Financial Statements ACC/280 May 01, 2012 Edward Vargas Financial Statements Accounting is extremely important by monitoring the functions of the companies, and allowing them to make appropriate financial transactions and decisions. Some areas of accounting can seem confusing and difficult but in the end the outcome is clear and concise. There are two basic forms of accounting known as; financial and managerial accounting. Financial accounting responsibilities are to follow the General Accepted Accounting Principles (GAAP) that is regulations for investor relations, creditors, and taxation purposes, whereas managerial accounting is for internal evaluation. There are different functions and categories that accounting
This summary will be assessing the requirements of Statement of Financial Accounting Standards (SFAS) 116 and 117 and how it impacts the financial statements. The Statement No. 116 addresses Accounting for Contributions Received and Contributions Made, contributions consist of gifts of cash, marketable securities, property and equipment, utilities, supplies, intangible assets (such as patents and copyrights), and the services of professionals and skilled workers (University of Phoenix, 2007, p.490). These contributions have to be accounted for at fair value, unless their is a particular collection or contributed service. Statement No.
Robbin Industries is jeopardizing itself by not properly reporting the advertising costs. As an operating company, they must understand the generally accepted accounting principles and adhere to them (Weygandt, Kieso, & Kimmel, 2010). (c) What would you do if you were Wayne Terrago? Wayne Terrago should try to report the financial condition and results of operations fairly and in accordance with the generally accepted accounting principles. As controller, Wayne should inform management and understand what is acceptable according to the GAAP.
Full disclosure requires that publicly traded businesses use accrual based accounting and revenues are recognized as sales are earned. Full disclosure also requires that footnotes describe accounting procedures and provide details for unusual transactions. With companies such as Enron and WorldCom, the accounting field has an increased need for businesses to tell the truth in its financial statements. Full disclosure acts as the obligation for businesses to be truthful in its statements in order to protect the parties
E2-1 (a) Accounting rule-making that relies on a body of concepts will result in useful and consistent pronouncements. TRUE (b) General-purpose financial reports are most useful to company insiders in making strategic business decisions. FALSE. General-purpose financial reporting helps users who lack the ability to demand all the financial information they need from an entity and therefore must rely, at least partly, on the information provided in financial reports. However, an implicit assumption is that users need reasonable knowledge of business and financial accounting matters to understand the information contained in financial statements.
Smith, Harmelink & Hasselback. Federal Taxation: Comprehensive Topics. CCH, 2013. Pg 14-18-19 states that the corporation should issue long-term debt because debt has certain advantages over equity. Interest payments on the debt are deductible by the corporation while dividends are not deductible.
The financial balance sheet will demonstrate the current and total assets and the current and total liabilities of the business. The financial income statement will demonstrate the projected income, or losses, of the business in a given year. And, the financial statement of cash flows will demonstrate the projected liquidity and the operating cash for the business in a given year. (What is a Pro Forma Financial Statement?, n.d.) A pro forma financial statement is a statement that is usually presented to a potential investor in a company to demonstrate the financial merits of investing. As well, public companies must file a pro forma financial statement with the Securities and Exchange Commission (SEC).
GAAP also has specific types of transactions, and it required public companies to follow rules that are set by the Securities and Exchange Commission. IFRS Revenue Recognition IFRS revenue recognition states that revenue can be recorded when it becomes economically significant: IFRS revenue recognition can be defined as "not as strict" as opposed to GAAP. IFRS is considered universal; standard 18 sets forth general principles and examples applicable to all industries. IFRS allows recognition when the rewards and risk of ownership is transferred, giving the buyer control of the goods, revenue is understood and the economic benefits will flow to companies or in other words, you will get paid. IFRS bans the "completed contract method" and under certain circumstances will allow the percentage of completion method.
The goal of SOX was to implement requirements that publically traded companies have internal and external controls in place to prevent the providing of fraudulent or misleading financial information to internal and external users of financial statements in financial decision making, by investors, creditors, employees, and customers. In this case SOX applies if Excello misrepresents (inflates) their 2010 end-of-year earnings report, they are defrauding internal and external users of financial information (Mintz & Morris,
First, the patient financial services staff (PFS) did not have access to real-time information in regards to key financial and operational indicators such as A/R days and cash collections. Managers and staff had to wait until the end of the month which hindered them in tracking progress and making important decisions. Second, the hospital’s accounting system did not allow managers to isolate and analyze select data or generate reports on demand to the level of detail required. Third, in addition to PFS staff, the central business office (CBO) staff also suffered from a lack of real-time information. The CBO was only able to enter accounts when they were assigned with an outstanding balance.