...GULU UNIVERSITY FACULTY OF BUSINESS AND DEVELOPMENT STUDIES DEPARTMENT OF FINANCE AND ACCOUNTING BACHELOR OF BUSINESS ADMINISTRATION (BBA) COST AND MANAGEMENT ACCOUNTING (BBA 314) COURSE WORK SEMESTER ONE: 2012/2013 Henry Egyeyu 07/U/456/BAK/PS Tel: +256774366667/+256714366667 Question: Accounting theory and practices have identified financial management, financial accounting and management accounting as distinct entities and granted them independent status. Unfortunately, cost accounting which also appears to many users of accounting data and information as fit to be an independent stream of knowledge, has been denied this opportunity. In many circles, this is considered a very unfair treatment and must be corrected if the accounting discipline has to meaningfully grow. As an upcoming professional in the field, develop a logical position on the cost accounting issue relating it to a practical scenario (case study) in Uganda. Your argument should be presented inform of a report addressed to: Director, cost concern international (Uganda chapter) P.o. Box 17 Kampala Important Response Information: i. The report must be 6-7 (six to seven) pages, well-edited. ii. Strictly use Times New Roman fontage, Font size 12, and 1.5 spacing iii. You must sign the report and provide your phone contact. iv. The report must be submitted within exactly 30 (thirty) days from the date of receipt. Henry & Egyeyu Consultancy P.o box 26031, Gulu 1st October, 2012 ...
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...Introduction and background Cost accounting is the process of accumulating, measuring, analyzing, interpreting and reporting of the information related to the cost. This type of process is useful and relevant for all internal and external stakeholders of the business entity. In the management accounting, the term cost accounting includes the works of establishing budget and actual cost of operations, processes, departments, analysis of the variances and profitability or social use of the funds. In the external stakeholders we include all those who have invested money in the company, such as banks, financial houses, investors and others. Internal stakeholders are those people who work within the premise of the company, such as business or company directors, division heads and managers. Cost accounting has long been used to help managers understand the costs of running a business. Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions. In the early industrial age, most of the costs incurred by a business were what modern accountants call "variable costs" because they varied directly with the amount of production. Money was spent on labor, raw materials, power to run a factory, etc. in direct proportion to production. Managers could simply total the variable costs for a product and use this...
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...is regarded as one of the most important topic in accounting. However, it is most difficult issues that standard setters and accountants must deal with regularly because the accounting standards and rules are changing all the time for improving the quality of accounting, which also explains why there are so many changes over these two decades on Australian Accounting policy. This report will focus on some accounting policies regarding to recognition of revenue from the contracts with customers, its history before the adoption of international financial reporting standards (IFRS). Also, current standards and the convergence between IFRS and US GAAP in future will be discussed. There are some drawbacks and ambiguity on the earlier accounting standard to recognize revenue, therefore it is understood that the international accounting standard board (IASB) and Financial Accounting Standard Board (FASB) are currently working on the policy relating to the recognizing revenue from the contracts with customers. They have decided that the ultimate goal of the convergence is a single set of high-quality, international accounting standards that both domestic and international companies can use. Once the convergence is bringing U.S. GAAP and IFRS closer together in a few years, Australian entities may be influenced by the new proposals. It would be a challenging task for companies because it is difference from the two current accounting standards for recognizing revenue. There will be five...
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...Common Error Sheet • IFRS/ASPE are the new accounting standard and must be used when discussing all accounting issues. Although the case mentioned GAAP, you learned in class that IFRS was to be used. Going forward, discuss the case using IFRS/ASPE, even if the case says GAAP. • A lot of students missed mentioning that an unqualified audit opinion was needed; this was a constraint in the case. • The required in this case was to “provide advice about terms that should be included in the sale agreement to minimize the risks to Mr. Jones of being affected by accounting choices made by the new owner of the company”. Therefore, you are to write the case from the perspective that the new owner would make accounting choices that would not be fair to Mr. Jones, and to conclude on what is FAIR. • When discussing users and objective, make sure that you conclude on the primary user and objective. Also, make sure you are discussing users based on what is asked of you in the case. This case asked for advice on terms to be included in the sale agreement to minimize the risks to Mr. Jones; therefore, Mr. Jones is the primary user. Since Angela requested this case, she is also the main user. The buyer, CRA, auditor, etc. are not relevant users for this advice. • When discussing the new equipment purchase, a lot of students did not discuss the amortization policy that is to be used. This is an important issue within capital assets and it is especially important...
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...Accounting Issue: Financial Reporting * Comprehensive Income * Issued to address the presentation of certain items that bypass the income statement and were recorded directly to equity * Focused on net income would not take into account comprehensive income items in measuring financial performance * Bypassed the incomes statement: recorded directly to stockholder’s equity * Foreign currency matters * Derivatives and hedging * Compensation –Retirement benefits. * Prior to ASC 220 entities were required to present only the accumulated balances in the statement of stockholder’s equity. To date, ASC 220 has required that comprehensive income be presented in financial statements. * ASC 220 must be reported one of three ways * Present separate statement of comprehensive income. * Combine statement of income & comprehensive income * Present comprehensive income as a section within the statement of stockholder’s equity. * GAAP vs IFRS * GAAP * Does not require a consecutive presentation of statement of income and comprehensive income. * Presents three alternatives of presenting comprehensive income * Separate statement * Combined statement with income statement * As part of the statement of changes in stockholders equity * IFRS * Presents two alternatives of presenting comprehensive income ...
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...gain the competitive advantage over competitors, leading to their acquisition (Hughes 16). With the increase of business acquisitions, there was a need to reexamine old accounting principles in order for the transactions to be properly recorded; this accounting is known as goodwill accounting. The concept of goodwill accounting has surprisingly been present for over a hundred years, first appearing around the 1880’s (1). Since its creation however, goodwill accounting has been a source of debate and controversy due to its adverse effects on the net income of numerous firms. Goodwill accounting has undergone recent revision by the FASB, specifically in the area of goodwill impairment. The purpose of this paper is to examine the history of goodwill accounting, the initial amortization method and revised current method of testing for impairment, and the needed, yet sometimes detrimental effects this accounting has had on several high-tech industrial firms. Without proper accounting for goodwill impairment, several firms would have the ability to overstate their net earnings and destroy the reliability of the financial statements in the eyes of investors. To understand the history and need for goodwill accounting and impairment, one must start with a definition of the concept. According to the Intermediate Accounting text by Stice, “goodwill is best thought of as a residual amount, the amount of the purchase prices of a business that is left over after all other tangible and...
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...Jenna McMorrow Accounting 249 Linda Amman Ethical Paper 4/09/2015 Fraud An Oak Brook Chicago attorney, Kathleen Niew age 59, was once known as a successful real estate attorney and a popular radio host. Now known as crooked and corrupt behind the scenes. She used her law license to lie and steal from clients. Kathleen Niew used to host call-in radio shows on WIND-AM 560, and she offered estate and financial planning advice. Mrs. Niew also wrote multiple books about financial advice and lead countless seminars regarding how people can improve their finances. Kathleen Niew was offering advice to society, however behind the scenes she was bilking more than $2.3 million dollars from a Chicago couple who entrusted Kathleen with their life savings. Instead of investing and getting real estate deals for the married couple like they had asked, Kathleen diverted the money into her own investors. Unfortunately these clients of Kathleen’s are not alone, she has robbed multiple clients that came to her for help regarding their finances. She wired millions of dollars to a gold mining company in Australia, hoping to get a commission for herself in the deal. Kathleen had used the couple’s money for her own desires instead of theirs. Mrs. Niew pleaded guilty to 10 counts of wire fraud in 2014. Which resulted in her getting 70 months in prison, has been ordered to pay restitution of $2.34 million to all the victims of her fraud, and has to forfeit assets related to the crimes. She committed...
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...DEFENCE OF HISTORICAL COST ACCOUNTING i. Historical cost is relevant in making economic decisions. * Ijiri present 3 reasons historical cost is relevant for making decision * It effect the evaluation n selection of decision rules. It used the past info to measures the quality of their past decisions. * Provides input for satisficing notion where some managers make decisions that will support expected or satisfactory outcome. They are consider how much has already earned rather than how much mote they can earn. * It is used bcoz it imposed on decision makers by their environment. Eg: taxation decision n cost plus contract. ii. Historical cost is based on actual, not merely possible transaction. * Record done based on actual transactions made. * Ijiri- it possible to prepared a balance she on the basis of year-end market price without references to actual transactions. * Historical cost provides evidences for determining how efficiency management has meet their responsibilities. iii. Through history, FS based on historical cost have been found to be useful. * Mautz – “if whose who make management n investment decision had found financial reports based on historical cost useful over the years, changes in acctg would long since have been mad” iv. The best understood concept of profit is the access of selling price over historical cost. * People understand the basic notion of actual cost compared to...
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...The financial statements of a global manufacturing firm differ from those in the service or merchandising industry primarily with transactions related to material, labor, and overhead. A manufacturing company has three basic inventory accounts: raw materials, work in process, and finished goods. (Goosen, pp. 31-46) Because the cost of goods manufactured is critical, a manufacturing company typically has a statement called cost of goods manufactured. The accounting for overhead in a manufacturing firm involves many complexities as does measuring and assigning values to the various components. In addition, a global manufacturer needs to adhere to the local reporting rules and regulations. Maintaining consistency across all manufacturing locations is one of the largest issues facing global manufacturers. International Financial Reporting Standards (IFRS) With the trends of globalization, there is a growing acceptance of IFRS. The IFRS aims to harmonize financial reporting across borders. (The Economist, 2007) Over 110 countries already require or permit IFRS reporting. The underlying assumptions of the IFRS standards and framework are that assets should be valued at the price which it could be currently sold, rather than on a valuation technique. The effect of transactions and other events is recognized when they occur, not as cash is received or paid. Finally, the financial statements are prepared on the basis that an entity will continue in operation for the...
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...accounting issue memorandUM to: Audit files FROM: [YOUR NAME], MEMBER OF AUDIT TEAM FOR PARKER & PROCK APPROVED BY: FRANK REEDY, ENGAGEMENT MANAGER ON AUDIT FOR PARKER & PROCK SUBJECT: TREATMENT OF MANUFACTURING OVERHEAD COSTS AT PARKER & PROCK FOR YEAR ENDING DECEMBER 31, 2013 DATE: JANUARY 16, 2014 CC: CLAIRE ALLYSON, CONTROLLER, PARKER & PROCK In performing the audit planning for the audit of Parker & Prock (P&P) for the year ending December 31, 2013, we discovered that P&P has an accounting policy that results in only direct manufacturing labor and direct material costs being included in the cost of manufactured inventory. Furthermore, this accounting policy results in all other costs, including those properly categorized as “manufacturing overhead,” being accounted for as period costs that are being expensed as incurred. This accounting policy has the effect of understating inventory balances at period end and as well as understating the cost of goods sold and overstating operating expenses for the period. P&P is a private company. Prior to undertaking tests of inventory balances, we determined that a review of P&P’s inventory accounting policy was warranted. The subject of this review is to research whether P&P’s treatment of manufacturing overhead is in accordance with generally accepted accounting principles (GAAP). In performing our research we used the FASB Accounting Standards Codification (the Codification). Within the Codification we identified...
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...With the spate of recent corporate failures there have been increased criticisms and calls for regulatory reform of existing accounting and auditing practices. The issue of regulation within the accounting profession has been highly contentious and led to many debates. Those in favour of a free-market stress that market forces will optimise the allocation of resources and as such regulation is not necessary. Whilst those opposing this view believe that markets are imperfect and as such outside intervention in the form of regulation is required. Both sides hold valid arguments as to why regulation is or is not necessary and this paper shall examine these opposing views before providing an informed opinion. The anti-regulation or free-market approach to accounting is one that has been subscribed to for many years. The main thrust of the American Institute of Accountants in 1934 was anti-regulation, they stressed that, “no attempt [should be made] to restrict the rights of corporations to select detailed methods of accounting deemed by them to be best adapted to the requirements of their business” (May 1934, 80). The argument behind this notion is that the natural market forces or the “invisible hand” of the market will ensure self-regulation. Ross (1979, 379) implies this when he writes, “…disclosure regulations are generally neither required nor desirable, since left on their own, firms will have incentives to report accurately”. The belief that firms have internal incentives...
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...Ethical Issues in Business and Accounting Barbi Hammond October 31, 2010 Ethical Issues in Business and Accounting The business and accounting worlds are full of ethical dilemmas and scandals. The works of great philosophers of the past can be directly applied to current situations in today’s business and accounting ethical situations. David Hume is one of the philosophers whose works could be applied to the business world today. David Hume was a Scottish philosopher. Hume introduced the moral philosophy known as metaethics. Metaethics refers to the study of moral language and its meaning. (Gaffikin, 2007.) Metaethics focuses on the following questions: * semantic questions such as the meaning of moral terms such as good, right and ought; * logical questions such as the (syllogistic) validity of moral arguments; * ontological questions such as the existence of moral facts; and * epistemological questions such as the possibility of moral knowledge and, if so, the scope of such knowledge Hume felt that although moral beliefs hold meaning they are not logical thought. According to Hume morals are psychological thoughts and can’t be taught. Hume’s theory regarding morals can be tied to the business world in many ways. The most prominent of these would be an organizations decision to hire someone with a history of less than reputable behavior in hope that the person has learned the error of their ways. According to Hume, this person cannot be reformed...
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...Issues in Accounting Ethics ETH 557: Accounting Ethics September 14, 2015 Ethical Issues for Companies As an accountant and being in the public or the private sector you have to remain loyal to your clients and to be loyal to the ethical guidelines and rules when it comes to a company or and individual person financial records for the purpose of reporting. Being an accountant you will run across some unethical issues and this would be regardless of the type of industry and their goal would be to reduce any and all factors that they would face when it comes to manipulating financial records and this could lead to an ethical issue or criminal violations. The Sears Auto Center Scandal As stated in the textbook (Duska, 2011) “Those who appeal to consequences over fairness and rights are called consequentialist. Finally, the theory that gives precedence to the issues of fairness, rights, and commitment, and advocates doing the right thing – no matter what the consequences to self and others – is called deontological theory. Under this theory, the end does not justify means.” (Duska, 2011; pg. 52 & 62) Identify the ethical issues involved in the case from a consequentialist and deontological perspective (refer to Chapter 2). Ethics will always be a key factor when it comes to deciding what society would deem as being acceptable in order to live out one’s life. This factor would develop as a person and would include the morale as a whole when...
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...Sears The Sears case is one of many multimillion companies who were trying to survive back in the 80’s while facing the new era of many distribution companies like Wal-Mart. They designed a commission program for the auto division in an effort to gain market share that included the mechanics and the service advisors. The goal was to sell an amount of front-end alignments or brake repairs during their shifts. Many customers were fixing their cars after this commission implementation because of Sears’ employees’ recommendations however the repairs weren’t necessary. Consumer affairs conducted an investigation finding unnecessary repairs due to consequences of Sears’ compensation system. The president took certain responsibility, but he denied any fraud; they eliminated the advisor commission and designed a system based on customer satisfaction however the mechanics’ compensation remains the same. Congress received a letter from a Sears’ employee stating that the majority of the inspecting employees were still being paid with the same commission structure. However, the mechanics were receiving another incentive for every hour of work completed; the more work performed, the more money earned. However, the mechanics could be cutting corners to get more work done or they could recommend unnecessary repairs. The main factor contributing to the unethical conduct was the advising of costumers on unneeded repairs for the sole purpose of commissions; attached to a compensation program...
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...Emission allowances and the related accounting issues Laura Chilian April 5, 2012 For many years, the Securities and Exchange Commission (SEC), and the International Financial Reporting Standards (IFRS), tried to establish a proper accounting treatment for emission allowances. The mechanism for these credits is based on a simple ‘cap and trade’ idea. The government issues a number of credits to each company based on the amount of greenhouse gases emitted. Issuing a lower number of credits than needed creates scarcity, which makes trade possible. Companies that emit more gases than they were allowed will pay a fine or buy more credits. Situations are reversed if companies use less credits than they should have. This creates a market-based system on an international level (“Emission Trading Schemes” 2). The first accounting conflict arises from the nature of these allowances. They could be considered assets held for use, grants from the government for the value of the allowances, or a liability/promise to deliver allowances equal to the emissions that have been made. Considering this, emission allowances can not be categorized as either net assets or net liabilities. Due to the lack of authority, accounting practitioners create diversity (“Emission Trading Schemes” 5). Two models or treatments are developed to account for these rights. 1) The inventory model: when...
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