716 | 20,440 | ||
| Advertisement | 7,100 | 7,656 | ||
| Travel and hotel expenses | 2,628 | 1,883 |
