Profits must be legally and accurately accounted for. An advantage of a C-Corporation is owners can set salary levels at whatever they wish instead of paying dividends like ordinary
When preparing the income statement, the first entry is revenue. The sum of money received from selling a
These indicators go beyond financial statement figures, such as sales and net income, to include measures tailored to the client and its objectives. Such key performance indicators may include market share, sales per employee, unit sales growth, unique visitors to a Web site, same-store sales, sales by country, and sales per square foot for a retailer. ASSESS CLIENT BUSINESS RISK The risk that the client will fail to achieve its objectives related to (1) reliability of financial reporting, (2) effectiveness and efficiency of operations, and (3) compliance with laws and regulations PERFORM PRELIMINARY ANALYTICAL PROCEDURES a. Auditors perform preliminary analytical procedures to better understand the client’s business and to assess client business risk. One such procedure compares client ratios to industry or competitor benchmarks to provide an indication of the company’s performance.
Owners put in their money to make a profit this is why it is important for them to track the sum of money they may have made in an accounting period. Usually a supervisor’s standing is related with the success of the company. When a business is making money the amount of money a manager makes will usually increase and they may also get a promotion. Income statements are also used to check the revenues and expenses of the company which allows managers to reduce their unnecessary expenses to make more profit. These income statements are also useful for outside users such as investors, creditors and the government.
An activity can have more than one cost driver attached to it. For example, a production activity may have the following associated cost-drivers: a machine, machine operator(s), floor space occupied, power consumed, and the quantity of waste and/or rejected output. (BusinessDictionary.com, 2013)" I think the company would do better with Activity Based Costing (ABC) because this allocation method is more accurate because it takes all cost related factors into consideration. The first way the company was allocating department costs was and even three way split, which was undercutting Fabricating, which needs more funds, and this method was overcompensating Laminating and Assembling, which require less. With the ABC Method, the costs are factored by the different cost drivers, such as machinery, staff, number of parts needed, amount of products made, as well as direct material costs and direct labor hours.
Substantive Procedures for Cash Outflow Irregularities ACC/566 Forensic Accounting September 13, 2014 Businesses have goals that include making a profit. In order to have a profitable business, it must be one that offers goods and services that are appealing to the people. When this occurs, there is a demand for the products and services and in some cases a need. Because the financial industry has its ups and downs, businesses must comply with certain rules and regulations in order to stay in business. Not only should they adhere to these guidelines and laws set forth, but they must internally protect their assets or prized possessions in order to continue the inflow of prosperity.
COURSE WORK 1- FINANCIAL MANAGEMENT/FINANCIAL ACCOUNTING 1. UNDERSTANDING OF THE DIFFERNCE BETWEEN FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING Financial accounting is focused on generally accepted accounting principles- producing a limited set of financial statements. This includes the balance sheet and the income statements, by which the overall past performance of business can be judged by outsiders. Management accounting deals with information that is not made public and is used for internal decisions making only. These reports are far more detailed than financial accounting reports and can cover performances and activities by departments, teams, products, customers and employees.
Market research starts out by finding information on customer’s needs, the business competitors and the market trend. Market research can be collected through primary and secondary research. Market research plays an important role because it can reduce business making the wrong decision. Without market research
Also, which users could be interested in each type of ratio. The data collected has revealed the company’s performance and position. Profitability ratios measure a company’s ability to generate earnings relative to sales, assets, and equity. These ratios assess the ability of a company to generate earnings, profits, and cash flows relative to relative to some metric, often the amount of money invested. They highlight how effectively the profitability of a company is managed.
“Activity Based Costing” presumes that: * Products consume activities * It is the activities (and not the products) that consume resources, * Activities are the “cost drivers,” and * Activities are not necessarily based on the volume of production. Instead of allocating costs to cost centers (such as manufacturing, marketing, finance), “Activity Based Costing” allocates direct and indirect costs to activities such as processing an order, attending to a customer complaints, or setting up a machine. A subset of Activity Based Management (ABM), it enables management to better understand: * How and where the firm makes a profit, * Indicates where money is being spent, and * Which areas have the greatest potential for cost reduction? (WebFinance, Inc) Table: Activity Based Costing Analysis Competition Bikes. Item | Activity Cost Pool | Cost Driver | Cost Driver Quantity | Pool Rate | Product Line | Cost Driver Quantity for Product Line | Activity Cost for Product Line | Product Line Production Volume | Activity Cost per Unit of Product | Factory | 33,400 | Setups | 545 | 61.284 | Titanium | 45 | 2,757.80 | 900 | 3.06 | Setups | | | | | Carbon Lite | 500 | 30,642.20 | 500 | 61.28 | | | | | | | | | | | Quality |