...Learning Team Discussion Learning Team A: Teri Francis, Jamie Geciauskas, Edwin Hung, Anh Tran, Sean Williams ACC 290 May 14, 2012 Professor Nicole Church Learning Team Discussion During week three, Learning Team A discussed different concepts regarding accounting. Some of these key concepts included; the differences between accrual basis and cash basis accounting, adjusting entries, and the adjusted trial balance. Accrual Accounting In accrual accounting, companies post income when it is earned and expenses are posted when they occur. Accrual accounting is based on the revenue recognition principle and the expense recognition principle. The revenue recognition principle means that revenue is claimed when the service is completed, even if the customer has not paid yet. "Let the expenses follow the revenue" (Kimmel, Weygandt, & Kieso, 2010, p. 163). Expenses necessary to earn revenue must be posted in the same accounting period when the revenue is posted; this is expense recognition. Cash Basis Accounting In cash basis accounting, revenue and expenses are claimed when the company receives cash. This particular basis of accounting can be inconsistent and when it comes to formal entity financial reporting. Cash basis accounting violates the generally accepted accounting principles (GAAP) because it does not meet the revenue recognition and expense recognition principles. Adjusting Entries Adjusting entries are important because they follow the revenue recognition...
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...Michael Simonds HSM/260 Accrual Method The Accrual Method is a major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out. This contrasts to the other major accounting method, accrual accounting, which requires income to be recognized in a company's books at the time the revenue is earned (but not necessarily received) and records expenses when liabilities are incurred (but not necessarily paid for). When transactions are recorded on a cash basis, they affect a company's books only once a completed exchange of value has occurred; therefore, cash basis accounting is less accurate than accrual accounting in the short term. Smaller companies that haven't formally incorporated and most sole proprietors use cash-basis accounting because the system is easier for them to use on their own, meaning they don't have to hire a large accounting staff. If a company uses accrual accounting, it records revenue when the actual transaction is completed (such as the completion of work specified in a contract agreement between the company and its customer), not when it receives the cash. That is, the company records revenue when it earns it, even if the customer hasn't paid yet. Expenses are handled in the same way. The company records any expenses when they're incurred, even if it hasn't paid for the supplies yet. By using accrual accounting, the records of the business are kept more consistently. Every period shows exactly...
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...Accrual Method Accrual Method There are many differences between Accrual Based Accounting and Cash Based Accounting. Accrual accounting shows the flow of business income and debts. It will show the cash reserves and will show good or bad cash flows. For example the income ledger with thousands of dollars, however the account is actually empty due to the customers have not paid the bill yet. The cash accounting is a more accurate picture of the actual cash in your business. It may offer information as a longer-term profit. When using a cash method the ledgers will show one month of different profits, however the actual sales have slowed down. A lot of credits customers have paid in monthly bills. In the accrual accounting revenue is not cash. In many times when using the accrual accounting method, you may end up seeing more revenue than actual cash in the ledger. This is because for example customers place orders, but have not paid the bills yet, meaning you are seeing the future revenue, but no cash in the account yet. The importance of a cash flow statement is very important because it tells you weather the organization is actually making any profits. At the end of the month a monthly statement is created to tell the organization what money is actually coming in and how much is actually going out. This will give you accurate account information if you are below the line or above the line. Reference Study Academy. (2015). Retrieved from...
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...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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...Brandywine Homecare Renne Brown Dr. Merle Point-Johnson HSA525 Healthcare Financial Management January 22, 2012 Brandywine 1 1. Construct Brandywine’s 2007 income statement The income statement summarizes the operations (i.e.the activities) of an organization with a focus on its revenues, expenses, and profitability (Gapenski, pg. 74,2008). The income statement of Brandywine Homecare is presented in Table1: Brandywine Homecare Income Statement 2 Revenues: $12million Expenses: $ 9 million Depreciation $1.5million Total Expenses ...
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...ACO01– FINANCIAL ACCOUNTING 2 FINAL EXAM ANSWER SHEET 2014 ------------------------------------------------- Name : Student ID : ------------------------------------------------- Test code : Time : 90 minutes TOTAL MARKS: | 1st Invigilator | 1st Examiner | 2nd Examiner | 2nd Invigilator | Part A. Multiple choice questions (40 marks) Please fill in the appropriate circles corresponding to your answers. 1. 2. Ⓐ Ⓑ Ⓒ 3. Ⓐ Ⓑ Ⓒ 4. Ⓐ Ⓑ Ⓒ 5. Ⓐ Ⓑ Ⓒ 6. Ⓐ Ⓑ Ⓒ 7. Ⓐ Ⓑ Ⓒ 8. Ⓐ Ⓑ Ⓒ 9. Ⓐ Ⓑ Ⓒ 10. Ⓐ Ⓑ Ⓒ 11. Ⓐ Ⓑ Ⓒ 12. Ⓐ Ⓑ Ⓒ 13. Ⓐ Ⓑ Ⓒ 14. Ⓐ Ⓑ Ⓒ 15. Ⓐ Ⓑ Ⓒ 16. Ⓐ Ⓑ Ⓒ 17. Ⓐ Ⓑ Ⓒ 18. Ⓐ Ⓑ Ⓒ 19. Ⓐ Ⓑ Ⓒ 20. Ⓐ Ⓑ Ⓒ 21. Ⓐ Ⓑ Ⓒ Part B. Exercises (60 marks) Transaction | Account Titles | Debit | Credit | 1. | Purchased lot | 225,000 | | | Old building | 120,000 | | | Cash | | 345,000 | | Tear down old building | 34,500 | | | Fill and level the lot | 51,000 | | | Construction cost | 1,140,000 | | | Cash | | 1,525,000 | | | | | 2. Ming Yue Co | Land | 154,665 | | | Land improvements | 55,440 | | | Building | 162,030 | | | Closing costs | 19,600 | | | Cash | | 387,850 | | | | | 3. Fineses Co | Depreciation (1 year) = 13,250 | | | | Depreciation expense | 59,625 | | | Accummulated depreciation | | 59,625 | | | | | 4. | Cash | 35,000 | | | Accummulated depreciation | 59,625 | | ...
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... * Inputs * The planning model * Outputs * Key Ratios: * Profit Margin: NI/ Sales * ROE: NI / Common equity * DSO: AR/ (Annual Sales / 365) * Avg. time it takes to collect rev after sale has been made * Inventory Turnover: Sales/ Inventory * Fixed Asset Turnover: Sales/ NFA (Net Fixed Assets= Fixed assets- acc. Depre.) * Debt/ Assetss: TD (Total Debt) / TA (Total Assets) * TIE: EBIT/ Interest Expense * Current Ratio: CA (Current Assets) / CL (Current Liabilities) * NOPAT (Net operating profit after tax) : EBIT (1 – T) *T= Tax rate * NOWC (Net Operating working Capital): CA (current assets = cash + accts rec. + Inventories) – A/P & Accurals (Accounts payable + Accrued expenses) * Excess of current assets over operating current liabilities. * Total Net Operating Capital:...
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...|30 June |2011 (m) |2012 (m) |2013 (m) | |Sale |14894 |15724 |15902 | |Operating Income |1893 |1649 |1822 | |Operating | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Simple comparison Currency in millions of Australian dollars the total revenue in 2013 is $15,902.00 compared with $15724.00 in 2012, followed by $14613.00 in 2011. Qantas seen a relatively flat in the revenue. Gross profit in 2013 is $4315.0 with $4181.0 in 2012, followed by $3939.0 in 2011. Net income in the...
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...ACO01– FINANCIAL ACCOUNTING 2 FINAL EXAM ANSWER SHEET 2014 ------------------------------------------------- Name : Student ID : ------------------------------------------------- Test code : Time : 90 minutes TOTAL MARKS: | 1st Invigilator | 1st Examiner | 2nd Examiner | 2nd Invigilator | Part A. Multiple choice questions (40 marks) Please fill in the appropriate circles corresponding to your answers. 1. 2. Ⓐ Ⓑ Ⓒ 3. Ⓐ Ⓑ Ⓒ 4. Ⓐ Ⓑ Ⓒ 5. Ⓐ Ⓑ Ⓒ 6. Ⓐ Ⓑ Ⓒ 7. Ⓐ Ⓑ Ⓒ 8. Ⓐ Ⓑ Ⓒ 9. Ⓐ Ⓑ Ⓒ 10. Ⓐ Ⓑ Ⓒ 11. Ⓐ Ⓑ Ⓒ 12. Ⓐ Ⓑ Ⓒ 13. Ⓐ Ⓑ Ⓒ 14. Ⓐ Ⓑ Ⓒ 15. Ⓐ Ⓑ Ⓒ 16. Ⓐ Ⓑ Ⓒ 17. Ⓐ Ⓑ Ⓒ 18. Ⓐ Ⓑ Ⓒ 19. Ⓐ Ⓑ Ⓒ 20. Ⓐ Ⓑ Ⓒ 21. Ⓐ Ⓑ Ⓒ Part B. Exercises (60 marks) Transaction | Account Titles | Debit | Credit | 1. | Purchased lot | 225,000 | | | Old building | 120,000 | | | Cash | | 345,000 | | Tear down old building | 34,500 | | | Fill and level the lot | 51,000 | | | Construction cost | 1,140,000 | | | Cash | | 1,525,000 | | | | | 2. Ming Yue Co | Land | 154,665 | | | Land improvements | 55,440 | | | Building | 162,030 | | | Closing costs | 19,600 | | | Cash | | 387,850 | | | | | 3. Fineses Co | Depreciation (1 year) = 13,250 | | | | Depreciation expense | 59,625 | | | Accummulated depreciation | | 59,625 | | | | | 4. | Cash | 35,000 | | | Accummulated depreciation | 59,625 | | ...
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...Accounting period: the annual reporting period (or fiscal year) Accounting priciples: are fundamentals theories, truths and propositions that serve as the foundation for financial accounting and reporting Accounting standards: establish the authoritative guidance on how companies should account for and report specific transactions events and arrangments in their financial statements Accrual accounting: measures the reports and economic effect of a companies transactions evente etc in the periods in which those effects occurred, even if the cash recipt and payment occured in a different period Accruals: when economic effects are recognized in the current period, even though the cash flows will occur in a later period they are reffered as accurals Business cycle: is the yearly period from the lowest sales through highest sales and back to lowest sales. Comparability: of accounting information helps identify and explain similarities and differences between two or more sets of economic facts Complete representation: provides users with full disclosure of all the information necessary to understand the information being reported, with all necessary facts, descriptions and explanations Conceptual framework: is a foundation of objectives, concepts, priniciples, and definition that leads to high quality financial accounting standards and the appropriate application in accounting practice. confirmatory value: if it provides feedback to confirm or correct prior prediction and expectations ...
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...assessment is based on the fact that the system is quite complex and it shifts to mass customization. The Army also focuses on cyclic time in how they pay all employees. Meaning bi-monthly or once a month and also has generic job descriptions. This is the closest structure I could relate the Army and the complex structure in which they compensate military personnel (Milkovich, 2014 p.43). Objectives: The objective of the military pay structure is to be equal to or meet the cost of living standards that are in line with the civilian compensation structures. There are no profit sharing or incentives for innovation within this structure. But the objective also is to reward through other compensation vehicles such as a 2.5 day leave accural each month and a benefits package unrivaled by many civilian corporations. That is where the objective of taking care of Soldiers and compensating them comes into play. Other objectives within the structure are a paid stipend for food and housing allowance in which your full rent is paid. The final objective is to ensure you are taken care of after you retire and you receive a percentage of your base pay for the rest of your life. Though the objectives are cyclic and timed based on years of service and certain other criteria this pay system truly looks out for its employees. Internal Alignment: The internal alignment of the Army pay structure is similar to a fortune 500 company. Executives meaning General officers are paid at...
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...Assignment #1 Brandywine Homecare Michelle Rose HAS 525 Health Financial Management October 23, 2011 Construct Brandywine’s Homecare 2007 Income Statement. Brandywine’s Homecare Income Statement Revenue $12,000,000 Operating Expenses: Salaries Expense $5,000,000 Supplies $ 120,000 Utilities $ 140,000 Insurance $ 750,000 Depreciation $ 1.7 million Total $ 4.3 million Net Income $ 7.7 million What were Brandywine’s 2007 net income, total profit margin, and cash flow? Net income is the residual income of a firm after adding total revenue and gains and subtracting all expenses and losses for the reporting period. Net income can be distributed among holders of common stock as a dividend or heal by the firm as an addition to retained earnings. As the profit and earnings used income, net earnings, and net profit for net income. However, net income called the bottom line because it’s typically found on last line of the company income statement. One of the most important concepts to understand is that net income is not a measure of how much cash a company earned during a given period. Revenues-expenses= net income $12,000,000 - $7.7 million = $4.3 million (net income) Total profit margin tells how profit a company makes for evaluation dollar generates in revenues. It is the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs. It is calculated by dividing...
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...| | | | | | | | | | | | |USMAN AKRAM |+92-42-5879870 | | |+92-0323-4810136 | | |667-Neelam Block, | | |Allama Iqbal Town, | | |Lahore | | |Email:Usman649@gmail...
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...Generally Accepted Accounting Principles Jack Carmine HSC/571 February 3,2014 Generally Accepted Accounting Principles The health care industry is a business but unlike most business; the primary goal of health care organizations is to provide medical care to patients. The secondary goal is to have the financial means to provide care by earning a profit. The financial statement of an organization measures how the business did in the past, present, and has the potential to predict the future status. All businesses need to keep track of revenue and cost, including a having a consistent method to share and present information to stakeholders and outside entities. Generally Accepted Accounting Principles (GAAP) is the standards, procedures, and rules organizations use to record and report financial information and ensures consistency in financial statements. The Financial Accounting Standards Board (FASB) establishes the standards and rules of GAAP (Finkler, Kovner, & Jones, 2007). A few of the most common GAAP are reviewed in this paper. Financial accounting yields four financial statements. “The statements are … balance sheet, statement of operations (or income statement of revenues and expenses, statements of cash flows,[and] statement of changes in new assets (or statements of changes in net assets)” (Cleverley, Song, & Cleverley, 2011,p.182) . GAAP is used to form the structure...
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...the DOJ and SEC, the CA accounting department did not follow the GAAP. However, Richard asserted that this way of accounting was not as costly and significant as the WorldCom or Enron corruption cases because these two companies went bankrupt. Richard is also very confident that once released from prison, he will be able to continue his accounting career. The process in which CA recorded its sales revealed numerous inaccurate accounting principles and concepts. According to the article, the accounting department recognized revenue while the contract was signed. It follows the accrual concept that revenue is recognized not only when cash transactions occur. Since the contracts were signed, the revenue could be received earlier or later. Accural accounting helps to provide a more accurate picture of current company conditions. However, CA’s accounting strategy was to recognize next quarter revenue in the current quarter, which increased the revenue in the current quarter. Despite knowing that next quarters revenue would decrease, CA accountants knew the current financial statement look good enough to cloud the minds of investors and shareholders’ about...
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