...CheckPoint: Reversing Entries Reversing entries are journal entries used at the beginning of accounting periods. These entries reverse selected entries made in the immediately preceding accounting period. Reversing entries are typically used when revenue or expenses were accrued in the previous accounting period and the company does not want the accruals to remain in the current accounting period. In my office, we accrue payroll, payroll taxes, and various invoices received in one year and paid in the next year. Prior to the annual audit, the accrued entries are reversed to give an accurate picture of ‘in the year, for the year’ transactions. In this way, we are able to accurately report revenues and expenses. These reversals are always posted prior to preparing the year-end trial balance. Reversing entries are optional because only those adjustments that create an account receivable or short term liability should be reversed. Reversing entries are exactly the reverse of an adjusting entry, but the date is the first day of the next accounting period and the transaction contains the same information as the adjusting entry. These adjustments are followed by receipts or expenditures in the near future. In my office, these receipts or expenditures are usually within the first month of the next accounting period. It is important to note that adjusting entries recording depreciation or revenue collected in advance are never reversed. Reference: ...
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...received even if it is only part of the transaction (CASH RECEIPTS TRANSACTION FILE) d. cash disbursement-all cash paid (checks even if it is only part of the transaction) (CASH DISBURSEMENTS TRANSACTION FILE) e. general journal – everything else (e.g., adjusting entries, closing entries, reversing entries and any transaction that doesn’t belong in the other journals. (GENERAL (JOURNAL) TRANSACTION FILE) F. payroll journal (all payroll transactions) (PAYROLL TRANSACTION FILE) 2. Record the transaction in the Ledger (general and subsidiary) i.e. POST Posting is equivalent to a (master) file update in a computerized (AIS), That is, the transaction in the transaction file are incorporated into the master file balances. General ledger (general ledger master file) Accounts receivable subsidiary ledger (accounts receivable master file) Accounts payable subsidiary ledger (accounts payable master file) Inventory subsidiary ledger (inventory master file) Payroll or employee earnings subsidiary ledger (payroll master file) (Your Waren case project also has a ) Fixed assets subsidiary ledger (fixed assets master file) Etc. 3.prepare a trial balance 4. Record adjusting journal entries Four types of adjusting journal entries i. Reapportioning recorded costs Template: debit expense Credit asset (or contra asset) ii. Reapportioning unearned revenues Debit unearned revenue...
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...Accounting Cycle Paper ACC421 June 3, 2013 Accounting Cycle Paper Although I work for a major corporation, Walgreens, I have nothing to do with the accounting department or the cycle. I will however use this paper to explain the accounting cycle as well as the people that would be involved within the cycle. Generally the people involved in the accounting cycle would be record-keepers, accounting clerks; financial managers as well as staff accountants all have a hand in the parts of the accounting cycles. Bookkeepers and accounting clerks are generally the ones that record the entries and prepare statements for financial managers and staff accountants to approve. The first step of the accounting cycle would be to identify and analyze the transaction and events that need to be accounted for. Even though the generally accepted accounting principles (GAAP) has guidelines there are no rules to what events or transaction a company is required to record. A company should record every sale or purchase no matter how big or small it is. Once these transactions or events have been analyzed, they are recorded in the next step which is journalizing the transactions. There are several different places these transactions are recorded. Some of these places are the general journal, cash receipts journal, cash disbursements journal, purchases journal, sales journal and other special journals depending on the company (Kieso, Weygandt, & Warfield, 2012). Then these transactions...
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...evolved much like business has evolved; the multiple steps have been reduced as technology has simplified the process, “today, most companies use accounting software that processes many of these steps simultaneously” (“What is the accounting cycle?” 2007, para. 3). The accounting cycle consists of: identifying, journalizing, posting, trail balance, adjusted entries, adjusted trial balance, preparing financial statements, closing, post-closing trial balance, reversing entries, and financial statements (Kieso, Weygandt, & Warfield, 2007, Chapter 3). Identifying a transaction or event is the first step in the cycle; businesses engage in various activities on a daily basis, as a result, determining when to record and activity is crucial. Once the activity has been identified as a transaction that must be recorded, then the next step is to journalize the transaction. The journalizing process can be done in a variety of ways; the most common method is the general journal, although some companies keep other special journals. The next step in the accounting cycle is posting, which is “the procedure of transferring journal entries...
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...ADJUSTING ENTRIES BY MELANIE.KELLY7 ACCOUNTING In accounting there is many different things that you need to know, the one that we are going to go over today is adjusting entries. Adjusting entries are to ensure that revenue and expenses are properly recorded under accrual basis. Adjusting journal entries are made in the general ledger to record revenues that have not been earned or recorded and expenses that have been made but not yet recorded. This process is fourth step in the accounting cycle, which happens at the end of the accounting period after the trial balance is done. After the adjusting entries are journalized and posted and adjusted trial balance is done, from there the financial statements are prepared. Adjusting entries can vary significantly across companies, they happen because the exchange of cash does not always match with the earnings of revenue or an expense. This could be like cash received after revenue is earned. There are four types of adjusting entries that are used as I am going to go thru all of them. Accrued revenues which are also called accrued assets these are revenues already earned but not paid for or posted to the general ledger. Another name for this could be accounts receivable. When this happens the receivable account is decreased and the cash account is increased. EXAMPLE A customer purchased a new machine but didn’t pay for it. Cash ...
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...ACCT290 WEEK 4 REVERSING ENTRIES JOAN GAPP Journal entries are used to change accounting information in financial systems. Following the double-entry system used in modern accounting, these entries always affect at least two accounts -- one account is debited, while another account is credited. A reversing entry is a journal entry that inverts a previously recorded "regular" entry. The use of reversing entries is optional, but it offers certain advantages, making them very popular in the accounting world. When you reverse an entry made in a prior period, you prevent duplication of revenues or expenses, which improves accuracy. For example, you made an entry to recognize a phone expense last month as part of the closing of the month process. Now the bill has been entered in the accounting system, and an expense was again recognized. The reversing entry will zero out the expense, correcting the situation. Reversing entries related to period closing always are paired with entries from the past. You can enter a journal entry in January and reverse it in February to avoid duplication in February. You don't normally go back to January to reverse an entry done in February. Reversing entries is a simple process that can be performed by any employee without much knowledge of accounting. Basically, the account originally debited is now credited and vice versa. There's no need to research or conduct any calculations -- all you need to do is reverse the original entry using the same exact...
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...attractiveness of an industry for organisations in terms of profitability in their immediate environment. Using the forces in this model we can analyse how attractive the UK Supermarket industry is to enter, the 5 forces are as follows. The threat of potential new entrants Barriers to entry in the UK supermarket industry relies on the entrants capability of matching capital requirements of existing firms, the UK supermarket industry is dominated by firms known as Tesco, Asda, Sainsbury’s and Morrison’s (Big 4) owing up to 69% of market share in the UK. Looking at the experience curve (1960: Boston Consultancy Group) A new entrant would have to achieve the economies of scale needed to achieve cost parity with the big 4 and compete on cost advantage. In the supermarket industry achieving economies of scale is not on production but other factors such as efficiency, pricing, range of goods and value of products. Tesco for example have very low cost margins in comparison to the scale of their operations and distribution channels but they are able to achieve high sales because the convenience, range of products and different services they offer. Product differentiation is another barrier to entry, a new entrant would need to achieve and individual level of differentiation and attain an identity through promotions and costly advertising, total advertising costs for the big for in 2009 was approximately £140m. New entrants also face disadvantage in lack of expertise and knowledge of...
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...CASE #1 – The Marketing ProcessYou are to write a 5-8 page report that answers the following: 1. An orthopedic group practice has decided to develop a pediatric sports medicine program. Describe at least three potential markets for this new service. 2. Describe the possible barriers to entry and exit for a physician wanting to establish a solo practice in internal medicine. 3. Describe the possible barriers to entry and exit for a company offering a health club facility in the same building where employees work. 4. Describe the possible barriers to entry and exit for a tertiary hospital developing a coronary bypass program. 5. Assume you are hired to design a managed care organization (MCO) plan targeted to baby boomers in San Antonio, Texas, a city with a large Hispanic population. Describe at least three ways that the MCO can make this service offering unique to respond to the major demographic trends of today.The format of the report is to be as follows: * Typed, double spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format. * Type the question followed by your answer to the question. * In addition to the 5-8 pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor’s name, the course title, and the date.NOTE: You will be graded on the quality of your answers, the logic/organization of the report, your language skills, and your writing skills. | The assignment...
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...want to equalize the marginal product per dollar spend across all inputs? Sybil, would it be that the marginal/dollar spent and decision rule theory assumes that the firm's only goal is maximum profit. would it be at this point, competition has forced the price down to its minimum. All excess profit is squeezed out. The firms have been forced to be just the right size to minimize cost. The customer gets the most possible value per dollar spent? Does that make sense to you? (I try to help before Cramster) in case Cramster doesnot answer. 2. What are the barriers to entry? Describe two potential barriers in the pharmaceutical industry? What are some consequences of these barriers? To me, the barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market. . 1.The barriers to entry are extremely high in the pharmaceutical industry. Many of the top firms have "significant manufacturing capabilities that are hard to replicate". Also,In recent years, product liability for potential damages has become an increasingly important issue in the pharmaceutical industry 2.The other barrier is, factors that influence the success of many pharmaceutical companies are capital requirements and financial resources, regulatory policies, and research and development. All three of these factors can influence one another and a lapse in one area can be disastrous...
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...was concerned with the contents of hot dogs and this led to the federal governments of the U.S. and Canada to intervene in the industry allowing only “muscle meat” in the food products. Changes like this effect the entire manufacturing process. The meat now has to be more carefully separated and the additional machines or manpower is expensive. Also, the government imposed rules on calcium supplements added to one of the product lines forcing costly activities like re-sourcing and reformulating the additive. Government regulations will typically affect the value chain and companies should analyze the effects to ensure there competencies continue. The threat of new entrants to the hot dog business is unlikely because the barriers to entry are quite high. There are significant government regulations on operations. In addition, capital requirements would be in the multi-millions, distribution channels are difficult to enter, and overall, the industry is an economy of scale. Per the case, rivalry is very intense and retaliatory among the top two market shareholders. This...
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...Industry Competition 3 Chapter Outline 3-1 Industry Life Cycle Stages 3-2 Industry Structure 3-3 Intensity of Rivalry among Incumbent Firms 3-3a Concentration of Competitors 3-3b High Fixed or Storage Costs 3-3c Slow Industry Growth 3-3d Lack of Differentiation or Low Switching Costs 3-3e Capacity Augmented in Large Increments 3-3f Diversity of Competitors 3-3g High Strategic Stakes 3-3h High Exit Barriers 3-4 Threat of Entry 3-4a Economies of Scale 3-4b Brand Identity and Product Differentiation 3-4c Capital Requirements 3-4d Switching Costs 3-4e Access to Distribution Channels 3-4f Cost Advantages Independent of Size 3-4g Government Policy 3-5 Pressure from Substitute Products 3-6 Bargaining Power of Buyers 3-7 Bargaining Power of Suppliers 3-8 Limitations of Porter’s Five Forces Model 3-9 Summary Key Terms Review Questions and Exercises Practice Quiz Notes Reading 3-1 26061_03_ch03_p037-060.indd 37 1/10/08 7:01:36 PM 38 Chapter 3 T Industry A group of competitors that produce similar products or services. 26061_03_ch03_p037-060.indd 38 his chapter marks the beginning of the strategic management process and is one of two that considers the external environment. At this point it is appropriate to focus on factors external to the organization and to view firm performance from an industrial organization perspective. Internal factors are considered later in the process and in future chapters. Each business operates...
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...Executive Summary This report suggests that mass car market is highly competitive and through proficient operational approach McLaren remained successful in eliminating all barriers to entry in mass car market.The successful merger of McLaren team with Ron Dennis’ Project 4 team in 1981 and itsstrategic alliance with Mercedes-Benz later in 1995 for supplying enginesprovided the group with a golden opportunity to establish itself on the global platform. McLaren was the first company to use carbon-fibre-composite in its road car designs, which has provided the company with a competitive edge in the mass car market. Continuous investments are made in R&D to produce high-performance road cars for its discerning customers. McLaren’s successful establishment in the mass car market signifies the effectiveness of its global business strategy. McLaren’s diversified business portfolio consists of McLaren Automotives, McLaren Racing, McLaren Electronic Systems, McLaren Marketing, Absolute Taste and McLaren Applied Technologies. McLaren has adopted related diversification to increase its growth rate and market power. There is operational synergy amongst the businesses in McLaren’s business portfolio.Vertical integration has allowed the group to increase its operational efficiency and profitability. McLaren Racing is the most profitable company in the portfolio and all the other companies in the portfolio are also making considerable profits. Core competences are the underpinnings of...
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...developed a framework that helps managers in this analysis. Porter’s framework, known as the five forces model focuses on five forces that shape competition within an industry: (1) the risk of new entry by potential competitors, (2) the degree of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers, and (5) the closeness of substitutes to an industry’s products. A. Potential Competitors Established companies try to discourage potential competitors from entering, since the more companies enter an industry, the more difficult it becomes for established companies to hold their share of the marker and to generate profits. Thus a high risk of entry by potential competitors represents a threat to the profitability of established companies. On the other hand, if the risk of new entry is low, established companies can take advantage of this opportunity to rise prices and earn greater returns. The strength of the competitive force of potential rivals is largely a function of the height of barriers to entry. The concept of barriers to entry implies that there are significant costs to joining an industry. The greater the costs that potential competitors must bear, the greater are the barriers to entry. High entry barriers keep potential competitors out of an industry, even when industry returns are...
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...General Environment: • Cultural o Cultural trends play a major role in the consumer appeal of this industry. We go through phases of what sports are trendy. • Seasonal o There is a high seasonal influence on consumer buying. Summer products typically cost less than winter products. Sales during offseason offset sales revenue. Winter sales are higher during the holidays and prices of the products are higher. • Physical o These companies are very aware of their carbon footprint. They are all based on the idea of being outdoors and care about how their production activities are affecting the environment. • Legal o As with many companies, these companies need to be sure they are following policies that abide by labor standards, for example, child labor laws, workers compensation, and labor training. Five Forces: • Threat of Substitutes o Substitute products pose no real threat, as they are not able to maintain the same level of quality and performance of the products within the industry. o Substitute Prices Customers might be attracted to the lower cost of products from outside the industry o Substitutes performance and quality Performance expectations cannot be met by the industries outside of our own. o No switching costs There are few switching costs for the customer, thus making it easy to substitute the product, although customers are not willing to do so because of the lack of performance from substitute products. Those products that are capable...
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...companies. Fluctuations in oil prices directly affect Lego’s margin. Competitive Rivarly (pressure low): There is Best-Lock from Hongkong and Mega Brands from Canada. Both compete with lego by low prices. Lego has a strong brand image and brand loyalty among customers and can charge premium prices. Parents know Lego because they played with it themselves. As the parents are the ones who pay the toys and as they are the force that often decides over children’s playtime, they will be the ones who make children play with traditional toys rather than computer games. Lego has therefore a critical competitive advantage over its competitors, as they cannot look back on such a long history. New market entrants (pressure low): There are low market entry barriers. Lego’s patents expired and overseas competitors enter the market. As the oil prices collapsed during the financial crisis in 2008,...
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