Categories for Accounting

Financial Planning and Forecasting Essay

Financial Planning and Forecasting Essay

We have also provided comprehensive documentation on the templates so that you do not need to guess or figure out how we implemented the models. All our template models are only in black and white color. We believe this is how a professional financial template should look like and also that this is the easiest way for you to understand and use the templates. All the input fields are marked with the ‘*’ symbol for you to identify them easily. Whether you are a financial analyst, investment banker or accounting personnel.

Or whether you are a student aspiring to join the finance world or an entrepreneur needing to understand finance, we hope that you will find this package useful as we have spent our best effort and a lot of time in developing them. ConnectCode Pg iii Financial Planning and Forecasting Version 1. 0 1. 1. 1 Financial Planning and Forecasting Pro Forma Financial Statements Financial statements projections and forecasting are very common in corporate financial analysis.

The reason is that it is very useful and important to forecast how much financing a company will require in future years.

The projections are achieved by using historical sales, accounting data and assumptions on future sales and costs. These financial statements projections are known financial modeling as Pro Forma financial statements. 1. 2 Financial Statements Modeling This spreadsheet provides a template for financial statements forecasting. It requires simple financial statements inputs from the past 5 years and will automatically generate all the necessary Pro Forma Financial Statements projections outputs. The following diagram illustrates the process of using this template for financial statements forecasting.

IFRS and GAAP Accounting Principles Essay

IFRS and GAAP Accounting Principles Essay

IFRS is also referred to as International Financial Reporting Standards. They are set of standards of accounting developed by International Accounting Standards Board (IASA). They are becoming the standards in the globe to be used for preparation of financial statements for the public companies. IASB is independent body which sets accounting standards which is based in London (McLaughlin, 2009). This body consists of fifteen members who are from nine countries including United States. IASB started operating in 2001 since it succeeded International Accounting Standards Committee.

With desperate laws, cultures, tax regulation and commerce, individual nations, overtime have come so as to develop accounting systems of their own. In United States, Financial Accounting Standard Board (FASB), formed in year 1973, was third group which developed the Generally Accepted Accounting Principles (GAAP) in U. S, since the formal setting of standards which started in 1939. FASB is the first group in US which employed independently funded full-time professionals to be independent in accounting profession.

Sanctioned officially in 1973 December, by Securities and Exchange Commission (SEC), which was federal regulator, FASB up to now continues setting accounting standards for U.

S (Subramani, 2009). IASC was formed shortly after FASB had been formed in the same year so as to develop accounting standards which will be internationally accepted. During the early 1970s, economy of the globe was at that time marked by expansion of the cross-border activities. This time seemed to be right in considering whether there was a need to set universal accounting standards to address world which was shrinking (McLaughlin, 2009).

IASC in their effort of promoting acceptance of one set standards of accounting globally, tried to write certain inclusive standards. Committee members often had difficult in achieving a common consensus on proper accounting treatment to transactions which were similar or the same (AICPA, 2010). They identified preferred treatments, but accounting which was different with also different results was as well allowed. They considered this as necessary so as to promote the acceptance of complete set for the world accounting standards.

If specific standard was much different from that which was accepted generally in an individual country, that nation may not accept all the set standards. It was better in allowing some alternatives in order to bring many nations into the mix. International Accounting Standards Board (IASB) replaced IASC after it had issued 41accounting standards to be used internationally in 2001. Since formation of IASB, it has issued around eight IFRS and also they have modified several international accounting standards (IASs).

In 2000, European Commission provided the international standards large boost as it announced initiative which required every listed company in the European union to be using IFRS starting the year 2005. Before mandatory introduction for all companies to use IFRS, all countries in European Community regulated separately their standards of reporting (McLaughlin, 2009). The measure of using IFRS did not affect the non-listed companies in Europe. European ministers’ council approved IFRS in 2002. At the start of 2005; approximate of 7000 companies effected the change.

Around 6500 of these companies had been prior reporting GAAP in their own country, with almost 3000 of them in UK alone (Ernst & Young, 2009). EU however, never endorsed three paragraphs in IAS 39, and these were standards which deal with measurements and recognition of the financial instruments. Volatility potential of the earnings which was related to such paragraphs’ accounting macro hedge as well as option of fair value made the standard setters to go back in the drawing board several times, but there was no appearance of silver bullets.

Up to now, EU has not fully endorsed set of the IFRS which was promulgated by IASB (Jermakowicz, & Epstein, 2008). Failure of EU to fully endorse these set of international standards is significant issues to several reasons, not the few which is requirement in the IAS1, financial statement presentation that is explicitly stated by a company that their financial statements are complying with the IFRS (McLaughlin, 2009). Companies are further not allowed to state their financial statements as complying with IFRS if it does not fully comply with whole body of the IFRS.

The accounting standards so as to gain world wide acceptance, there is a need for them to be universally applied. It is necessary to have comparability. Financial statement set prepared using GAAP of country A is not comparable suddenly to another which is prepared using GAAP of country B since both of them on the top states IFRS (AICPA, 2010). United States key regulator priority is the consistent application of these standards. If to be accordance with the IFRS means the similar and same transactions have to be accounted in same way in every nation, then preparing financial statements according to IFRS will have to add value.

Investors will no longer waste their effort and time in reconciling financial information when comparing to companies which are similar but in different countries (Subramani, 2009). Capital will then flow efficiently and at a low cost to companies in many places. Another major boost for acceptance of the IFRS was seen in 2002as the Norwalk Agreement was being signed and was reaffirmed in the Memorandum of Understanding in 2006. IASB in the London together with FASB in the Norwalk agreed to remove the differences in their standard sets and converge it on high-quality standards (Ernst & Young, 2009).

The emphasis was on high-quality and this meant that if the FASB standards or IASB standard was deemed to be better, then the convergence was would be on the superior one. If neither of them had sufficient standards which would qualify to be used internationally, then the two boards would jointly work together to produce new standards. Work is on progress in developing a conceptual single framework which will guide in setting future standards. Convergence between U. S GAAP and IFRS do not mean accounting standards should become identical.

It means that in the cases where the transactions are similar or the same, then the accounting should be just the same, or if not so, the disclosures should be transparent to enable reader understand about the differences (Subramani, 2009). Also the standard setters are putting more effort to reduce the difference which is in the two systems. Three significant differences between IFRS and GAAP. The difference between the two set of standards include the following: in the US GAAP in the income statement, extraordinary items is restricted to some items which are both infrequent and unusual (McLaughlin, 2009).

Negative goodwill usually is treated as an extraordinary item. In the IFRS, income statement usually prohibits extraordinary items. In the US GAAP the significant items in the income statement are presented separately at the face of income statement just as component of operation going on, where as in the IFRS significant items in the income statement separate the disclosure of nature and also the amount required, but it can be included in income statement or notes (Ernst & Young, 2009). Changes in the equity in U. S PAAF are present in all the changes in every caption of the stockholders’ equity either in separate statement or foot note.

Equity changes in IRFS at least, presents components which are related to expense and income recognized as section of separate statement (AICPA, 2010). Other equity changes are disclosed either in notes or presented as a part of one, combined statement in all equity changes. Three similarities between IFRS and GAAP. In both accounting standards, exchange losses and gains on the settled items and also on the monetary items which are unsettled should be taken to loss or profit for that period. When loss or gain on non-monetary items is directly recognized in equity, then that loss or gain is further taken to the equity (Ernst & Young, 2009).

On the other hand if losses or gains on non-monetary item are taken in loss or profit, then related component of exchange would further be included in loss or profit. Functional currency should be currency of primary economy in environment the business is operating. The other currencies should be treated or termed as foreign currencies. Presentation of currencies should be currencies used in presenting financial statement and is usually matter of one’s choice (AICPA, 2010). Financial statements should be prepared by the functional currency of the entity but may be presented by any other form of currency.

Individual transactions should be translated at rate on date of transaction, or at any average rate for period if the rates do not significantly fluctuate. Identify three potential risks of IFRS and GAAP convergence. There are several risks which may affect companies as a result of the convergence. They include that; the convergence may risk tax rate and thus making it not to be effective to some companies, it may also risk the long term financial agreements and contracts, and it may also risk timing of the revenue recognition (Ernst & Young, 2009).

Financial Ratios and Division Managers Essay

Financial Ratios and Division Managers Essay

The front desk receptionist routinely takes an extra 20 minutes of lunch to run personal errands. Agency Problem: she took an extra 20 minutes to do her personal errands instead of working, which she puts her own self interests before the best interests of the company. Occurred cost: the salary that the company pays to her. The solution would depend on the boss on her work performance in the past. If she has an important personal errand to do during that time, then boss might need to talk to her and explain the solution for her.

This problem can be final dealt by clocking-in and clocking-out even time for lunch hours.

B) Division managers are padding cost estimates so as to show short-term efficiency gains when the costs come in lower than the estimates. Agency Problem: Division managers use their authority to mislead information and a problem exists when management and stockholders have conflicting ideas on how the company should be run in short-term.

It will mess up the management in order to plan costs. Also it might ruin the number balance sheets and which could affect future gains. This might mean that the division managers who wish to engage in capital expenditures can now secure a short-term benefit from lower estimates.

Occurred cost: The solution is management should monitor division managers performance and might give managers the performance shares which result in meeting the stated performance goals. These goals must be more efficient and accurate in order for management to plan goal to generate profit. Agency cost: By reducing and by providing appropriate incentives to align the interests to division managers. C) The firm’s chief executive officer has secret talks with a competitor about the possibility of a merger in which he would become the CEO of the combined firms.

Agency Problem: The chief executive officer risks negative behavior because of dealing with the competition and did not involve his company’s best interests. He is putting his needs of planning a secret merger with his competition, which most likely can result potential profit for him, and possibly his company, if the merger is a positive one. Since he knows that his merger will occur (due to the fact of his direct “under the table” dealings with his competition), he can then go forward openly with his own company to promote the merger. Occurred cost: The CEO should know himself and the risks of CEO overconfidence.

His behavior results in exactly this type of good faith mismanagement of the business. It is very important that the company should continue improving both legal and non-legal mechanisms that remedy conflict-of-interest problems by guarding against looting, fraud, and other forms of corporate corruption and disloyalty and by incentivizing managers to maximize shareholder value. The added challenge for corporate governance is to move beyond managerial motives to account more for human psychology and how managers actually behave and make business decisions when they are well-intentioned.

D) A branch manager lay off experienced fulltime employees and staffs customer service positions with part-time or temporary workers to lower employment costs and raise this year’s branch profit. The manager’s bonus is based on profitability. Agency Problem: the branch manager created the personal goal to get more bonuses which depends on profitability and did not look into the company’s performance. Occurred cost: the management should be able to see that profitability does not come from sales.

The cross section analysis helps the analyst to find out as to how a particular firm has performed in relation to its competitors. Time-Series analysis evaluates performance overtime by comparing current to the past performance. To look at significant year-to-year changes may be symptomatic of a major problem. Time series analysis helps to the firm to assess whether the firm is approaching the long-term goals or not. The Time series analysis looks for (1) important trends in financial performance (2) shift in trend over the years (3) significant deviation if any from the other set of data.

So, I will compare the actual year 2007, 2008 and 2009. Liquidity by look at the current ratio and quick ratio that evaluating the speed with which certain accounts are converted into cash and its look at the ability of a company to meet its short-term obligations. As actual year 2009 the current ratio (2. 48) and quick ratio (1. 35) higher than the industry average and the higher is the better for company. If we look at the balance sheet we will see that the current asset and the current liability is decreased which is the big decreased from accounts payable.

This shows that Marin Manufacturing Company have enough quick assets to pay off all current liabilities. Activity It shows relationship between the sales & the assets. By evaluate inventory turnover, average collection period, and total asset turnover. As the inventory turnover of the Marin Manufacturing Company is less the industry average which I recommends that the company should manage inventory more efficiently. The average collection period is higher than both industry average and the past year which the manager should emphasis on the collection to decrease this number.

It means that they have to change their policy of lending business for more efficiency of debt collection. The total asset turnover for the actual year is 1. 6 which more then the past year but it still less than the industry average. So, the company needs to increase sakes to meet the industry average. Debt can analyze by debt ratio and time interest earned ratio. The debt ratio of actual year 2009 is higher than the industry average it continue increasing since year 2007-2008. Its means that the company has high leveraged and might borrows more money in the year 2008.

Also the higher debt ratio means higher risk for lenders and investors. For the time interest ratio which decrease from year 2008 at 1. 9 to be 1. 6 in year 2009 and lower than industry average it means the company might facing the risk that cash flows from operations will be insufficient to cover interest and principal payment. Profitability by evaluate gross profit margin, net profit margin, ROA and ROE. Gross Profit Margin is measuring how much amount is left to meet other expenses & earn net profit which actual 2009 is at 27% that higher than the industry average (26%).

Its mean that the company has high ability to sell goods at intended selling price. At 0. 65 % of net profit margin that decrease from 1. 1 % in 2007 to 1. 0% in year 2008 and less than industry average (1. 2%) that create low safety to the company. The higher risk that a decline in sales will erase profits and might result in net loss. The ROA and ROE both in year 2009 are decreasing to be less than the industry average and decresing from the past year. This show that the managerment is not managing asset effeicincy or assets are not being utilized effectively and lower ROE might caused by high debt.

It seem like when this company are not very attractive for invertor if they looking at return on stockholders investment which is decreasing to be lower than industry averange. Market can analyze from P/E ratio and M/B ratio. For P/E in year 2009 is 34. 4 compare with the industry average at 43. 4 which lower and if compare to the past year it lower than year 2008. It means that investors are not perceive good growth potential of Marin Manufacturing Company.

Principles of accounts Essay

Principles of accounts Essay

I would like to express my sincere gratitude to all the persons who have been helpful towards the successful completion of this assignment. First and foremost I would like to thank Shadae Russell, Shakeyra Millington, Jonathon Butler and Ovasha Bartley for their support and assistance towards carrying out the research to complete this assignment. Secondly I want to thank my guardians for providing me with the suitable materials to finalize this assignment. I would also like to thank Mrs. K. Elliot for her assistance and guidance in completing this project.

Last but certainly not least I would like to thank God for his extended mercies unto me. Introduction This assignment is about a business that started approximately three (3) years ago which is situated in a busy area that allows it to generate large amounts of money each day to carry out its operations. This assignment contains all the information about this Blanna’s Fashion Boutique business. The information which this assignment contains includes the financial records for the period ending September 30 2011.

This assignment serves to keep track of all the money that goes inside the business bank account, all the cash which the business uses within visiting the business bank account, all the money that goes outside of the business bank account, all the money that came into the business by cash and not with the use of cheques and the purposes for each transaction. Therefore this assignment provides a clear understand of all the operations the business under goes on a day to day basis. Table of Contents Headings Page # Cover Page I Title PageII AcknowledgementIII Introduction IV Aim of the Project1

Description of Business Entity 2 Mission Statement 3 Logo and Slogan 4 Accounting Cycle 5 Accounting Information Journals 6-7 Cash Book 8 Ledgers 9-13 Trial Balance 14 Stock Valuation 15-19 Trading, Profit and Loss and Appropriation A/c 20-21 Balance Sheet 22 Bank Reconciliation Statement 23 Accounting Ratios 24-25 Performance of the Business 26 Comparisons 27 Recommendations and Suggestions 28 Conclusion 29 Appendix Price list (showing mark up %) 30 Diagrams Charts and Graphs Pictures Invoices, Cheques, Receipts etc References Aim of the Project The aim of this project is:

To arrive at a comprehensive understanding of the financial sector of businesses. To highlight the strength and the weaknesses of the Blanna’s Fashion Boutique business. To present the financial records for the year ended September 30, 2011 for Blanna’s Fashion Boutique business. Description of Business Entity Blanna’s Fashion Boutique is a partnership. This business is owned and operated by Anna Kay Blake, Shadae Russell and Ovasha Bartley a Group of ambitious young ladies. Our main aim is to make a profit while catering for the needs of the community which it is situated in.

Blanna’s Fashion Boutique is situated in Montego Bay at the Blue diamond plaza 10 Pearl Street. This business has been in existence since June 20, 2008. We employ approximately fifteen (15) workers. We cater for the petite to the full figured women. We produce a wide variety of slippers, pants, skirts, handbags and accessories. Prices are always lower than that of our competitors. In cases of fashion emergencies you can call us at (1876) 3553980/4275646 or email us at Blanna’[email protected] com. The mission of Blanna’s Fashion Boutique is to: Provide the latest fashion for all females Provide goods and services at a reasonable cost

Ensure that the quality of our goods meets the standards of our business. Ensure that whatever the business do doesn’t affect the environment negatively. Provide employment for members of the community Provide sponsors to underprivileged children Logo and Slogan Logo Slogan With passion we send out the latest fashion Accounting Cycle General Journal Date Details Folio Debit Credit September 1 Bank CB01 364000 Cash CB01 27160 Debtor (J. Simpson) SL01 31600 Motor Van GL02 62840 Building GL03 100000 Stock 24960 Creditor (Super Supreme) PL01 10560 Capital GL01 600000 Opening entries 610560 610560 Purchase journalPage 01 Date Details Folio

Amount 1-Sep Super Supreme International PL01 237,040 27-Sep Super Supreme International PL01 57,960 Sep 30 Total credit purchases to be transferred to the purchases account in the general ledger GL02 295,000 SALES JOURNAL Date Details Folio Amount 5-Sep J. Simpson SL01 57000 13-Sep B. Banton SL03 78,550 20-Sep N. Kidman SL02 104,400 Sep 30 Total credit sales to be transferred to the sales account in the general ledger GL13 239,950 RETURN OUTWARDS JOURNAL Date Details Folio Amount 9-Sep Super Supreme International PL01 13,600 Sep 30 Total return outwards to be transferred to the return outwards account in the general ledger GL16

13,600 Return Inwards Day Book Date Details Folio Amount 24-Sep B. Banton SL03 16,800 30-Sep N. Kidman SL02 9,600 Sep 30 Total goods returned to us to be transferred to the return inwards account in the general ledger GL15 26,400 Cash Book Date Details Folio Discount Allowed Cash Bank Date Details Folio Discount Received Cash Bank September 1 Balance b/d GJ01 27,160 364,000 September 1 Machinery GL3 48,000 September 2 Bank C 50,000 2 Cash C 50,000 3 Sales GL13 59,350 3 Rent GL4 30,000 7 Sales GL13 37,750 6 Fixtures GL5 65,000 18 J. Simpson SJ01 12,000 45,000 8 Wages GL12 10,000 29 B. Banton SJ03 6,175 55,575 11 Insurance GL6 6,100 30

Sales GL13 120,540 11 Electricity GL7 3,300 11 Rates GL8 2,600 15 Super Supreme International PL01 7,500 142,500 15 Wages GL12 10,000 16 Drawings GL10 6,200 19 Furniture GL11 3,600 22 Wages GL12 10,000 29 Wages GL12 10,000 30 Balance c/d 123,075 239,000 18,175 350,375 409,000 7,500 350,375 409,000 General Ledger Date Details Folio Amount Date Details Folio Amount Capital A/C Page 01 September 31 Balance c/d 600,000 September 1 Balance b/d GJ01 600,000 October 1 Balance b/d 600,000 Motor Van A/C Page 02 September 1 Balance b/d GJ12 62,840 September 30 Balance c/d 62,840 October 1 Balance b/d 62,840 Buildings A/C Page 03 September 1

Balance b/d GJ01 100,000 September 30 Balance c/d 100,000 October 1 Balance b/d 100,000 Machinery A/C September 1 Bank CB01 48,000 September 31 Balance c/d 48,000 October 1 Balance b/d 48,000 Rent A/C September 3 Bank CB01 30,000 September 30 Profit & Loss 30,000 Fixtures A/C September 6 Cash CB01 65,000 September 31 Balance c/d 65,000 October 1 Bal b/d 65,000 Insurance A/C September 11 Bank CB01 6,100 September 30 Profit & Loss 6,100 Electricity A/C September 11 Bank CB01 3,300 September 30 Profit & Loss 5,500 30 Accruals c/d 1,200 5,500 5,500 October 1 Accruals b/d 1200 Rates September 11 Bank CB01 2,600 September 30 Profit & Loss

2,600 Drawings September 16 Cash CB01 6,200 September 30 Balance c/d 6,200 September 30 Balance b/d 6,200 Furniture September 19 Cash CB01 3,600 September 30 Balance c/d 3,600 October 1 Balance b/d 3,600 Wages September 8 Bank C01 10,000 September 31 Profit & Loss 40,000 15 Cash C01 10,000 22 Bank C01 10,000 29 Bank C01 10,000 40,000 40,000 Sales September 30 Trading Account 457,590 September 3 Cash CB01 59,350 September 7 Cash CB01 37,750 September 30 Cash CB01 120,540 September 30 Total Credit Sales SJ01 239,950 457,590 457,590 Purchases September 31 Total Credit Purchases PJ01 295,000 September 31 Trading Account 295,000

Return Inwards September 31 Total for month RI01 26,400 September 31 Trading Account 26,400 Return Outwards September 31 Trading Account RO01 13,600 September 31 Total for month 13,600 Discount Allowed September 30 Total Discount Given to customers 18,175 September 30 P & L 18,175 Discount Received September 30 P & L 7,500 September 11 Super Supreme International 7,500 Purchases Ledger Super Supreme International September 9 Return Outwards RO01 13,600 September 1 Balance b/d GJ01 10,560 15 Bank CB01 142,500 1 Purchases PJ01 237,040 15 Discount Received CB01 7,500 27 Purchases PJ01 57,960 30 Balance c/d 141,960 305,560 305,560 October 1

Balance b/d 141,960 Sales Ledger J. Simpson September 1 Balance b/d 31,600 September 18 Discount Allowed CB01 12,000 September 5 Sales SJ01 57,000 September 18 Bank CB01 45000 September 30 Balance c/d 31,600 88,600 88,600 October 1 Balance b/d 31,600 N. Kidman September 20 Sales SJ01 104,400 September 30 Return Inwards RI01 9,600 September 30 Balance c/d 94,800 104,400 104,400 October 1 Balance b/d 94,800 B. Banton September 13 Sales SJ01 78,550 September 24 Return Inwards RI01 16,800 September 29 Discount Allowed CB01 6,175 29 Cash CB01 55,575 78,550 78,550 Trial Balance Blanna’s Fashion Boutique Trial Balance as at September 30, 2011

Details Debit $ Credit $ Capital 600,000 Motor Van Buildings 100,000 Machinery 48,000 Stock 24,960 Rent 30,000 Fixtures 65,000 Sales 457,590 Purchases 295,000 Cash 123,075 Bank 239,000 Wages 40,000 Return Outwards 13,600 Super Supreme International 141,960 Electricity 3,300 Insurance 6,100 Rates 2,600 Furniture 3,600 Drawings 6,200 Return Inwards 26,400 N. Kidman 94,800 J. Simpson 31,600 Discount Received 7,500 Discount Allowed 18,175 1,220,650 1,220,650 Stock Valuation (A) Pants Date Received Issued Balance Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 1-Sep 12 900 10,800 1-Sep 96 1,000 96,000

12 96 900 1,000 10,800 96,000 3-Sep 12 12 900 1,000 10,800 12,000 84 1,000 84,000 5-Sep 12 1,000 12,000 72 1,000 72,000 13-Sep 24 1,000 24,000 48 1,000 48,000 20-Sep 24 1,000 24,000 24 1,000 24,000 27-Sep 36 1,100 39,600 24 36 1,000 1,100 24,000 39,600 30-Sep 24 12 1,000 1,100 24,000 13,200 24 1,100 26,400 (B) Blouse Date Received Issued Balance Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 1-Sep 12 400 4,800 1-Sep 96 440 42,240 12 96 400 440 4,800 42,240 5-Sep 12 12 400 440 4,800 5,280 84 440 36,960 13-Sep 24 440 10,560 60 440 26,400 20-Sep 36 440 15,840 24 440 10,560 30-Sep 12 440 5,280 12 440

5,280 (C ) Handbag Date Received Issued Balance Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 1-Sep 4 1,600 6400 4 1,600 6,400 3-Sep 1 1,600 1,600 3 1,600 4,800 7-Sep 1 1,600 1,600 2 1,600 3,200 13-Sep 1 1,600 1,600 1 1,600 1,600 27-Sep 4 1,650 6,600 1 4 1,600 1,650 1,600 6,600 30-Sep 1 3 1,600 1,650 1,600 4,950 1 1,650 1,650 (D ) Skirts Date Received Issued Balance Quantity Unit Cost Amount Quantity Unit Cost Amount Quantity Unit Cost Amount 1-Sep 12 780 9,360 1-Sep 60 820 49,200 12 60 780 820 9,360 49,200 3-Sep 12 780 9,360 60 820 49,200 7-Sep 12 820 9,840 48 820 39,360 13-Sep 12 820 9,840

36 820 29,520 30-Sep 24 820 19,680 12 820 9,840 (E) Slipper Date Received Issued Balance Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount 1-Sep 48 900 43,200 48 900 43,200 5-Sep 12 900 10,800 36 900 32,400 7-Sep 12 900 10,800 24 900 21,600 20-Sep 24 900 21,600 27-Sep 12 980 11,760 12 980 11,760 Trading, Profit and Loss and Appropriation Account Blanna’s Fashion Boutique Trading Profit & Loss Account for the year ended September 30, 2011 $ $ $ Sales 457,590 Less Return Inwards (26,400) Net Sales 431,190 Less Cost of Goods Sold: Opening Stock 24,960 Purchases 95,000 Less Return Outwards (13,600)

Net Purchases 281,400 Cost of Goods Available 306,360 Less Closing Stock (54,930) 251,430 Gross Profit 179,760 Add Revenues Discount Received 7,500 187,260 Less Expenses Wages 40,000 Rent 30,000 Electricity 4,500 Insurance 5,100 Rates 2,600 Depreciation 400 Discount Allowed 18,175 100,775 86,485 Net Profit Add interest on Drawings: Shadae 620 Less: 85,865 Interest on capital Anna kay 12,500 Shadae 7500 Ovasha 10,000 30,000 Salary: Anna kay 12,000 42,000 43,865 Share of Profit: Anna kay 18,277. 08 Shadae 10966. 25 Ovasha14,621. 67 43,865 Balance Sheet Blanna’s Fashion Boutique Balance Sheet as at September 30, 2011 Fixed Assets Cost

Accumulated Depreciation NBV Buildings 100000 100,000 Fixtures 65000 65,000 Machinery 48000 400 47,600 Furniture 3600 3,600 Motor Car 62840 62,840 400 279,040 Current Assets Stock 54,930 Debtors 126,400 Prepayment 1,000 Bank 239,000 Cash 123,075 544,405 Less Current Liabilities Creditors 141960 Accruals 1,200 143160 Working Capital 401,245 680,285 Financed by: Capital 600,000 Net Profit 86,485 686,485 Less Drawings 6,200 680,285 Bank Reconciliation Statement Updated Cash Book Balance b/d 239,000 Bank Charges 65 Credit Transfer 4200 Standing Order 15000 Balance c/d 228,135 243200 243200 Bank Reconciliation Statement as at September 30, 2011

Balance as per Bank Statement 222,535 Add Late Lodgments 45,000 267,535 Less Unpresented Cheque 39,400 Balance as per Cash Book 228,135 Accounting Ratios Inventory Turnover Ratio- Cost of Goods sold Average Inventory/2 =244,470 24960+61890/2 =5. 62 Current Ratio- Current assets Current Liabilities =551365 143160 =3. 85 Gross profit as a percentage of sales- Gross profit x 100 Sales =179,760 x 100 457590 = 39. 28% For every sale of $100 the business earns $39. 28 as gross profit. Net profit Ratio- Net profit / Net sales x l00 =86,485 / 431,190 x 100 =20. 06% For every sale of $100 the business earns $20.

06 as net profit. Acid Test Ratio- Current Assets- Stock Current liabilities = 544,405 – 54,930 143160 =3. 42 Performance of the Business In preparing the financial statements of Blanna’s Fashion Boutique the Trading, profit and loss and appropriation account shows a profit of eighty six thousand four hundred and eighty five thousand dollar (86,485) at the end of the financial period of September 30,2011. The business started out with six hundred thousand dollar. In the closing of the financial period of Blanna’s Fashion Boutique there was an increase in the amount of capital that the business has.

The business made a gross profit of one hundred and seventy nine seven hundred and sixty dollars (179,760) instead of making a gross loss. Comparisons The comparison is being done between the opening capital and the closing capital for Blanna’s Fashion Boutique, at the end of the financial period. At the beginning of the financial year the opening capital was six hundred thousand dollar (600,000). At the end of the financial period the closing capital is six hundred and eighty thousand two hundred and eighty five dollar (680,285) which means there is an increase of eighty thousand two hundred and eighty five dollar (80,285).

Another comparison is being done between the fixed assets of the business and the current assets. The fixed asset of the business is two hundred and seventy nine thousand and forty dollar (279,040) while the current asset is five hundred and forty four thousand four hundred and five dollars (544,405). This means that the amount of money that the business spend of items that stays in the business with no intention of selling it is lesser than the amount of money that the business spend on assets that will allow the business to generate a profit. Recommendations and Suggestions

It is recommended that Blanna’s Fashion Boutique: Ploughed back a portion of the profit that the business makes into it. Introduces new products to the business. Purchase new equipment for the business Uses some of the profit that the business makes to attach another department on to the business. It is suggested that Blanna’s Fashion Boutique should: Purchase cheaper equipments to use in the business. This will increase the amount of money available in the business. Offer more sale discounts this will force more customers to purchase from Blanna’s Fashion Boutique. Conclusion

It is clear that Blanna’s Fashion Boutique keeps all the records of the transactions that take place in the business over the financial period of time. Blanna’s Fashion Boutique could increase the gross profit and net profit of the business by adhering to the suggestions or recommendations outlined. Never the less Blanna’s Fashion Boutique made a good net profit of eighty six thousand four hundred and eighty five dollars (86,485) during the month of September in 2011. Blanna’s Fashion Boutique was able to make a profit due to the large amount of sales the business made. Price list Goods Price Pants $ Blouse $ Handbags

$ Skirts $ Slippers $ INVOICE Debit note Principles of Accounts School Based Assessment (2012-2013) You are required to name the firm and state the nature of the business. This must be in accordance with the items sold*. After the initial accounting entries (Tasks 1 -3) have been completed you will then record the additional adjusting entries as set out at Tasks 4 and 5. You may choose goods from the following list for the transactions. * Computer Store Clothes and Accessories Store A Keyboard Pants (guess) B Mouse Blouse (guess) C Printer Hand bags (guess) D Surge Protector Skirts (guess) E Speakers Slippers (guess)

ABC Enterprise (Remember that you are to rename the firm) The following transactions were taken from the books of ABC Enterprise. You are required to asses them carefully then write up the relevant books as outlined in the requirements below: 2011 Sept 1Opening Balances Capital$600, 000 Bank$364, 000 Cash$ 27, 160 Debtor (J Simpson)$ 31, 600 Creditor (Super Supreme International)$ 10, 560 Motor Van$ 62, 840 Building$100, 000 Stock 1doz A$ 10,800 1doz B $ 4,800 1doz D$ 9,360 Sept 1Bought goods on credit from Super Supreme International. 8 doz A @ $1,000 each 8 doz B @ $440 each 4 boxes C @ $1,600 each 5 doz D @ $820 each

4 doz E @ $900 each Sept 1Bought Machinery by cheque $48, 000. Sept 2Withdrew $50, 000 cash from the bank account to be used in the business. Sept 3Cash Sales 2 doz A @ $1, 650 each 1 box C @ $2, 950 each 1 doz D @ $1, 400 each Sept 3 Paid rent by cheque $30, 000. Sept 5 sold goods on credit to J. Simpson. 1 doz A @ $1, 650 each 2 doz B @ $800 each 1 doz E @ $1, 500 each Sept 6 Bought fixtures with cash $65, 000. Sept 7 Cash Sales 1 box C @ $2, 950 each 1 doz D @ $1, 400 each 1 doz E @ $1, 500 each Sept 8Paid wages $10, 000 by cheque. Sept 9Returned goods to Super Supreme International as items were damaged. 1 doz A 1 box C

Sept 11Paid the following expenses by cheque: Insurance $6,100, Electricity $3,300 and Rates $2,600. Sept 13Sold goods on credit to B. Banton: 2 doz A @ $1, 650 each 2 doz B @ $ 800 each 1 box C @ $2, 950 each 1 doz D @ $1, 400 each Sept 15Made payment to Super Supreme International by cash $150, 000, received a 5% cash discount. Sept 15Paid wages with cash $10, 000 Sept 16Owner withdrew $6,200 cash to fix his personal motor car. Sept 18Collected Cheque from J. Simpson for goods sold on Sept 5th 2011, $45, 000. Sept 19Bought furniture $3,600 with cash from Courts Ja. Ltd. Sept 20Sold goods on credit to N. Kidman 2 doz A @ $1, 650 each

3 doz B @ $ 800 each 2 doz E @ $1, 500 each Sept 22Paid wages with cheque $10, 000. Sept 241 doz D returned to us by B. Banton as they were the wrong size. Sept 27Bought goods on credit from Super Supreme International. 3 doz A @ $ 1,100 each 4 boxes C @ $1, 650 each 1 doz E @ $ 980 each Sept 29B. Banton settled his account less 10% cash discount. He paid with cash. Sept 29 Paid wages $10,000 by cheque. Sept 30 Received goods from N. Kidman: 1 doz B Sept 30Cash Sales 3 doz A @ $1, 815 each 1 doz B @ $ 800 each 4 boxes C @ $3, 000 each 2 doz D @ $1, 400 each Task 1 Write up ALL Subsidiary Books and then post the transactions to the ledgers.

Please ensure that you distinguish between, General Ledger, Sales Ledger and Purchases Ledger. Show the opening entries in the General Journal at September 1, 2011. Task 2 Prepare ABC Enterprise Trial Balance as at September 30, 2011 Task 3 Using the FIFO method of stock valuation, determine the closing stock. Task 4 Design a logo and slogan for your business and provide the relevant information on the business entity Prepare ABC Enterprise Trading, Profit and Loss Account for the month ending September 30, 2011 and a Balance Sheet as at that date, after taking into account the following: a) Insurance expense was paid in advance, $1000.

b) Electricity was outstanding by $1, 200 c) Machinery is to be depreciated at 10 % annually using the straight line method (show the depreciation for the month). Show adjustment to the above information in the ledgers. Task 5 Prepare the Bank Reconciliation Statement using the Bank Statement below Bank Statement DR CR Balance $ $ $ Sept 1 Balance 364 000 Sept 1 Burke’s (Machinery) 48 000 316 000 Sept 2 SNPN Ltd (Cash) 50 000 266 000 Sept 8 Wages 10 000 256 000 Sept 11 NWC (Rates) 2 600 253 400 Sept 20 Wages 10 000 243 400 Sept 24 Credit transfer (Q Smith) 4 200 247 600 Sept 29 Wages

Process Proposal Essay

Process Proposal Essay

The process that is being analyzed is the payroll process at a firm. The process can be viewed as a series of steps done on a daily basis and then at month end when salaries are to be distributed. Their process flow along with diagrams is given below.

Daily:

The work of the system starts as soon as an employee enters and checks in for the days work. Every employee owns a magnetic swipe card which is given to him/her upon employment at dollar.

The swipe card machine notes and stores the time of entry and exit for every employee along with other necessary information such as employee number, name etc. at the day end, this data is imported to the current system database (running on FoxPro) using a third party software. Issues such as total time worked per day (depending on employee type), overtime, absences and leaves are resolved then and there. Every employee, in case of over time put in, is handed a sheet at the day end called the ‘Overtime Sheet’.

Records of it are maintained by respective supervisors as well as the current system.

Monthly:

At month end, the data that has been accumulated over the whole period along with the overtime sheets that every employee submits is used to calculate total salaries of the employees and then paid to them in the form of payslips. All deductions and additions regarding overtimes, absences, leaves etc. are resolved and then sent to the supervisors for verification.

Upon verification, deductions regarding gratuities and additions such as benefits, allowances etc. are verified from the HR system records and then forwarded to the account system for tax deductions. The final process is then to transfer funds to each employee’s personal account and distribute payslips to each one of them. The transfer is carried out by the accounts department in co-ordination with the HR system and the payslips are distributed via supervisors.

A diagram that illustrates this process is given below:

As it can be seen, the process has various repetitive steps that can easily be eliminated if a computerized system is used. Especially the processes at month end, these can be shortened a lot if redesigned and enabled with IT.

Cvs Annual Report Essay

Cvs Annual Report Essay

Executive Summary/Company History/Products and Services
CVS/Pharmacy has shown a consistent growth for the last three years. Three years ago CVS/Pharmacy has merged with Longs Pharmacy and Caremark to form the largest retail pharmacy chain in the United States. CVS/Pharmacy- CVS/Pharmacy began operations in 1963, and added the pharmacy department in 1967. In 2007, CVS merged with Caremark Rx, Inc.

Finally, in 2008, CVS bought the Longs Drug Store chain. CVS has over 7000 stores(Cvs.com, 2010). At the end of 9 months of 2010, the company has lost 9.

25% against 2009 net income. However, the company has increased their assets and liabilities by .1% against 2009 figures(Cvs.com, 2010). As the company stands now in trends, Net revenues for this 7,100-store drugstore retailer were $23.9 billion for Q3 2010, down 3.1% from $24.6 billion in the prior year’s period.

Poor performance by the company’s Pharmacy Services segment—its revenues dropped 8.5%, to $11.9 billion—was a major contributor to the company’s woes. CVS’ Retail Pharmacy segment revenues actually increased 4.

1%, with total same-store sales climbing 2.5%(Trendwatch, 2010). CVS/Pharmacy is in the process of transitioning their leadership at CEO.

Tom Ryan will be stepping down at the end of the year as CEO, and Larry Merlo will be promoted to CEO. Tom Ryan has been the CEO of CVS/Pharmacy Inc. since 1994, and it has been the consistency at the top that has lead to the expansion of CVS/Pharmacy as being largest retail pharmacy chain in the United States. Now that Tom’s tenure is coming to a close, a new dawn is occurring for the corporation with Larry Merlo taking the helm. Competitor Analysis

In the retail pharmacy industry, there are only three pure pharmacy firms: CVS/Pharmacy, Walgreens, and Rite-Aid. Pure pharmacy firms are pharmacy retailers whose business is built around the pharmacy. Wal-Mart, Kroger, and local grocery stores have pharmacies as an extension of their business plan, but it is not the focus of their company. CVS/Pharmacy and Walgreens have been battling over the top position for years, and Rite-Aid has been ranked at a steady third in the market place.

Walgreens- Walgreens is CVS/Pharmacy’s chief competitor. Founded in 1901, Walgreens is considerably older. Unlike CVS/Pharmacy, Walgreens began with the pharmacy department. With 6000 stores, Walgreens is smaller than CVS. In 2010, Walgreens has increased sales against last year by 6.4%, and net earnings by 4.2%(Walgreens.com, 2010). Moreover, they have posted 36 straight years of sales gains, and 35 straight years of dividend payments(Walgreens.com, 2010).

Finally, Walgreens has posted net earnings for 5 consecutive years. Despite Walgreens smaller size, it has a bigger market share at 31.2% compared to CVS/Pharmacy’s 25%(Wikinvest.com, 2010). The last 10 years has been the first decade that a Walgreens family member was not at the helm of the Walgreens Pharmacy chain. Charles Walgreens retired from the CEO position in 1998, but stayed on a member of the board of directors. Mr. Walgreens will officially retire for the company this year.

Gregory D. Wasson is the Chairman of the Board and Chief Executive Officer. Mr. Wasson has worked with Walgreens for 31 years. In conclusion, Walgreens & CVS/Pharmacy are the giants in retail pharmacy. Their strengths, weaknesses, successes, and failures have brought them to a virtual dead heat. The purpose of this research is analyze the financial strength of both to determine which is in the best financial health. Common Size Statements

We will first compare CVS/Pharmacy and Walgreens through common size financial statements. Commons size financial statements allow for comparisons to be made between companies of different sizes and volumes in order to see the true performance. CVS/Pharmacy has over 7000 stores, and Walgreens Pharmacy only has 6000 stores.

The difference in size will have an impact on expense, revenue, and income. Every company plans to get the most out of every dollar spent. Consequently, we will be comparing the their financial performance from 2007-2009.

From the beginning, Walgreens has yielded a better gross profit by an average of 8% over CVS/Pharmacy. Gross profit is the amount left over after cost of goods sold is taken from revenue. Although, both have been steady with their percentage gross profit, CVS/Pharmacy 21% & Walgreens 28%, Walgreens has gained more.

However, Walgreens’ celebration is short lived because the balance statement is more than gross profit. In fact the 8% edge in gross profit they gave back in operating expenses. Walgreens’ operating expenses took, on average, 22.5% away from their total revenue. CVS/Pharmacy operating expenses took only 14.5% away from their total revenue. Moreover, other indicators of return on investment to the company are higher for CVS/Pharmacy than Walgreens.

CVS/Pharmacy has had a higher operating income than Walgreens since 2007. For the last two years CVS/Pharmacy has posted higher income before taxes than Walgreens. Finally, the biggest trend difference between the two firms is that CVS/Pharmacy’s net income has increased three years in a row, while Walgreens’ net income has steadily decreased three years in a row. As a company, CVS/Pharmacy received a 20% gross profit margin.

The next biggest payment went to operating expenses at 14.12%. After the expenses, income before taxes and operating profit account for 13% and net income accounts for nearly 4%. In 2009 alone, Walgreens’ gross profit and operating expenses nearly cancel each other out. There is only a 4% variance between gross profit and operating expenses for Walgreens.

Operating profit and income before taxes accounts for only 10% of the revenue, while Walgreens’ net income accounts for barely over 3%. On the key financial statements, Walgreens’ performance has been diminishing over the last three years, and CVS/Pharmacy’s performance has risen.

The reason behind the growing strength of CVS/Pharmacy has been the general, consistent financial growth. This will be illustrated by the financial ratios. Liquidity is the firm’s ability to meet its current obligations(Marshall, McManus, Vielle, 2010). Working capital is the excess of a firm’s current assets over its current liabilities(2010).

In this case, Walgreens’ has higher working capital than CVS/Pharmacy. On other tests of liquidity, Walgreens’ out performs CVS/Pharmacy. Walgreens has a higher current ratio, acid test ratio, and they turn over their assets 8 more times a year than CVS/Pharmacy. Although Walgreens has yielded their lowest net income in three years, they have a high comparable liquidity. Moreover, the higher net income for CVS/Pharmacy has not translated into higher liquidity. However, the increased in income has translated into a higher inventory turnover for CVS/Pharmacy. Conclusion

The findings of this paper are illustrating the transition in the marketplace between CVS/Pharmacy and Walgreens. For the last 20 years, these retail pharmacy firms have battled for supremacy in the industry. Over the last decade, CVS/Pharmacy has had one Chief Executive Officer, Tom Ryan. However, since Tom Ryan took over in 1999, Walgreens has had 3 CEO changes. The result of inconsistency in their leadership has translated to a lower return on investment.

Walgreens has higher liquidity, but they have shown three years of decreasing net income. As a result, they are getting weaker as an organization. However, CVS/Pharmacy has shown consistent growth over the last three years. Their increasing strength has been represented by their purchases of Long’s Pharmacy and Caremark. It is my conclusion that this trend will continue

Continuing Differences Between US Essay

Continuing Differences Between US Essay

U. S. GAAP IFRS Convergence In January 2008, the U. S. SEC issued a final rule that adopted rules that allowed non U. S. -based issuers’ financial statements in accordance with the IRRS, as issued by IASB, without the need to reconcile with the U. S. GAAP (SEC, pp. 20, 2008). In its ruling, the SEC acknowledged that the convergence efforts between the IFRS and U. S. GAAP have made progress in eliminating many disparities.

The SEC acknowledged that its prior complaints on lack of information or disclosure by foreign issuers on certain areas, and the manner of presentation of their financial statements have been resolved by the convergence efforts.

The SEC, however, recognize that a number of difference still exist, with some accounting subjects that the IFRS has yet to fully address ( SEC, pp. 20, 1998). Continuing Differences Between US GAAP and IFRS According to the SEC, due to their sources, U. S.

GAAP and IFRS will continue to have differences regardless of their convergence.

The SEC said that these include (i) the effects of mergers, combinations and other legacy transactions that happened when the convergence was still initiated, and (ii) those arising as a result of accounting elections (for example, hedge accounting) that foreign issuers make under those standards (SEC, pp. 21, 2008). The International Accounting Standards Board in its 2005 report said that certain divergence issues has to be addressed in the long-term.

These include (i) classification of debts on refinancing or default under credit agreements, (ii) differences in financial instruments’ accounting, (iii) post-employment benefits, and (iv) long-lived assets impairment and borrowing costs’ capitalization. AIFRS/Australian GAAP PricewaterhouseCoopers reviewed the the Australian equivalents to International Financial Reporting Standards (AIFRS) and gave recommendations to the Australian Accounting Standards Board. PwC pointed to divergences between Australian Standards (AIFRS) and IFRS:

According to PWC, the implementation of AIRFS is expect to improve corporate governance and financial reporting in Australia. Ernst & Young Report Ernst & Young said the IRS differ significantly from those principles in use. Among other things, the IRS’ protocol on business combinations compel recognition of more intangible assets to be valued an recognized than practiced in local accounting rules. E&Y said that the IFRS will help companies improve their internal control as it requires more extensive reporting procedures, and will require greater transparency among firms as a common financial standard will be used.

E&Y said in its report that the conversion to IFRS has a substantial impact on financial reporting which requires management and personnel to focus on improving strategy because: * financial statements’ presentation has been modified * measurement of assets and debts may result in increase in earnings and volatility in equity. * additional disclosures would be required.

REFERENCES

Final Rule: Acceptance From Foreign Private Issuers of Financial. January 9, 2008. Securities and Exchange Commission. http://www. sec. gov/rules/final/2007/33-8879. pdf

International Convergence status. 15 June 2008. International Accounting Standards Board. http://72. 3. 243. 42/fasac/06-21-05_intl. pdf Padoa-Scioppa. 19 May 2006. Financial Times. retrieved 13 Aug. 2008. http://www. iasb. org/News/Announcements+and+Speeches/Work+on+converging+accounting+standards+must+go+on. htm PriceWaterhouseCoopers. 28 Jan. 2005. Submission to Parliamentary Joint Committee on Corporations and Financial Services. http://www. aph. gov. au/SENATE/committee/corporations_ctte/completed_inquiries/2004-07/aas/submissions/sub22. pdf

Assets, liabilities, equity Essay

Assets, liabilities, equity Essay

Accounting, per se, is based on five types of accounts namely: assets, liabilities, equity, income and expense. These account types belong either of the Balance sheet accounts or Income and Expense accounts. Assets, liabiliites, and equity fall under the balance sheet account and the rest goes to the income and expense accoutnts. Definining each, asset is composed of a group of things that an individual or an entity owns. These includes tangible items like car, cash or often stocks (intangible) and others that possess convertible values.

On the other hand, liabilities are group of things on which an individual or an entity is indebted to. Loans and mortgages are the common examples of liabilities. Equity, is what we also call net worth – an amount that is represented to be the remainder after deducting the liabilities of an individual’s or an entity’s from its group of assets. Meanwhile, income is the same as profit – something that you earn as payment from the time, services, or goods that you offered in exchange of money.

Expenses include all those monetaries that were used to acquire the goods or services of someone else. Amongst various accounts in an entity, the stocks swap and replacement costs are the fundamental accounts that change when an entity assimilates to a corporate merger. Stock swap is frequently used in the accounts of a corporate merger since it does not prohibit the shareholders of merging companies to distribute among them the risk that is involved in the merging transaction.

Replacement cost, on the other hand is comes in when entities will employ cost in replacing that target company. However, replacment cost can only be true in most cases where an industry does not give services. References Investopedia ULC (2008) Mergers and Acquisitions: Introduction. Retrieved November 17, 2008, from http://www. investopedia. com/university/mergers/default. asp Money Instructor (2005) Basic Accounting Terminology 101. Retrieved November 17, 2008, from http://www. moneyinstructor. com/art/basicaccounting. asp

Accounting Essay

Accounting Essay

Merchandise inventory is generally valued at the price for which the goods can be sold. reported under the classification of Property, Plant, and Equipment on the balance sheet. reported as a current asset on the balance sheet. often reported as a miscellaneous expense on the income statement. Items waiting to be used in production are considered to be finished goods. merchandise inventory. raw materials. work in progress.

In a manufacturing business, inventory that is ready for sale is called store supplies inventory.

finished goods inventory. aw materials inventory. work in process inventory. Inventory items on an assembly line in various stages of production are classified as Finished goods. Work in process. Merchandise inventory. Raw materials. Rudolf Diesel Company’s inventory records show the following data: Units Unit Cost Inventory, January 1 5,000 .

00 Purchases: June 18 4,500 8. 00 November 8 3,000 7. 00 A physical inventory on December 31 shows 3,000 units on hand. Under the FIFO method, the December 31 inventory is $21,750. $21,000. $27,000. $24,000.

Rudolf Diesel Company’s inventory records show the following data: Units Unit Cost Inventory, January 1 5,000 $9. 00 Purchases: June 18 4,500 8. 00 November 8 3,000 7. 00 A physical inventory on December 31 shows 3,000 units on hand. Under the FIFO method, the December 31 inventory is $21,750. $21,000. $27,000. $24,000. In a period of rising prices, FIFO will have lower cost of goods sold than LIFO. lower net income than LIFO. lower net purchases than LIFO. lower income tax expense than LIFO. The inventory turnover ratio is computed by dividing cost of goods sold by 365 days. verage inventory. beginning inventory. ending inventory.

Quigley Company’s records indicate the following information for the year: Merchandise inventory, 1/1 $550,000 Purchases 2,250,000 Net Sales 3,000,000 On December 31, a physical inventory determined that ending inventory of $600,000 was in the warehouse. Quigley’s gross profit on sales has remained constant at 30%. Quigley suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory? 700,000 $100,000 $200,000 $300,000 Quigley Company’s records indicate the following information for the year: Merchandise inventory, 1/1 $550,000 Purchases 2,250,000 Net Sales 3,000,000 On December 31, a physical inventory determined that ending inventory of $600,000 was in the warehouse. Quigley’s gross profit on sales has remained constant at 30%.

Quigley suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory? $700,000 $100,000 $200,000 $300,000 Cash from sales of merchandise will be recorded in the sales journal. ash receipts journal. purchases journal. general journal. Posting a sales journal to the accounts in the general ledger requires a debit to Cash and a credit to Sales. debit to Accounts Receivable and a credit to Inventory. debit to Sales and a credit to Inventory. debit to Accounts Receivable and a credit to Sales. The process of totaling the columns of a journal is termed footing. ruling. columnizing. sizing.

Cross-footing a cash receipts journal means all necessary postings have been completed. each line of the journal has a horizontal total. the columns of the journal have been cross-referenced. he equality of debits and credits in the journal have been proved. Entries in the purchases journal are made without supporting documentation. from purchase invoices. from sales invoices. from the general journal. Principles of an efficient and effective accounting information system include all of the following except cost effectiveness. flexibility. useful output. All of these options are principles. Which of the following is not an advantage of a subsidiary ledger? Puts greater detail in the general ledger. Makes possible a division of labor.

Shows transactions affecting one customer or one creditor in a single account. Helps locate errors in individual accounts. Cash equivalents include each of the following except U. S. Treasury bills. bank certificates of deposit. money market funds. petty cash. An example of poor internal control is one person should be responsible for handling related transactions. the accountant should not have physical custody of the asset nor access to it. a salesperson makes the sale, and a different person ships the goods. the custodian of an asset should not maintain or have access to the accounting records.

Having different individuals receive cash, record cash receipts, and hold the cash is an example of documentation procedures. establishment of responsibility. segregation of duties. independent internal verification. Storing cash in a company safe is an application of which internal control principle? Establishment of responsibility Segregation of duties Documentation procedures Physical controls Using prenumbered checks and having an approved invoice for each check is an example of segregation of duties. documentation procedures. independent internal verification. establishment of responsibility.

An application of good internal control over cash disbursements is check signers should record the cash disbursements. blank checks should be stored in the treasurer’s desk. each check should be compared with the approved invoice after the check is issued. following payment, the approved invoice should be stamped PAID. Journal entries are required by the depositor for all of the following except bank service charges. an NSF check. collection of a note receivable. bank errors. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of 6 months or less when purchased. year or less when purchased. 1 month or less when purchased. 3 months or less when purchased.

The financial statements of Gentry Manufacturing Company report net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning and end of the year, respectively. What is the average collection period for accounts receivable in days? 50 times 40 times 80 times 54. 7 times Writing off an uncollectible account under the allowance method requires a debit to Bad Debts Expense. Uncollectible Accounts Expense. Accounts Receivable. Allowance for Doubtful Accounts.

The direct write-off method estimates bad debt losses. is acceptable for financial reporting purposes. shows only actual losses from uncollectible accounts receivable. debits Allowance for Doubtful Accounts to record write-offs of accounts. Putnam Company’s account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were $2,100,000 and $105,000 (Cr. ), respectively. An aging of accounts receivable indicated that $192,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is $87,000. 297,000. $105,000. $192,000.

The interest rate specified on any note is for a day. week. month. year. On February 1, Platt Company received a $9,000, 10%, four-month note receivable. The cash to be received by Platt Company when the note becomes due is $9,300. $300. $9,000. $9,900. The accounts receivable turnover ratio is computed by dividing total sales by ending net accounts receivable. total sales by average net accounts receivable. net credit sales by average net accounts receivable. net credit sales by ending net accounts receivable.

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Generally Accepted Accounting Principles Essay

Generally Accepted Accounting Principles Essay

The mutual set of accounting criteria used to develop medical centers financial statements are known as generally accepted accounting principles (GAAP). GAAP are a mixture of respected criteria created by Securities and Exchange Commission (SEC) and accountants. The SEC has authority granted by The Securities Act of 1933 and the Securities Exchange Act of 1934, to determine reporting and disclosure requirements. Oversight is the general functions of the SEC, granting the Governmental Accounting Standards Board (GASB) to determine the standards.

Generally accepted accounting practices are required for accountant to follow and medical centers to use so medical centers and provide investors with a minimal level of dependability for financing determination.

GAAP provides detailed information concerning the medical center fiscal returns, detailed balance and outstanding debt. GAAP guidelines are expected to be upheld by medical centers when giving an account of their economic figures through financial declarations (Finkler & Ward, 2006). Going concern principle. Financial statements must be prepared with the belief that the medical center will continue operation indefinitely.

Disclosure of pending cease of patient care delivery must be noted in financial statement (Finkler & Ward, 2006) Principle of conservatism. Certified public accountants have an obligation to document business purchases that necessitate estimation based on their sound judgment. The total medical equipment productivity time frame and outstanding accounts receivable are illustrations for the use of estimation. In financial data reporting, auditors adhere to conservatism rules, which demands lower appraisal be selected when one or more appraisals are taking in consideration.

For example, when the restoration department has reported a five -percent rate return for new MRI machine for the previous three fiscal years, but the medical centers production department claims the reported profit value is inconsistent and there is an expectation that fewer than three percent of the MRI machines will need repair service during the following year. Since there is a discrepancy, the production department will need to presents undeniable proof to authentication the appraisal, the medical center auditor has a duty to adhere to the conservatism principles and prepare for the ive-percent rate return.

Losses and costs are documented when they are credible and equitably estimated. Profits are documented when achieved (Finkler & Ward, 2006). Matching principle. The medical center expenditures for providing safe patient care should be documented with the corresponding fiscal year in which the income was produced. Documented in the same fiscal year as the income they help to generate. An illustration of this particular cost is the cost of products sold in the medical center, salaries paid to staff.

It is consider when patients are admitted to the medical center and the supplies used to provide safe quality care. Revenue is recognized when reimbursed by Medicaid and Medicare (Finkler & Ward, 2006). Cost principle. The dollar amount deducted from the budget to purchase land, medical equipment, and supplies. Assets are documented at price purchased, which is equivalent to the price paid to gain acquisition. When a medical centers assets such as property or office structures increase in worth each fiscal year, reappraisal in not required for financial reporting purposes (Finkler & Ward, 2006).

Objective evidence. For financial reports to be valuable, they must contain information that is pertinent, trustworthy, and organized in a consistent manner. The cost information provided is evidence-based. This means internal and external users could all agree when the medical center reports they purchased telehealth technology for 1. 5 million and they can produce evidence in a form of bank statements or detailed receipt from vendor proving payment, this is reliable information that is verifiable and objective (Finkler & Ward, 2006).

Materiality principle. Obligates the preparer of the financial report to correct significant errors that otherwise would cause an individual to make a different decision if provided with correct information. When time approaches to approve the budget for additional telehealth equipment, medical center executive may not approve, if they were aware that the program is not beneficial and several telehealth monitors were sitting in storage areas with the local facilities. Insignificant errors may be ignored (Finkler & Ward, 2006). Consistency.

Medical facilities should use the same accounting methods each fiscal year. Consistency make available significant associations to be achieved among separate fiscal years and among the fiscal reports of separate establishments that employ the similar accounting practices. If the medical center changes their accounting method, the accountant must disclose the change in the financial report (Finkler & Ward, 2006). Full disclosure principle. Financial statements usually make available data about the medical center previous performance.

However, imminent litigations, unsettled debt, or additional circumstances that have the potential to produce considerable negative influences on the medical centers economic status are also required to be disclosed in financial statements. (Finkler & Ward, 2006). In conclusion when medical centers are in compliance with GAAP this will help preserve creditability with creditors and investors because it restore confidence with external customers that the medical center financial reports precisely depict its financial standing.