...Bob’s Chocolate Chips and More, a bakery specializing in gourmet pizza and chocolate chip cookies, started business on October 1, 2011. The following transactions occurred during the month. 1. The company issued 6,000 shares of common stock at $15 per share. 2. The company acquired office equipment on October 1 for $30,000 cash. The equipment was used for administrative tasks. 3. The company purchased $15,000 of ingredients on account. 4. Rent is $500 a month. On October 1, the company paid rent for October, November, and December. 5. The company sold pizza and cookies for $35,000. The transaction was a credit sale. The pizza and cookies cost $9,000 to make. 6. The company paid salaries totaling $5,200. 7. The company collected $26,000 of the amount owed by customers. 8. The company paid $10,000 for ingredients previously purchased on account. 9. The company paid $800 for utilities on its corporate headquarters and $400 for advertising. 10. The company borrowed $12,000 from the bank for additional working capital requirements. The company repaid $3,000 by month-end. 11. The company paid $500 cash dividends to shareholders during October. 12. The company received an order from a customer for two luncheons. The sales price for the order was $20,000 ($10,000 for each luncheon). The customer paid $20,000 in advance for the order. Adjusting Entries Assume that the company has a monthly accounting cycle. Use the following information to construct the corresponding...
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...Part: 1 Social Relevance of Accounting Information 1.1. Accounting Standards 1.2. Need for Accounting Standards Part 2: Types of Accounting Standards Rules Based Accounting Principle Based Accounting System Part: 3 Comparisons of Principle and Rules Based Accounting Standards Conceptual Framework Flexibility of Rules and Principles International Accounting Platform Comparability of Financial Statements Realistic Representation of Accounting Information Part:4 Findings of the Research Study Part :5 Conclusion Reference Appendix Appendix 1: Narration on Figure 1 - Qualities of Accounting Information Abstract The proposed research paper attempts to illustrate the importance of a global accounting system and the impact of standards on the global market, as well as, providing the means for comparable financial reporting for decision making by both investors and corporations. This research provides understanding about the major differences of a Rules-based and Principal Based Accounting Systems, including the benefits and drawbacks of such a shift. Proponents of principles-based accounting blame the Rules-Based Accounting System for the major accounting scandals. They believe that the Rules-Based system encourages the use of financial structuring to achieve desired accounting results, which will undermine the quality of financial reporting. Supporters of rules-based accounting argue that principles-based accounting relies heavily on judgment...
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...responsibility of the advertising for the business. For example, when talking about an accounting firm or agencies you need to have an advertising accounting executive. An advertising accounting executive takes care of all the advertising campaigns in an advertising agency. Each day they have the challenge of having a relationship with clients and trying to figure out how they can advertise that client’s product or business. Advertising accounting executives can be a very stressful job. Not only will they work with one client, they can work up to many of clients or large agencies trying to figure out what is the best way to advertise their business. An accounting executive can also help media companies out with their advertising such as, TV, the newspaper, billboards, the radio and more. Accounting executives do not design nor create the material. Their job is to have a connection between the client and the advertising agency. Also, they manage the clients account and to lead them a way to success with advertising their business products. Advertisings accounting executives have many responsibilities and duties to take care of everyday they walk into an office. Not only is their job in an office but also these executives have to travel. Sometimes travel to different towns, different states or even different countries. Almost every accounting firm needs to know how to advertise so they hire an expert accounting executive, who usually has one or two assistants, to help lead the way to...
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...Accounting Proposal Introduction The field of accounting affects every active individual within a society to some extent. Taxpayers, families who budget for the future and businesses evaluating potential products use some form of accounting principles to accomplish the tasks required of them. A functional accounting system is critical to the success and health of any given economy. The purpose of this text is to suggest a solution to the lack of a medium through which accounting knowledge is disseminated. Knowledge of accounting is important in the innovation and improvement of accounting principles. These improvements are important in strengthening the economy of a country to compete in the emerging global market. In general, people would see benefit in their daily lives by understanding how and when to utilize various accounting principles. There are many instances in which these benefits can be seen. Individuals use accounting knowledge to more efficiently manage their financial resources. Also tied to this is the ability to keep accurate financial records in order for individuals to make more informed decisions regarding their money. These decisions include budgeting, fund allocation as well as general money management. These benefits stretch beyond the actual user of accounting principles. If people are better managing their money, they are less likely to fall into debt. If businesses do the same, they will be more averse to failure and bankruptcy. The use of accounting...
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...CHAPTER 2 ENRIRONMENTAL INFLUENCE ON ACCOUNTING DEVELOPMENT 1 2.1 Introduction In international accounting research, environmental influence is the key to understanding one country’s accounting system. "To a large extent, accounting is a product of its environment. That is, it is shaped by, reflects, and reinforces particular characteristics unique to its national environment" (Radebaugh and Gray 1997). From the late 1960s, researchers in international accounting have tried to categorize countries according to a series of criteria, which have been developed on a deductive or conductive basis. These criteria tried to explain the reasons for accounting differences between countries; they aimed to describe and compare different systems with each other in an efficient way. There are several advantages to categorize and analyze the differences among countries: First, it promotes improved understanding of the complex realities of accounting practices, as well as the factors that shape a country’s accounting regulations; Second, it provides useful information for solving some of the important accounting problems that exist in the world. For example, it can help policymakers assess the prospects and problems of international harmonization; Third, it can assist in the training of accountants and auditors who operate internationally; And finally, it can enable a developing country to better understand the available and appropriate types of financial...
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...system of accounting to be inefficient. 2.Venice’s commerce was driven by sea traffic. 3.The Genoese system was the first to imply that unlike items could be compared in terms of a common monetary unit. 4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it in the 1400s. 5.When hyperinflation exists, alternative systems to historical cost become necessary. 6. The International Accounting Standards Board, an international organization dedicated to the diversity of accounting standards worldwide. 7. One trend in European securities markets is consolidation. 8. The continental accounting system is closely linked to the tax collection system. 9. The first step into international business is usually the creation of a foreign subsidiary. 10. If a firm is not involved in international commercial transactions, knowledge of international business is unnecessary. Multiple Choice Learning Objective #1.1: Identify the key trends in the development of accounting through history 1. The Crusades were important in the development of accounting, because __a. the Arabs first developed double entry accounting, which was then adopted by the Italians. __b. the Christians needed double entry accounting to keep track of the relative profitability of the different Crusades. __c. the trade routes shifted the commercial center from Italy to Constantinople __d. none of the above. 2. The major Genoese influence on accounting was __a...
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...------------------------------------------------- Management accounting From Wikipedia, the free encyclopedia | This article contains wording that promotes the subject in a subjective manner without imparting real information.Please remove or replace such wording and instead of making proclamations about a subject's importance, use facts and attribution to demonstrate that importance. (February 2012) | Accounting | | * Historical cost accounting * Constant purchasing power accounting * Management accounting * Tax accounting | Major types of accounting[show] | Auditing[show] | People and organizations[show] | Development[show] | Business portal | * v * t * e | In Management accounting or managerial accounting, managers use the provisions of accounting information in order to better inform themselves before they decide matters within their organizations, which aids their management and performance of control functions. Contents [hide] * 1 Definition * 2 Scope, practice, and application * 3 Differences between financial accountancy and management accounting * 4 Traditional vs. innovative practices * 5 Role within a corporation * 6 Specific methodologies * 6.1 Activity-based costing (ABC) * 6.2 Grenzplankostenrechnung (GPK) * 6.3 Lean accounting (accounting for lean enterprise) * 6.4 Resource consumption accounting (RCA) * 6.5 Throughput accounting * 6.6 Transfer pricing * 7 Resources...
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...PUBLIC SECTOR ACCOUNTING AND FINANCE 1.0. Introduction: One of the main distinguishing factors between public and private sector organisations lies in their objectives and sometimes funding structure. While public sector bodies have a more social objective and focus more on the allocation or distribution of public goods and services within the country, private sector bodies have the main objective of increasing the wealth of their shareholders (IFAC, 2011). However, both private and public sector bodies face similar operational and business challenges brought on by the economic environment and climate. A crucial question therefore is how to account for the activities of private sector bodies and public sector bodies in a way that reflects the operational structure of the organisation and yet their varying objectives (Barton, 2000). There exist two main schools of thought on the nature of accounting in the public sector, each of which is formulated by the view of the role of the public sector within the economy (Evans, 1995). The traditional method of accounting within public sector organisations has often advocated the use of the cash basis of accounting, with larger emphasis rather placed on compliance with the rules and regulations governing the sector (Wynne, 2003). However, weaknesses in public sector management have brought to the fore the importance of efficiency and hence the adoption of the accrual method of accounting within the public sector. According to...
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...Managerial accounting is concerned with providing information to managers-that is, people inside an organization who direct and control its operation. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Managerial accounting provides the essential data with which the organizations are actually run. Managerial accounting is also termed as management accounting or cost accounting. Financial accounting provides the scorecard by which a company's overall past performance is judged by outsiders. Managerial accountants prepare a variety of reports. Some reports focus on how well managers or business units have performed-comparing actual results to plans and to benchmarks. Some reports provide timely, frequent updates on key indicators such as orders received, order backlog, capacity utilization, and sales. Other analytical reports are prepared as needed to investigate specific problems such as a decline in the profitability of a product line. And yet other reports analyze a developing business situation or opportunity. In contrast, financial accounting is oriented toward producing a limited set of specific prescribed annual and quarterly financial statements in accordance with Generally Accepted Accounting Principles (GAAP). (Ray H. Garrison Eric W Noreen 1999). Managerial accounting is managers oriented therefore its study must be preceded by some understanding of what managers do, the...
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...Abstract: The Australia Accounting Standard Board is an Australia government agency that developing, issuing, and maintaining Australia accounting standards and related pronouncements. In 2004, the Australia Accounting Standard Board (AASB) adopted the Framework for the Preparation and Presentation of Financial Statement. (Picker, Leo, Loftus and Wise, 2009, P30) The framework plays an important role as a guide to the AASB in developing accounting standards and resolving accounting disputes. Also, the framework address general purpose financial statement, which are the financial statements that an entity prepares and presents at least annual to meet the common information needs of a wide range of users external to the entity. (Picker, Leo, Loftus and Wise, 2009, P30) The essay following will talk about the purpose and status of a conceptual framework such as the use of framework, authority of framework and the development of the conceptual framework. Moreover, this essay will pay attention on the role that the framework plays in the standard setting process. Background: With the development of today’s global economic world, accounting standard setting process is been paid more attention. The framework that set by IASB has been adopted by more and more countries in which not to fall behind by others in accounting standards. The Australian Accounting Standards Board (AASB) is a body corporate with perpetual succession, and the most important function of AASB is to developing...
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...Executive Summary This report provides an analysis and evaluation of Triple Bottom Line (TBL) accounting. Many corporations adopt and follow the novel term, along with the public increasing public concern of social and environmental performances. The research pays attention to the arguments for and against the TBL accounting in corporate accounting reporting. Many companies concur with the significance of concept to reinforce their business, yet others hold the view that TBL is accompanied by diverse debates. The findings of this review show that TBL accounting: • Refers to a good tool of the measurement of accountability and transparency • Provides a beneficial opportunity to obtain the value of a corporate name and the market share in completion • Contributes to the reduction of production cost and the conservation of environment through making use of resources efficiently • Improves corporate management and employee productivity due to the measurement of accountability and transparency • Impacts on a core competency of business and a social situation • Adjusts a methodology to measure social and environmental performances TBL accounting with economic, social, environmental activities has been some negative thus far. However, the arguments against TBL accounting, which are related to core competency, poor societies and measure standard, are still doubtful and cannot address a strong persuasive in opposition to...
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...(2011), everyone understands that accounting is the mode of communication in business. It is the channel through which investors and businessmen get to understand whether their investments are worth it or not. It helps in giving the value of an investment at any given time. The contemporary accounting practice and methods are quite diverse. However, they have not been so since the beginning. According to Waweru (2010), there are numerous changes that have marked the evolution of accounting. This research paper seeks to look into the accounting evolution process. Reese and Janes (2012) indicate that accounting has changes both in terms of accounting theories, as well as application of technology in accounting. Therefore, when looking at the history and evolution of accounting, it is imperative to look at the changes that have occurred. These changes are both in theory, and the application of technology in accounting. It is also worth looking at the various accounting theories that have come up. These have to be related to the changes in technology, higher literacy levels, and more complex business operations which call for the review of accounting practices. The need to protect the interest of the public is also a chief reason why changes in the accounting practice needed to occur. This essay looks at the changes both in practice and application of technology. Evolution in Theory and Practice According to Alexander (2002) observes that accounting in the ancient times was propagated...
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...Journal of Accounting and Economics 31 (2001) 255–307 Empirical research on accounting choice$ Thomas D. Fieldsa, Thomas Z. Lysb,*, Linda Vincentb b Graduate School of Business Administration, Harvard University, Boston, MA 02163, USA Kellogg Graduate School of Management, Northwestern University, Evanston, IL 60208, USA Received 21 January 2000; received in revised form 31 January 2001 a Abstract We review research from the 1990s that examines the determinants and consequences of accounting choice, structuring our analysis around the three types of market imperfections that influence managers’ choices: agency costs, information asymmetries, and externalities affecting non-contracting parties. We conclude that research in the 1990s made limited progress in expanding our understanding of accounting choice because of limitations in research design and a focus on replication rather than extension of current knowledge. We discuss opportunities for future research, recommending the exploration of the economic implications of accounting choice by addressing the three different reasons why accounting matters. r 2001 Published by Elsevier Science B.V. JEL classification: M41 accounting Keywords: Capital markets; Accounting choice; Voluntary disclosure; Accounting judgments and estimates; Earnings manipulation $ We are grateful for comments received from Ronald Dye, participants of the 2000 Journal of Accounting and Economics conference, the editors Ross Watts and Douglas...
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...financial accounting according to the different measurement attributes, can be divided into historical cost accounting, current cost accounting, fair value accounting and other different models. Today is the leading and ruling position, or historical cost accounting model, although it faces challenges, can still be regarded as the basic pattern of financial accounting. 1, the historical cost accounting features 1, the basis for the past recognized. most important feature of the historical cost accounting is a past-oriented. From the basis of confirmation of view, the historical cost accounting is based on past transactions or events have occurred based on. Whether accrual or cash basis, are targeted to have occurred in terms of past transactions. The former caused a result of past transactions and the rights and obligations; the latter a result of past transactions caused by cash. Their common feature is based on transactions or events that have occurred in the foundation. 2, measured at historical cost. This is the essence of historical cost accounting. Assets, liabilities, costs measured at historical cost, provided that for the past history information associated with the lack of reality. 3, follow the decision of revenue realization and matching principle. double-entry bookkeeping has been created, through cost and revenue for the ratio to determine the income, has been the main features of accounting, and constitutes the entire accounting system of...
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...Versus Rules-Based Accounting Karla Law Liberty University Accounting 301-B07 Abstract Principles-based and rules-based accounting systems each have their advantages and disadvantages. When carefully examining these two accounting systems, it is clear to see that neither is better than the other. However, many individuals have the misconception that principle-based accounting is better. This is due to the fact that in recent years, the Financial Accounting Standards Board (FASB) has issued several standards that are considered more principles-based than rule-based. Nonetheless, that does not mean that principles-based accounting is better. Therefore, this paper will examine the pros, cons, ethics and virtues of both rules-based accounting and principles-based accounting. Keywords: GAAP; FASB; SEC; Principles-Based Accounting; Rules-Based Accounting Introduction Accounting can be a very confusing and intimidating subject for many individuals. Reason being, is that accounting has its’ own language per say. It is imminent that one learns the key terms to this challenging subject in order to obtain a better understanding of the matter. For starters it is key that one learns the differences and similarities of principles-based accounting and rules-based accounting. Once gaining that knowledge it is important to know what the generally accepted accounting principles (GAAP) are and what effect they have on principle-based and rules-based accounting. As well as, the effect...
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