...Employee, who is the company’s primary assets, is the secret in the sauce and the glue that holds the corporation together (Back, 2010). However, despite the importance of the employees, the companies do not include them as an asset in the balance sheet where all the other assets are being recorded (Kaye, 2012; McGrath, 2010). Employees are considered as an intangible asset to the company (Back, 2010). There are some reasons why employee is not or should not be include in the balance sheet as an asset. Many intangibles such as employees are not owned by the company in the first place (Adams, 2010; Kaye, 2012). Adams (2010) also stated that, a company can only put assets for which it has a clear ownership right on its balance sheet where employees do not meet that test. Furthermore, since there is no financial transaction creating the intangibles, the dollar value of intangibles can be difficult to identify (Adams, 2010). In basic accounting, we can see that accounting entries are made when there is money involve such as when the firm buys something, money is deducted from bank and the expense get booked to an expense or investment (Adams, 2010). However in most cases, intangibles are created outside the monetary system. McGrath (2010) mentioned that, value is created when employees learn something, but other than the employee’s salary, there is no financial transaction. Moreover, valuing employees or human capital is a very difficult task (McGrath, 2010; Weatherly, 2003). Weatherly...
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...Assets that are not included in the Balance Sheet In general assets are resources owned by the business. Weetman, P. (2006) defined asset as ‘a resource controlled by the entity as result of past events and from which future economic benefits are expected to flow to the entity’. There are two main sorts of assets which are tangible and intangible assets. Tangible assets have physical presence and have monetary value, it can be found as fixed or current asset in the balance sheet. Whereas, intangible assets are the ones that have non-monetary value and have no physical presence. Businesses create intangible assets by their hard effort over time and less often it appears in the balance sheet. Examples of assets that are not included in the balance sheet may include loyal and creative work force, expertise of management team, loyal customers, brand image, human capital, and tax return. In this eassy I will particularly focus on loyal and creative workforce which is an asset that is not included in the balance sheet. Balance sheet consist of assets (fixed and current), liabilities (short and long term) and owners equity. According to money measurement convention financial statement are prepared by ‘measuring items in monetary value’. Businesses consider loyal and creative employee as an asset because it meet all the criteria to be an assets e.g. providing future economic benefit, can be controlled. A loyal and creative workforce eventually enables business to earn extra revenue...
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...Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. A balance sheet is a snapshot of a business financial condition at a specific moment in time, usually at the close of an accounting period. A balance sheet is comprised of assets, liabilities, and owners’ or stockholders’ equity. Assets and liabilities are divided into short- and long-term obligations including cash accounts such as checking, money market, or government securities. A balance sheet can be applied to everyday life through an interesting look called your lifetime balance sheet. Equity is computed by subtracting the value of your liabilities from the total of your personal assets. The summary is as follows: Assets Financial Assets – houses, automobiles, bank accounts, investments, retirement accounts, businesses owned, along with personal items of value, including clothing, furniture, art, antiques, and any items worth noting. Human Capital -- the ability to work and earn income. Liabilities Pre-Retirement Consumption Spending -- a mortgage, loan, education and credit card balances as of the date on the balance sheet. Retirement Spending -- what you'll need to live on. Given these list of assets and liability, the process over a lifetime goes as follows: You have little, if any, financial assets when you start working. You begin to work and earn an income. Much of this income...
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...for the Degree of B.com Honours in Accountancy and Finance under the University of Calcutta.) A Survey on Accounting & Reporting of Intangible Assets in some selected Indian companies Submitted by Name: MAITREYEE MUKHERJEE Registration no: 043-1221-0272-10 Roll no: Name of the college: Heramba Chandra College. Supervised by Name of the supervisor: JAYANTA GHOSH Name of the college: Heramba Chandra College. BACKGROUND: In 1494, a mathematically minded Veteran monk named Luca Pacioli published his “Summa de Arithmetica, Geometrica”, the first accounting textbook. It illustrated double-entry accounting, a system that makes the modern corporation manageable, even possible. Today, half a millennium later, Pacioli’s process, still pretty much intact, is being challenged like never before. Pacioli’s accounting system lets businesses keep track of changes in their assets. But this system deals primarily with tangible assets such as cash, inventory, investments, receivables, property, plant, and equipment. What go unrecorded are intangible assets such as quality of management, customer loyalty, information infrastructure, trade secrets, patents, goodwill, research, and, considered by some, the ultimate...
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...Current and Noncurrent Assets Paper Every business must have assets to generate income for the business. Businesses must account for all assets in their balance sheets regardless if what is being reported are assets or non-assets. Balance sheets are organized in a particular way so that financial statements fundamentals are arranged in subgroups. Some of the basic examples of assets consist of cash, accounts receivables, and prepaid expenses. Examples of non-current assets consist of fixed assets, intangible assets such as equipment and property, and long term notes receivables. This paper will analyze the meaning of assets and non-assets and compare and contrast the two terms. Current Assets Current assets are short-term assets that a company plans on using or converting within a fiscal year. These assets are defined as company property, which provide benefits to the company. Current assets can be sold, lent, or lease to produce income or help generate value for the business. On a balance sheet companies list the current assets on the top section as it is available to use for the company and they are listed in the order of liquidity. The assets that are listed are cash, short term investments, receivables, inventories, and prepaid expenses. Some company’s accounting and operating fiscal year are longer than one calendar to classify assets and liabilities (Kimmel, Weygandt, & Kieso, 2007). Non-Current Assets Non-current assets are investments made by the company that...
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...unless otherwise stated. Common-size balance sheet is attached. Cash, Cash Equivalents, and Restricted Cash Del Monte Foods exhibit a dramatic change in cash and cash equivalents going from 12% of total assets to 0.3% of total assets. In monetary terms, cash and equivalents fall from $459.9 to a mere $13. Del Monte Foods acquired two companies (Meow-Mix and Milk-Bone), choosing to invest using cash over other financing sources. Restricted cash (not available for immediate use) has also exhibited a similar trend as cash and equivalents. It goes from 1.2% of total assets to nonexistent. Inventories I would first classify Del Monte Foods as a manufacturing company. They produce food products (for humans and pets) but they do not sell direct to the consumer. Del Monte Foods is within the typical range of inventory as a percentage of total assets in 2006 (21.1% of total assets) but falls out of this range in 2007 (17.8% of total assets). This might be a cause for concern in that if their inventory gets too low, they might miss sale opportunities. Looking at the monetary value, however, we see that inventories have increased; just at a lower rate than total assets. Note that the $45.7 increase in inventories is due almost entirely to the costs allocated to Meow-Mix’s and Milk-Bones’ inventories ($43.9 total) during the acquisition by Del Monte Foods. Accounts Receivable Accounts receivable as a percentage of total assets decrease from 6.6% to 5.7%. The monetary...
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...WHAT IS GOODWILL? The main method used by businesses to classify assets is to split them into tangible assets, which have a separate existence from the business (examples of which would include buildings, land and machinery), and intangibles which do not. Some clear examples of intangibles include goodwill, patents, research and development expenditure and trademarks. Intangible assets are usually created within the organisation over a period of time, by the company itself, rather than acquired from an external source and are rarely sold off individually they can normally only be sold in conjunction with associated tangible assets. Robins, in his essay "FRS 10: Goodwill and Intangible Assets" identifies three sources of goodwill within a business. He states these as: 1. Expertise of the workforce: Current accounting practices do not allow for the inclusion of knowledge or business acumen to be included within the balance sheet. In this way there is no allowance for the expertise of the workforce or the value of human resources to be recorded as an asset on the balance sheet. 2. The reputation of the product(s) of the business: Often, if the product has a household name attached, which generate positive connotations then sales and profits will be "boosted" on the basis of that reputation. 3. The general economic environment: Current levels of interest and exchange rates as well as levels of investor confidence generally will have a major influence on the value...
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...Drivers of Industry Financial Structure In order to facilitate our analysis we divided the companies into services, retail and R&D. The first step was to divide the balances between the ones that had a value for R&D/Sales and the ones that didn’t. So we have balance sheets A, F, G and J and the companies that require R&D are the Developer of Prepackaged Software, the On-line Retailer, the Pharmaceutical Company and the Manufacturer of Electronic Communications Equipment. Now we have six remaining balance sheets and six companies. We divided these remaining companies into services and retail. Companies in the service business usually have low inventories so we have balance sheets C, D and I and the Major Passenger Airline, the International Hotel Chain and the Temporary Staffing Agency. The remaining companies are the Warehouse Club for Food and General Merchandise, the Supermarket Grocery Retailer and the Manufacturer and Marketer of Consumer Products and these industries are characterized by high receivables, high inventories and high inventory turnover so, we can conclude that the corresponding balance sheets are B, E and H. We will now perform more in-depth analysis in order to match each company to each balance sheet. R&D Companies On-Line Retailer In order to specify what balance sheet corresponds to the On-line Retailer we must first define some of the characteristics of On-line Retailers. On-line Retailers require some R&D (9,7%) exactly because they are on-line...
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...pronouncements. Instructor Explanation: Chapter 1 Points Received: 4 of 4 Comments: 4. Question : (TCO1) The going-concern concept of accounting: Student Answer: enables accountants to ignore the effect of inflation in the accounting records. holds that the entity will remain in operation for the foreseeable future. maintains that each organization or section of an organization stands apart from other organizations and individuals. ensures that accounting records and statements are based on the most reliable data available. Instructor Explanation: Chapter 1 Points Received: 4 of 4 Comments: 5. Question : (TCO 1) Revenues are: Student Answer: decreases in assets resulting from delivering goods or services to customers. increases in liabilities resulting from...
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...Riordan Manufacturing BSA/500 September 9, 2013 Riordan Manufacturing This document considers the impact of external influences on Riordan’s business; assesses the current financial state of Riordan Manufacturing, using standard tools to analyze the income statement, balance sheet and cash position; examines the financial and accounting systems in use, and their efficacy; and, recommends potential improvements to these systems and their integration to other systems. These improvements include additional accounting software modules to facilitate reporting, internal and external audits, and regulatory compliance. Influences Riordan Manufacturing is a corporation that has several influences affecting business processes and its financial state. Most organizations are affected by economic, government, and legal influences to varying degrees. The key economic influences affecting Riordan Manufacturing are real GDP growth, inflation, labor cost, interest rates, global monetary values, and fuel prices. These economic influences have an effect on the operational cost and liabilities of Riordan Manufacturing. Tax rates, environmental regulation, customs regulations, and employment regulations are some key government influences that affect Riordan's operational cost and income taxes paid. Riordan is a multi-national corporation, the government influences of each nation Riordan operates in have different affects. The key legal influences are tax laws, environmental...
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...the business expenses are greater than revenue then it has a net loss. Income statements only show the amount of money gained or lost from revenue and expenses. Therefore, the money a business gets from investments from the owner, or the money lost from drawings from an owner, are not on the income statement. This is so these transactions do not confuse the user on how well the business is doing. Owner’s equity statement is the second financial statement to be completed. The reason being is you need the net income, or net loss from the income statement to complete this statement. This statement reports the change in owner’s equity over the same period of time as the income statement. Owner’s equity is the portion of the company’s assets not claimed by creditors. You begin this statement with the amount of owner’s equity from the start of the period. Then you add the amount of investments, and the net income from the income statement. If the business had a net loss on the income statement you would subtract it from the beginning owner’s equity. After you make your additions, you make your subtractions from owner’s equity, for transactions such as drawings. Once all of your additions and subtractions are made,...
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...statement. The financial statement lets the person and business know what debits have been taken place in a monthly and yearly time and also credits that have been done in a monthly ans yearly time. There are four types of a financial statement and that is a balance sheet, a profit and loss statement, a statement of a change in equity, and a statement of cash flow. These four types of a financial statement have their own purpose in the accounting field and they are all very important to the businesses and individual people that use each of them. The balance sheet lets the businesses and people that use this sheet know what assets, liabilities, and ownership equity at anytime they need it, monthly, quarterly, or yearly. The balance sheet is also a summary of a sole proprietorship, business partnership, and other business organizations, if companies and businesses need them depending on if there is an audit of the company or needing them for month end or yearly end purposes. A balance sheet usually has assets in one section of the statement and liabilities and net worth in the other section. There are two types of a balance sheet and that is an account form and a report form. The balance sheet for personal use has current assets such as cash flow whether is would be in the checking account and or in a savings account or liabilities such as mortgages, and other debits that go through the account. The profit and loss part of the financial statement is the report of the companies...
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...Business Analysis During this research work, Coca-Cola Company will be studied in order to review: 1.-Company Background 2.-Company Mission 3.-Company Vision 4.-Coca-Cola Business Environment 5.-Income Statement (Comparisons between Coca-Cola vs. PepsiCo). 6.-Balance Sheet (Comparisons between Coca-Cola vs. PepsiCo). 7.-Cash Flow Statement (Comparisons between Coca-Cola vs. PepsiCo). 8.-SWOT Matrix 9.-Economic trends and influence to Coca-Cola Company 10.-Strategies used by Coca-Cola Company 11.-Technological Advantages 12.-Coca-Cola and Globalization 13.-Coca-Cola’s Human Resource Management 14.-Management Decisions 15.-Conclusion Company Background So the first let’s find out who is Coca-Cola, where it’s come from, how big is this company, where you can find its products, since when is the market, who are the principals competitors from this company to have a better understanding who is this company. What is Coca-cola and where it’s come from? Coca-Cola is a beverage which is carbonated soft drink, was invented by Doctor John Pemberton who was a pharmacist form Atlanta, Georgia in May 1886, then 1887 Asa Candler bought the formula from John. By late 1890s, Coca-Cola was one of America’s most popular fountain drinks, because of a very aggressive marketing campaign; as a result the syrup sales went over 4000% at that time, then by 1960’s the soda fountain consumption declined its popularity and bottled soft drinks and fast food restaurants became popular...
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...ABC Company ACC 206 Principles of Accounting II The ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles, introducing the new project to build cedar dollhouses by shingle scrap materials for reaching $3 million annual sales within the next 3 years. Explain the overall risk profile of the ABC Company based on current economic and industry issues. In order to help out the CEO I prepare reports that will contain the information regarding the project. These statements refer to the accompanying Excel spreadsheet as well as word documents. The statements are; Cash Flow statements, Product Cost, Net present value, Depreciation, Contribution Margins and Break-even Point of sales. In the last conclude the major risk factors in this project, management accountant responsibilities of the project and recommendations. I. An overall risk profile of the company based on current economic and industry issues that it may be facing. It’s a mystifying time to be in the manufacturing industry. After a severe global financial crisis hasten merchandise prices and flounce to the side a year detonation, a promising revival give the industry reason to hope. But the global economy has degenerated into another less severe downturn in 2011, hindering global demand and forcing down merchandise prices once again. The move of the industry focusing on all over the risk based on current economic and industry concerns. Many industry leaders...
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...Contents Introduction 1 Balance sheet Income statement Describe two principle financial statements their users, format, frequency and content 2 Financial accounting Management accounting Compare & contrast financial accounting and management accounting 3 Describe the relevance ,application and limitations of financial ratio analysis with reference to three types of users of financial statement 4 Conclusion 5 1. Introduction. -Finance is one of the most significant elements in order to succeed in business performance. Managers are able to decide ways how they will proceed their business and what extent they will broaden or minimize the scale of their business through various figures of finance. Also, those of things help shareholders to predict organisation's promising. Accounting is a basic tool in figuring out how entity spend asset and how they make a profit or how loss happens. Some specialists such as managers, shareholder, accountants use these information. In accounting, there are some methods of analysing how healthy company's financial statement is. Some types of useful ways will be introduced on this essay and will be explained why accounting and finance is a crucial factors of business. 2 .Describe two principle financial statements(their users ,format, frequency and content) Balance sheet : it is a summary of the financial position of the business. It mainly consists of three factors which are assets, liabilities and equity...
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