...Accrual vs. Cash Basis Accounting XXXXXXXXXX ACC290 XXXXX, XX, XXXX XXXXXX XXXXXX Introduction In business, there are many different forms and standards to accounting. These standards are governed by rules, laws, regulations and accurate accountability of a particular business account. There are some general differences between general and commercial basis accounting principles, also differences between accrual and cash basis accounting. Those differences will be looked at here. General and Commercial Basis Accounting Principles According to Wikipedia.com, generally accepted accounting principles (GAAP) refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of financial statements. Hubpages.com discusses commercial accounting, also known as profit accounting, defining that it performs primarily by profit and loss. The reporting for a profit organization is directed to the investors. ("The Principles Of Commercial Accounting And Fund Accounting", 2011). Accrual vs. Cash Basis Accounting According to the readings, accrual basis accounting is defined as in which companies record, in the periods in which the events occur, transactions that change a company's financial statements, even if cash was not exchanged. In other words...
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...Financial Reporting Problem Part II ACC290 September 16,2013 Financial Reporting Problem Part II Financial Reporting Problem, Part II The PepsiCo is a beverage distributor is known for their soda and other merchandise. The cola company started in the 1800s in a drugstore, and it was named “Brad’s Drink.” In 1898, cola introduced “Brad’s Drink” to the market. After a few years, the name changed to Pepsi. The currents assets are very important to companies like PepsiCo. In the balance sheet, “current assets are assets that a company expects to convert to cash or use up within one year or its operating cycle, whichever is longer. For most businesses, the cut off for classification as current assets is one year from the balance sheet date” (Kimmel, Weygandt, & Kieso, 2011, p. 49). The company can use these assets to support its routine operations. For example, the company can use the assets to pay their current expenses. The common types of current assets consist of cash, marketable securities, inventory, accounts receivable, prepaid expenses, and additional liquid assets that the company can turn in to cash. However, according to Kimmel, Weygandt, and Kieso, 2011, companies normally arrange their current assets in the order in which they anticipate to convert them into cash. Therefore, the proper order for a company to have its assets listed under the current assets is as follows cash, (2) short-term investments (such as short-term U.S. government securities)...
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...Financial Statements Paper ACC290 January 2, 2013 David Aloyan The main goal of most businesses is to gain profit and have less spending costs all together. If a business is not making money, the owner of that business really has no reason to keep that business open. It is both a waste of time and a waste of money if there is no profit to be made. Many businesses deal with money all the time but how do they really know how much profit was made at a certain point of the year or a certain time of the month. If a business cannot keep track of the money coming in and the money being spent it cannot keep track of whether it is making money or loosing money. Fortunately, we have a solution to keep track of the money our businesses are making and the money our business are spending. Our Solution to our questions about cash flow is financial statements. Financial statements can be beneficial to internal and external sources that are interested in making a business grow. There are four basic financial statements that makeup the backbone of financial accounting. These four statements are balance sheets, income statements, retained earnings statements, and statements of cash flow. A balance sheet is used to show your business’s assets, what your business owns, and the business’s liabilities, what your business owes. It can paint a picture of your business’s finances at a specific point in time. An income statement shows how successful the business was for a certain season...
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...Comparison of IFRS to GAAP Khadija Boyd Crystal Scott ACC 290 11 August 2014 Deborah Wilson This paper will examine comparisons between the International Financial Reporting Standards (IFRS); which is designed to be a common global language for business affairs and the Generally Accepted Accounting Principle (GAAP); which refer to the standard framework of guidelines for financial accounting. There are certain ways that the format of a statement of financial position under the IFRS often differ from the balance sheet presented under the GAAP. At a minimum the statement of financial position shall include items that present the following information: property, plant, and equipment, investment property, intangible assets, financial assets, investments accounted for using the equity method, biological assets, inventories, trade and other receivables, cash and cash equivalents, total assets classified as held for sale to include disposable group classified as held for sale in accordance with the IFRA 5, trade and other payables, provisions, financial liabilities, liabilities and assets for current tax, deferred tax liabilities and assets, and non controlling interests presented within equity. Unlike the IFRA, the GAAP does not prescribe a standard format. The United States Security Exchange Commission (SEC) regulation does not require precise like items to appear on the face of the balance sheet. The IFRS and GAAP conceptual frameworks hold opposing views from the objective...
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...Financial Statements ACC290 November 5, 2012 Lori McKinney Financial Statements Whether a company is a small, mom-and-pop organization or a multi-billion dollar corporation, financial statements are an integral part of the company’s financial operations. There are four basic financial statements, each of them related. Changes on one statement will affect the other but no single statement will tell the complete story of how the company is performing financially. Because of this, it is important for users to understand which reports are pertinent to them and know how to interpret the information in those reports. Four Basic Financial Statements The four basic financial statements are the income statement, retained earnings statement, balance sheet, and statement of cash flow (Kimmel, Weygandt, & Kieso, 2010). These statements provide a summary of all the financial activity for a company during a particular period for use by both internal and external users. Purpose of Financial Statements The first of the four statements is the income statement. The income statement summarizes a company’s revenue and expenses for an identified period of time, showing the over-all success or failure during the period. The income statement details the sources of revenue such as revenue from sales, investments, and services provided as well as the amounts received. The statement also shows the expenses for the company. Expenses include salaries, benefits, and supplies. The income statement...
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...A. Davis, Jr. ACC/542 October 21, 2013 Irene Branum Preface In the last few weeks the accounting firm, Team D has looked into characteristics of Kudler Fine Foods and provided recommendations to update and replace existing components of the IT system. These recommendations made can yield in the company’s increased productivity, profitability, and remove potential threats. Team D determined that industry specific software is useful in comparison to customized software. Four main modules such as payroll, account payable, accounts receivable, and inventory were developed as well as enhancement of each flowchart based on the appropriate system. Team D examined the database completeness at Kudler’s intranet and developed a pivot table; therefore, making the decision-making process easy. External and internal risks were analyzed and internal control points were developed by incorporating both risks and controls into a flowchart. Team D also showed why findings and recommendations are more useful to the company in comparison to SAS70 and SAS94 audits. The team identified events that will lessen the dependence on auditing through computer and showed a brief description how the audit should be conducted. System Integrity and Validation Kudler Finer Foods has looked for recommendations regarding the company, to include computer information system, automated process of an accounting information system, data table analysis, internal control and risk evaluation, and auditing procedures...
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...I. Introduction The Royal Mint has a unique manufacturing operation in the United Kingdom and also designated as an executive agency responsible to the treasury to the “Her Majesty's” Government. Its objective is to provide the government with coinage at a competitive price and its manufacturing requirement ranges from high volumes of standard coinage to individual service medals or commemorative coins. In the case of the Royal Mint, they follow a unique cost ceiling that their cost base must always be less than the face value of the coins being produced. In order to follow that unique cost ceiling, the researchers follow the concept of simultaneous design by being involved in initiatives to improve materials being used in both coins and dies. Then due to high inflation rate, the face value of the coin is exceeding the cost base of the raw material and with the help of using the concept of simultaneous design, the Royal Mint quickly mitigated the risk by changing the composition of the 2 Pound and 1 Pound coins to a steal core with an electroplated copper outer layer and has significantly reduced the unit cost and it added expected lifetime by using a less expensive metal base. II. Background The Royal Mint has a cost ceiling that the cost base of the material must be less than the face value of the coin being produced. In order to follow that unique cost ceiling, the Royal Mint implemented the Concept of Simultaneous Design to research on how to further improve...
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...CHAPTER 17 PROCESS COSTING 17-1 Industries using process costing in their manufacturing area include chemical processing, oil refining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor chips, beverages, and breakfast cereals. 17-2 Process costing systems separate costs into cost categories according to the timing of when costs are introduced into the process. Often, only two cost classifications, direct materials and conversion costs, are necessary. Direct materials are frequently added at one point in time, often the start or the end of the process. All conversion costs are added at about the same time, but in a pattern different from direct materials costs. Conversion costs are often added throughout the process, which can of any length of time, lasting from seconds to several months. 17-3 Equivalent units is a derived amount of output units that takes the quantity of each input (factor of production) in units completed or in incomplete units in work in process, and converts the quantity of input into the amount of completed output units that could be made with that quantity of input. Each equivalent unit is comprised of the physical quantities of direct materials or conversion costs inputs necessary to produce output of one fully completed unit. Equivalent unit measures are necessary since all physical units are not completed to the same extent at the same time. 17-4 The accuracy of the estimates of completion depends on the care and skill of the estimator...
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...Memo of law Question/Issue Presented What evidence can be found during a legal discovery and how does this affect the record-keeping policy of a business organization? Applicable Law and Ethical Standards Newby v. Enron Corp. , 2002 U.S. Dist. LEXIS 28397 (S.D. Tex. May 1, 2002) Newby v. Enron Corp. (In re Enron Cor... , 2003 U.S. Dist. LEXIS 1668, Fed. Sec. L. Rep. (CCH) P92404 (S.D. Tex. Jan. 28, 2003) United States v. Arthur Andersen LLP , 2002 U.S. Dist. LEXIS 26870 (S.D. Tex. May 24, 2002) 18 USCS § 1512 Discussion/Analysis (of Law and Facts) During a legal discovery which includes the procedures of Deposition, Interrogatories and Production of Documents there can be different evidence found depending on the area of work the business organization is involved in. An example could be that a company tried to create false documents with the intent to seem like a good investment or to avoid paying taxes. During a deposition evidence can be found that people questioned tell conflicting stories. It is crucial to be able to deliver the right documents requested during a discovery. Therefore, it is important to have an organized record-keeping policy for any organization. Furthermore, a business should keep its records as correct as possible and not be tempted to give in to fraud, changing documents or destroying important documents. A company should follow the law to keep the required documents. It would be a crime to hide, destroy and/or withhold subpoenaed...
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...TOOLBOX: 1) Inventory Management - Inventory Turnover Ratio = Costs of Goods Sold/ Inventory If inventory turns over 6 times, how many days does it stay on the shelves or in the warehouse? These are annual figures: 365/7 = 60 days on the shelves. Need a better specific Mission Statement. 2) Costs that do no change with volume of output are called -Fixed Costs Costs that change when volume changes are called -Variable Costs 3) Fishbone Analysis 4) Low Urg/Low Impt – Low Urg/High Imp High Urg/Low Impt – High Urg/High Imp 5) Present Value and Future Value PV x C^n = FV When comparing investments....pick the one that has a larger present value. 6) PORTER 5 Porter 5 does not cover the opportunities part of the SWOT ad Market Growth Potential. 7) HILO METHOD: Finds Slope (FC, VC) [(Total Cost From Later Year - Total Cost from Year Before Later)] / [(Units from Later Year /-Units from Year Before Later)] = VC FC = Total Cost – (VC)(UNITS) 2012 Units: 800 Total costs: 7000 2011 Units: 500 Total costs : 6100 [7000/6100] / [800/500] = $3/unit ( VC 3(800) 2400 ... 7000-2400 FC= 4600 8) BREAKEVEN POINT BE = [FC/[P-VC] BE ( Given a total profit ) = [FC+TP]/[P-VC] QUESTION: How many units must you sell to earn $100 000 in profit 4600+ 100 000/ [5-3] = 104600/2 = 52 300 9) FINANCIAL STATEMENT BALANCE SHEET - ASSETS = LIABILITIES + EQUITY INCOME STATEMENT- NET INCOME = REVENUE MINUS EXPENSES CASH FLOW STATEMENT ...
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...ACCT310 - 1304B – 07 Andre’s Hair Styling American Intercontinental University Online December 1, 2013 ABSTRACT The following information is going to contain information from Andre’s hair styling. The information is going to detail the contribution margin, the annual break-even point, as well as the operating income. Fixed costs consist of the barbers so to figure that out we must take their nine dollars and ninety cents an hour that they are paid and multiply that by the barbers forty hour work week and then multiply that by the fifty weeks that they work a year and then again multiply by the five different barbers that are working at Andre’s Hair Styling; we then get ninety-nine thousand dollars as the outcome. ($9.90*40 hours a week*50 weeks a year* 5 barbers) = $99,000 which added together is one hundred and twenty thousand dollars. Other expenses for Andre’s Hair Styling consists of the remaining fixed costs per month which is one thousand seven hundred and fifty and then multiply that by twelve months and we get twenty-one thousand dollars a year for other fixed expenses. ($1,750 fixed expenses * 12 months in a year) = $ 21,000 Now that we have done all of that calculations to begin answering the questions at hand we will go from 1-4. 1. The first task is to find the contribution margin per hair cut at the same time assuming that the barber’s compensation is a fixed cost. So we take the following in mind. Andre’s hair styling is charging twelve dollars...
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...Assignment: Cost, Volume, and Profit Formulas ACC220 February 19, 2012 Assignment: Cost, Volume, and Profit Formulas In a business, it is profit that ultimately determines whether a business succeeds or fails a financial year. To aid in forming decisions, managers depend on information presented in Cost-Volume-Profit (CVP) analysis. In a CVP analysis, information is built on the interrelation of five general components. By understanding these components and how they relate to one-another, managers and accountants can also determine the contribution margin ratio. With these factors in hand, managers can predict the contribution ratios necessary to balance expenses and maximize profits. For managers to make successful decisions in business, they need to understand the components, the factors, and how they relate to one-another. Creating a CVP analysis requires knowledge of five general components: The volume of a business’ activities, the selling prices of individual units, the variable and fixed costs of producing each unit, and the net total of multiple types of units sold. The volume of business’ activities generally refers to the total units of any specific merchandise sold, which is multiplied with selling prices. Following the income of sales, the variable costs (costs to produce each unit) is subtracted to determine the contribution margin. Finally, the fixed costs (supporting budget) are subtracted from the contributions margin to determine the net income in a CVP...
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...Running Head: PUBLIX CMT Contemporary Management Technique for Publix Target Costing Rationale Publix Super Markets, Inc. is a primarily Florida established grocery store chain which employees over 120,000. Currently, Publix serves over one million customers each day and is also one of the largest employee-owned businesses in the world. Moreover, the company is one of Florida’s leading supermarkets and has tailored to most cultural trends in the grocery industry-organic foods; health foods, natural foods, prepared meals, ethnic ingredients, etc. Publix grocery has benefited from great success in the industry and has expanded out of primary market, Florida. However, with the arrival of globalization impacting margins in almost every industry, the food retailing/supermarket industry has now joined the trend. International and domestic food retailers around the globe have started to internationalize at a brisk rate and open operations around the globe (Mujtaba & Franklin, 2007). The right product pricing is one of the most important matters concerning the growth of companies’ financial performance. Prices should be low enough to draw in customers; however, simultaneously high enough to cover all costs and anticipated profits. Research in the supermarket industry indicates that nine percent of customers leave and shop elsewhere because they think prices are too high. The supermarket business is becoming more and more concentrated as large regional chains such as...
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...Kudler Accounting System Derek Gleaves UNIVERSITY OF PHOENIX BSA/310 Frank Skowron December 18, 2011 Kudler Accounting System Kudler wants to incorporate an SQL database that contains the fields found in the company's Chart of Accounts. Add a balance field and create a query that will display all of the fields of the database and run a report totaling the balance field using test data added to the database. Kudler's Chart of Accounts is currently a Microsoft Excel spreadsheet and they want the Chart of Accounts upgraded to the SQL database. The new database will be used to facilitate decision making at the store and department levels. The processes of Kudler Fine Foods include inventory, payroll, accounts payable and accounts receivable. Using a new accounting information systems, will improve these processes from the old system. Key features Intergrading the new accounting system at Kudler Fine Foods has made the company gain new key features along with adding the old key features, such as; It allows the company to keep track of customer purchases. Each time a customer creates a purchase it will register to the new accounting system main computer, and shows what items were purchased along with the price paid. This new system shows the accounts receivables, this show the money being received, and the money going out. The current system at Kudler could be improved through the automation. The objective of accounts payable processing is to pay vendors at the...
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...Final Paper: Case Study of WorldCom Financial Statement Fraud Introduction This paper will discuss the financial statement fraud committed by WorldCom by examining what led up to the fraud, who committed it and why, and the impact it caused on various stakeholders and the economy. WorldCom applied aggressive and undisclosed accounting tactics to provide financial statements that reflected a $10 billion profit for the years 2000 and 2001, rather than the actual combined loss of $73.7 billion that occurred (Romar, 2006). Opportunity, pressure, and rationalization were all present in this severe example of financial statement fraud which had a devastating impact on stakeholders globally. Basis for Understanding Financial Statement Fraud Prior to taking a deep dive into this specific example, it is important to first understand what constitutes financial statement fraud. Financial statement fraud can be defined as “deliberate misstatements or omissions of amounts or disclosures of financial statements to deceive financial statement users, particularly investors and creditors” (Wells, 2011, p. 299). Financial statement frauds can be broken down into five distinct categories: fictitious revenues, improper asset valuations, concealed liabilities and expenses, timing differences, and improper disclosures” (Wells, 2011, p. 292). The History of WorldCom “WorldCom began in Mississippi as a small provider of long distance telephone services” (Lyke, 2002). However, due to deregulation...
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