Accounting Angel Martinez Acc 11/28/2011 Accounting Accounting requires collecting information and displaying it on statements so that business decisions can be made for the future of a company. The purpose of accounting is to document what the company is spending and what revenue is being collected. Accounting provides a business with correct and documented information on what is profitable and what is negative. Without accounting, businesses can not prosper or make decisions on growth or downsizing. Accounting requires that all transactions be recorded to ensure accuracy when giving financial details to board members, stock holders, and the IRS for tax purposes The income statement posts revenues and expenses.
These are important to the investors who are looking at the company but also to managers. Exercise 7-2: Answer the following questions about the statement of cash flow and the statement of retained earnings. 1. The current month’s net cash provided by operations is $34,936.57 2. The year-to-date’s net cash provided by operations is $4,717.37 3.
To make their reports meaningful, a company reports the recorded data in a standardized way according to generally accepted accounting principles (GAAP). The remainder of this paper will illustrate examples of the income statement and balance sheet. In addition, this paper will discuss a few basic accounting principles along with a brief discussion of the difference in how equity is reported for an owner invested firm versus a not-for-profit entity. Construct Brandywine’s 2007 Income Statement In order to construct Brandywine’s 2007 income statement, one must first collect the data required for reporting. The income statement reports the success or profitability of a company’s operations over a specific period of time (The Income Statement, 2011).
Integrative Problem FIN 370 Organizations spend a significant amount of time and resources on capital budgeting processes before entering into any type of contract or investment. Caldonia like other organizations use the capital-budgeting processes to provide a clear understanding of cash flows of before determining the profitability and risks of a proposed project. As a recent new hire in the financial department at Caledonia Products, I have been tasked to evaluate the calculations of cash flows involved in investing in a new product, and consider the factors involved in either leasing or purchasing equipment. The financial analyst must calculate the organizations net present value, payback period, and IRR (internal rate of return against the projected interest rate to determine which project is most lucrative. Caldonia is presently considering two projects, both that have an 11% rate of return and negative net value of $100,000 the first year.
Every business has to meet internal and external reporting requirements to show its financial health and to meet legal and other requirements financial health means that will have enough cash at any one point in time to be able to meet demand for short-term cash outflows. One of the reasons why businesses like ASDA keep accurate records is, assessing its financial position, Asda assess their financial position every year so they know if they are making efficient use of resources to provide the necessary financial return to achieve a profit or a suffered loss. Keeping accurate accounts helps ASDA to know if there is any product which is not making any profit so they can stop selling in order to make more profit and less lost. ASDA uses figures from the profit/loss account and balance sheet to work out appropriate ratio such as acid test ratio which shows the liquidity of the business. Other reason is that accurate accounts allow ASDA financial team to compare its financial performance with previous year, it is really important because this can show business its future prospects and forecast cash flow and will show them profit and loss.
Berry’s Bug Blasters Ratio Analysis Memo ACC/291 Principals of Accounting II MEMO To: Berry’s Bug Blasters CEO From: Accounting Dept (Team B) Date: September 16, 2013 Re: Ratio Analysis Accounting Team B conducted a ratio analysis of Berry’s Bug Blasters to express the relationships among selected items of financial statement data. Ratios express mathematical relationships between one and another is expressed in terms of percentage, rate, or simple proportion. We used ratios to evaluate liquidity, profitability, and solvency. Listed below are the findings from the ratio calculations. The analyses reveal many things about the company’s financial position and performance, and also which users are interested in each type of ratios.
c. Company personnel account for the sequence of shipping documents and verify that an entry for each shipment is included in the sales journal. This control relates most directly to the sales transaction-related audit objective of (1) occurrence. 14-22 ( Objectives 14-3, 14-4 ) For each of the following types of misstatements (parts a through d), select the control that should have prevented the misstatement: a. A manufacturing company received a substantial sales return in the last month of the year, but the credit memorandum for the return was not prepared until after the auditors had completed their testing. The returned merchandise was included in the physical inventory.
The income statement is important because it will show whether the company’s revenue exceeded expenses for a specific period resulting in net income or the amount the company may have lost because the expenses exceeded the revenue. The retained earnings statement is equally important because it will indicate the exact reason why the company’s retained earnings increased or decreased over the reporting period. The balance sheet is important because it is the overview of the company’s financial condition at the time of the reporting period and the statement of cash flow’s is important because “Reporting the sources, uses, and change in cash is useful because investors,creditors, and others want to know what is happening to a company’s most liquid resource.” (Weygandt,
GASB and FASB Similarities GASB and FASB accounting are sets of objectives that proprietorship, government, and not-for-profit organizations follow in preparing financial statements. According to Weygandt (2008, p. 17) “both the GASB and the FASB have established objectives that circumscribe the functions of financial reports.” GASB and FASB objectives show whether a company is making enough profit to pay for expenses throughout the year, allows investors information to decide whether to invest or not, and how well the company budget complied throughout the year. Also, the two accounting standard boards show whether management is complying with all aspects of the objectives. GASB and FASB accounting have differences that individuals need knowledge about to prepare financial statements for government and not-for-profit organizations. GASB and FASB Differences Accountants and individuals, who work in accounting fields, need to know the differences between GASB and FASB.
-Financial management ensures that a business is monitoring their finances. Financial management involves setting budgets and ensuring that departments remain on budget throughout the year. - The financial manager or credit controller There are several ways organisations maintain financial records. They include manual systems (hard copy) and computer-based (electronic) systems. How do computer and manual systems operate?