UNDERSTANDING FINANCIAL STATEMENTS Research Paper

UNDERSTANDING FINANCIAL STATEMENTS - Research Paper Example A balance sheet is split into three parts; assets, liabilities and stockholder’s equity. Assets are the economic resources possessed by a firm. Liabilities are a firm’s debt or obligations to acquire its assets. Stockholder’s equity is the total value of a firm’s common stock in addition to the additional paid-in capital and retained earnings. A basic rule of finance is that all business transactions are documented on the balance sheet at the dollar value actually decided at the time of the transaction. This suggests that, recording all of the firm’s transactions at their historic cost is the factor that the net worth of the firm illustrated on the balance sheet should not be mixed with the sales or appraised value. Net worth or stock holder’s equity on the balance sheet simply shows the difference between assets and liabilities (Bernstein & Wild, 2000). Income statement, which is also known as the profit and loss statement, statement of operations or statement of income, is another major financial statement. Income statement summarizes the firm’s revenues and expenses over a specified time, concluding with the net income or loss for the period. The income statement is divided into three parts; revenue, expenses and the net income. Revenue is cash inflows or acquiring of assets of a firm during a specified period. Expenses are the outflow or using of the assets, or incurrence if liabilities during a specified period. Net income on an income statement is the total sum earned or lost by the firm during the accounting period. Using the accrual method of accounting, sales are documented on the income statement when the goods and/or services associated with those sales are delivered or shipped to the customer. The cost of goods sold is recorded on the income statement at the same time the sales are recorded. Sales and cost of good s sold are also recorded in spite of of when the firm gets cash for the goods delivered

World Trade Organizations Dispute Settlement Mechanism Thesis

World Trade Organizations Dispute Settlement Mechanism - Thesis Example The author of the paper states that the WTO Dispute Settlement Mechanism should secure the ‘rule of law’ within international trade and provide all members with opportunities to exercise their rights equally under multilateral trade agreements. But, even after ten years, there still are many countries which haven't have the option to initiate a dispute. The system has been critically analyzed and the solutions have been proposed that DSM should break the monarchy and fear of developed countries and secure the developing.  An international organization, theWorld Trade Organization(WTO) was designed to supervise and liberalize international was came into being on 1 January 1995. It is the descendant of GATT theGeneral Agreement on Tariffs and Trade, which was formed in 1947, and continued to operate for almost five decades as a de facto international organization.  Most of the academic literature, even in its more critical versions, tend to share this basic assumption with the designers of the DSM. The DSM is conceptualized as a legal system where the same rules apply to countries on an equal basis, and where cases are judged according to their merits. This principle is incarnated in the AB, which has developed a case law with this emphasis.  A final set of observations from this literature focuses on biases and inequalities within and between institutions managing trade, including the WTO in general and the DSM in particular (Busch and Reinhardt, 2003; Shaffer, 2003). Here, the main problem identified is that the DSM (and the WTO) has become too technically complex and demanding for most developing countries to use effectively in the absence of adequate assistance. Originally, this is the observation that there are too much law and too little politics in the system.   The implicit biases of systems of trade rules, including the DSM, in favor of powerful countries - reinforced through the dominance of judicial forms of rule-making - have been noted by some contributors to the literature (for example, Busch and Reinhardt, 2001).  Initial studies of developing country participation in WTO dispute settlement found that they were unable to use the system effectively to settle cases, although they had expected levels of success when cases went before panels and the Appellate Body.161 This suggested that there was a need for more training and assistance to developing countries to enable them to handle the initial stages of dispute settlement more effectively. More recent experience suggests that at least the major developing countries - and quite a few Latin American countries in general - have become more effective in using dispute settlement overall, including in using it to obtain early settlements. The establishment of the Advisory Centre on WTO L aw and the dispute settlement training activities of the WTO Secretariat and others should help ensure that developing countries continue to made progress on this front (Busch and Reinhardt, 2001).