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Key Financial Relationships

Submitted by Testing Lady on April 8, 2008

Category: Miscellaneous
Words: 1171 | Pages: 5
Views: 202
Popularity Rank: 58,665
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Introduction
This Paper will compare and contrast the three major financial statements between eBay and Microsoft it will also give a brief detail of each statement of how and why they are beneficiary to each other. In addition, this paper will give the three key components of the basic accounting equations and how they are interpreted on each company financial statement as well as how and why they affect their company’s end of the fiscal year earning. Finally, this paper will discuss why control techniques are needed and why some issues occur why implementing the control techniques and the outcome of each issue.

Key Financial Relationships
Inter-relationships
The three major financial statements are all ties in together, along with the statement of retained earnings. The balance sheet for the previous affects both the statement of cash flows, and the statement of retained earnings. The retained earnings affect both the income statement and the balance sheet. While the statement of cash flows affects the current year’s balance sheet (Brealey, Myers, & Marcus, 2007). EBay’s financial statements are no different in this matter. In eBay’s 2006 annual report one can see this. The fund received from eBay’s customers and accounts receivable, customer paying with credit, on the balance sheet would affect the net revenues on the income statements. Accounts receivable is on eBay’s statement of cash flows and balance sheet as is accounts payable. If a mistake is on either of accounts receivable or the accounts payable then both financial statements are wrong and need to be corrected. The end of cash at the end of the accounting period on the statement of cash flows affects the cash portion of current assets on the balance sheet (eBay, 2007).
In taking a look at the financial statement online for Microsoft, MSN (2008) offers the ability to take a look across the board of four years worth of information...

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