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Colgate-Palmolive Firm is a global consumer products company based in the United States. Colgate-Palmolive is a commercial firm with the primary objective of making profits. The City of Dallas, on the other hand, is a government-owned organization with a humanitarian mission, and hence the balance sheet presentation of both organizations will be fundamentally different. An organization’s balance sheet summarizes the organization’s assets and liabilities as of a specific date. However, the nature of assets and liabilities is determined by the nature of the organization. The City of Dallas’s primary assets includes pooled cash, restricted cash, and tax receivables (sales tax, ad valorem tax, and special assessment). Its significant liabilities include accrued payroll, unearned revenues, accounts payable, and contracts payable.
The assets of Colgate-primary Palmolive include plant and equipment, trademarks, inventory, and cash balances, while its significant liabilities include share capital, reserves, bank debt, and accounts payable. The explanation for the differences in balance sheet items of the two organizations is as follows:
The City of Dallas is a governmental body with significant receivables in taxes earned from the citizens of Texas. The majority of this money is used to pay social security programs, for which the City of Dallas has significant unrestricted cash balances. On the other hand, Colgate-Palmolive is a commercial firm that owns plants, property, and equipment. Additionally, the inventory and cash on hand represent the assets generated by the company’s operations and are likely to be liquidated soon.
The liabilities of The City of Dallas are in the form of accrued payroll, accounts payable, and contracts due. These liabilities indicate the sum owed for developing various areas within its control. On the other hand, Colgate Palmolive has equity capital (representing the contribution of equity shareholders), reserves (representing accumulated earnings), bank debts, and accounts payable, all of which are utilized to finance the company’s activities. The variance in the primary items is due to the organization’s nature.
As discussed in the above question, Colgate-Palmolive operates to make profits. In contrast, The City of Dallas is a government-owned organization with a humanitarian mission. Therefore, their statement of revenues, expenditures, and changes in fund balances.
The statement of revenues, expenditures, and changes in fund balances is a financial statement that summarizes the revenue, expenses, and consequent changes in fund balances for a government fund. It is comparable to a for-profit entity’s income statement in that it summarizes results over time. Revenues, expenditures, and changes in fund balances are included in this statement. Revenues are reported by source; for example, taxes and levies, service charges, and fines are all reported separately. Expenditures are classified according to their character (for example, current, debt payment, and capital outlay) and then by their function (general government, public safety, sanitation, and parks and recreation). Other sources and uses of finance include capital transfers, long-term debt issuance, and revenues from the sale of long-lived assets.
The City of Dallas’ income statement is alternatively referred to as the Statement of Revenues, Expenditures, and Changes in Fund Balances. The majority of revenue comes from tax collections, franchise fees, licenses, fines, and investment income. The revenue streams are generated from social activities, but the critical expense categories include public safety, lighting, public works, and other social expenses.
Colgate Palmolive’s income statement includes revenue from product sales and license fees from its subsidiaries located in various geographies. In contrast, its expense statement includes material purchasing costs, factory operating costs, payroll costs, and the taxes that the company is required to pay. The difference in income statements between Colgate-Palmolive and the City of Dallas is because Colgate-Palmolive is a separate legal entity.
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