Managers within the firm, as well as the firm’s owners and lenders, keep track of the firm’s performance by reviewing its financial statements – income statement, balance sheet, and statement of cash flows.
What is the purpose of the income statement?
Identify the major types of expenses that are shown on the typical income statement.
What is the purpose of the balance sheet?
Identify the major types of assets and the claims of creditors and owners shown on the typical balance sheet.
What are the three different accounts that comprise the owners’ equity (also known as stockholders’ equity) section on a typical corporate balance sheet?
What is a statement of cash flows? Describe the three standard sections contained in a statement of cash flows.
Sample solution
Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell.
In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.
God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.
Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.
To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.
References
Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.
Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.
Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.
Sample Answer
Sample Answer
Purpose of the Income Statement
The income statement, also known as the profit and loss statement, serves to summarize a firm’s revenues and expenses over a specific period, typically a fiscal quarter or year. Its primary purpose is to provide stakeholders—such as management, investors, and lenders—with insights into the company’s profitability and operational efficiency. By detailing how much money the company earned (revenues) and how much it spent (expenses), the income statement helps assess whether the firm is generating profit or incurring losses during the reporting period.
Major Types of Expenses on the Income Statement
A typical income statement includes several major types of expenses, which can be broadly categorized as follows:
1. Cost of Goods Sold (COGS): This represents the direct costs associated with producing goods or services sold by the company, including raw materials and labor costs.
2. Operating Expenses: These are the costs required to run the company’s core business operations but are not directly tied to the production of goods. They generally include:
– Selling, General, and Administrative Expenses (SG&A): These are overhead costs, including salaries of non-production staff, advertising expenses, rent, and utilities.
– Depreciation and Amortization: This accounts for the reduction in value of tangible assets (depreciation) and intangible assets (amortization) over time.
3. Interest Expense: This expense arises from borrowing funds and is calculated based on interest rates applied to outstanding debt.
4. Taxes: This includes income taxes owed on the profits generated by the firm.
Purpose of the Balance Sheet
The balance sheet provides a snapshot of a company’s financial position at a specific point in time, detailing what the firm owns (assets), what it owes (liabilities), and the residual interest of the owners (equity). The primary purpose of the balance sheet is to give stakeholders an overview of the company’s financial health, enabling them to assess its liquidity, solvency, and capital structure.
Major Types of Assets and Claims on the Balance Sheet
A typical balance sheet includes two main sections: assets and liabilities/equity.
1. Major Types of Assets:
– Current Assets: These are assets expected to be converted into cash or consumed within one year, such as cash, accounts receivable, inventory, and short-term investments.
– Non-Current Assets: These assets are expected to last longer than one year and include property, plant, and equipment (PP&E), intangible assets (like patents), and long-term investments.
2. Claims of Creditors and Owners:
– Liabilities: These represent what the company owes to external parties. They are divided into:- Current Liabilities: Obligations due within one year, such as accounts payable and short-term debt.
– Long-Term Liabilities: Obligations not due for more than one year, such as long-term loans and bonds payable.
– Equity: This represents the owners’ claim on assets after all liabilities have been settled. It includes contributed capital and retained earnings.
Accounts Comprising Owners’ Equity
The owners’ equity section on a typical corporate balance sheet comprises three main accounts:
1. Common Stock: Represents the value of shares issued to shareholders at par value.
2. Preferred Stock: Represents shares that have preferential rights over common stock, particularly regarding dividends and asset distribution upon liquidation.
3. Retained Earnings: This account reflects cumulative profits that have been reinvested in the business rather than distributed as dividends to shareholders. It indicates how much profit has been retained for growth or other purposes.
Statement of Cash Flows
The statement of cash flows summarizes cash inflows and outflows over a specified period, providing insights into a company’s liquidity and cash management. It helps stakeholders understand how cash is generated and used in operations, investing activities, and financing activities.
The three standard sections contained in a statement of cash flows are:
1. Operating Activities: This section reflects cash transactions related to the core operations of the business. It includes cash received from customers, cash paid to suppliers and employees, interest payments, and tax payments.
2. Investing Activities: This section shows cash flows related to the acquisition or disposal of long-term assets. It includes purchases or sales of property, plant, equipment, and investments in other companies.
3. Financing Activities: This section details cash flows resulting from transactions with the firm’s owners and creditors. It includes cash received from issuing stock or borrowing funds, as well as cash paid for dividends and repayment of debt.
By examining these three components, stakeholders can gain a comprehensive understanding of how a company manages its cash resources.
