Question 4 (50 marks) A. Compare the Balance Sheet of Colgate-Palmolive with the

Question

Question 4 (50 marks)

A. Compare the Balance Sheet of Colgate-Palmolive with the Balance Sheet of the City of Dallas Governmental-Type Funds for 2014 (25 marks).

B. Compare the Income statement of Colgate-Palmolive with the City of Dallas Statements of Revenue, Expenditures and Changes in Fund Balances for 2014 (25 marks).

Note: This is a descriptive financial analysis; no data analysis is required.

This question requires us to compare a governmental fund balance sheet and Statements of revenue, expenditures and changes in fund balance with the business equivalents in the for-profit sector.

Explanation / Answer

Answer A.

Colgate-Palmolive is a corporation incorporated for commercial purpose with 'profits' as their main motive, whereas City of Dallas is a government-owned organisation with social objective and hence the presentation of the Balance Sheet of both the organisation will be inherently different.

The balance sheet of an organisation shows the details of assets and liabilities of an organization as on a particular date.However, the nature of assets and liabilities depends upon the nature of the organisation.

The major items of the assets of City of Dallas includes pooled cash, restricted cash and tax (sales tax, ad-vale rum and special assessment) receivables whereas the major items of liabilities include accrued payroll, unearned revenues, accounts payable and contracts payable.

The major items of the assets of Colgate-Palmolive includes Plant Property & Equipment, trademarks, inventory and cash balances whereas the major items of liabilities includes Share capital, reserves, bank debts and accounts payable.

The reason behind the differences in the items of balance sheet is

Answer B.

The income Statement of City of Dallas is differently termed as Statement of Revenues, Expenditure and changes in fund balances, where the majority income sources are tax collections, franchise fees, licenses, fines and investment incomes. The income sources are earned by conducting social activities, whereas the major items of expenses are public safety expenses, lightning expenses, public works and other social expenses.

The income statement of Colgate Palmolive includes the income from sales of its products and the license fee it received from its subsidiaries located across various geographies, whereas the expenses include material purchasing expenses, factory running expenses, payroll expenses and the taxes that the company is required to pay.

The difference in the Income statement of Colgate-Palmolive and City of Dallas is on account in the difference in the form of organisation with separate

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