Data Collection and Education Essay Paper

As a nursing leader, you have been asked to assess to educate staff on the data points necessary for developing an accurate financial statement. Educate the staff on accuracy and what data points are necessary when developing a financial plan. Be sure to define terms for the staff.

Data collection and education

Financial statements are important tools that cannot be underestimated in any environment since they reflect the financial influences of events and transactions that occurred in the past. In fact, accurate financial statements are imperative for an organization of any scale. That is because these statements reveal numbers that are useful for telling the story about the organization, estimating failures, determining success, planning strategies, and making decisions (Gillespie, 2016). There are four basic types of financial statements. The first type is statement of financial position (balance sheet) that offers a snapshot of the organization at a particular data through listing its assets and liabilities. The second type is income statement that offers a summary of the net income/loss, losses, expenses, gains, and revenue over a specific period. The third type is cash flow statement that summarizes the cash receipts during a specified period. The final type is statement of changes in equity, which reconciles the equity for a specified period (Gillespie, 2016). The present paper discusses the importance of an accurate financial statement and the necessary elements.  Data Collection and Education Essay Paper

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An accurate financial statement serves six important functions. Firstly, it helps with forecasting, planning and decision making functions since it contains figures on how much is earned, spent, needed, and reserves thus aiding the company in making financial decisions such as boosting financing and increasing sales. In addition, it can help the company with financing decisions such as how much it owes in debts and shareholders capital before determining how to finance its activities. Secondly, it improves payment cycles while optimizing accounts receivable and accounts payable cycles. Thirdly, it helps in building trust with the investors since they are likely to withdraw if faced with fudged accounts. Fourthly, it mitigates errors by identifying internal wrongdoing and costly mistakes early on. This is particularly important for addressing fraudulent and illegal activities that would be identified through number discrepancies. Reconciliation activities determine if the discrepancy is resultant of an error or fraud. Fifthly, it helps in evaluating tax liability so that the organization makes precise payments and can even enjoy the associated incentives. Finally, it facilitates financial transparency to determine the organization’s true value in terms of depreciations, capital, assets, and liabilities (Mowen et al., 2016).

It is important to note that a financial statement primarily offers financial information expressed in monetary units. In addition, the information will only relate to an individual organization. Besides that, the information is offered as estimates and approximations, rather than exact financial measurements. Besides that, all financial statements are prepared based on accounting assumptions. The first assumption is that all statements are prepared at regular time intervals. The second assumption is that the organization will conduct its business indefinitely. The third assumption is that all transactions are measured and expressed in a single currency/financial unit (Mowen et al., 2016).

An accurate financial statement must have unique factors to identify it as such. The first factor is to ensure that the right feature is used to record the figures. This includes the use of a single currency for all calculations and the same level of accuracy, such as decimal points. The second factor is to clarify the attribute in terms of present value of future cash flow, net reliable value, current market value, current cost, and historical cost. For instance, the liabilities and assets are traditionally presented as historical costs. The third factor is to include notes (informative disclosures) appended at the end of the statement to explain the methods used and explanations. In addition, the notes include parenthetical disclosures and schedules that present information not included anywhere else in the statement. For example, explaining details on the methods of consolidation, contingent liabilities, income taxes, leases, pensions, long-term debt, and the inventory and depreciation methods used. The fourth factor is the inclusion of a heading that offers the time covered by the statement (date), name of the statement, and name of the organization (Pride, Hughes & Kapoor, 2014).

Besides the four mentioned factors, the Financial Accounting Standards Board (FASB) has identified nine elements that act as the building blocks that construct every statement. The first element is revenues that include all inflows, liability settlements, and asset enhancements. The second element is losses that include incidental and peripheral transactions resulting in equity decreases as well as distributions to owners and expenses. The third element is liabilities that include all future sacrifices of economic benefits arising from current obligations. The fourth element is investments by owners that include equity and asset increases. The fifth element is expenses in terms of cash outflows and asset uses as well as liability incurrences. The sixth element is equity that constitutes residual interest as the difference between liabilities and assets. The seventh element is distribution to owners that details any net asset decreases resultant from reducing ownership equity and interest. The eighth element is income that details changes in assets resultant from non-owner sources. The final element is assets that offer probable future benefits resultant from past events and transactions (Mowen et al., 2016). In this respect, financial statements are tools that explore the financial health of an organization at a given time.

References

Gillespie, A. (2016). Foundations of economics. Oxford: Oxford University Press.

Mowen, M., Hansen, D. & Heitger, D. (2016). Cornerstones of managerial accounting (6^th ed.).  Boston, MA: Cengage Learning.

Pride, W., Hughes, R. & Kapoor, J. (2014). Business (12^th ed.). Mason, OH: South-Western.  Data Collection and Education Essay Paper