...steps in completing the accounting cycle? Discuss the relationship between the amounts on the adjusted trial balance for an account and its ledger? Discuss the relationship of the adjusted trial balance and the amount on the financial statements? What is the effect on the financial statements of missing a step when completing the accounting cycle? There are nine steps to completing an accounting cycle which are: ϖ Analyze business Transactions ϖ Journalize the Transactions ϖ Post to ledger accounts ❖ Prepare a trial balance ❖ Journalize and post adjusting entries: Prepayments/Accruals ❖ Prepare an adjusted trial balance ❖ Prepare financial statements: Income statement Retained earnings statement Balance sheet ϖ Journalize and post closing entries ϖ Prepare a post-closing trial balance Account balances are transferred from the ledge onto the trial balance for review and adjustments, if necessary. The adjusted trial balance states a list of company’s accounts, and the balance of the account. A discrepancy found in the trial balance is adjusted to disclose accurate balance. After the account balances are entered onto the trial balance, the two columns are totaled. The totaled credit balance must be the same as the totaled debit balance; if not the trial balance is reviewed to find any errors in posting or journalizing. The adjusted trial balance...
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...Client Understanding Client Understanding Paper Letitia Edwards University of Phoenix July 1st, 2013 Professor Boswell Abstract One of the most important responsibilities of accounting personnel is to ensure compliance with Generally Accepted Accounting Principles. To ensure compliance, a new employee would need to review the firms’ current financial statements and get clarification if needed. Client Understanding Paper Reorganization of personnel is almost a constant factor with organizations. In terms of the financial statements, new employees/accountants need to gain understanding on company policy of stating transaction. For this paper we wanted to discuss four key factors: Adjusting lower cost of market inventory on valuation, Capitalizing interest on building construction, Recording gain or loss on asset disposal, and Adjusting goodwill for impairment. To explain to the client why this information is important, we will discuss each topic. First we decided which topic we would do our research on, and then we assembled all the data and analysis to create this paper. Adjusting lower cost of market inventory on valuation: Ending inventory in one accounting period will automatically become the beginning inventory for the next. For that reason and others, it is important to keep accurate information. Lower of cost or market refers to the valuation process that may result in an asset that can be reported at an amount lower than cost. The...
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...these key concepts included; the differences between accrual basis and cash basis accounting, adjusting entries, and the adjusted trial balance. Accrual Accounting In accrual accounting, companies post income when it is earned and expenses are posted when they occur. Accrual accounting is based on the revenue recognition principle and the expense recognition principle. The revenue recognition principle means that revenue is claimed when the service is completed, even if the customer has not paid yet. "Let the expenses follow the revenue" (Kimmel, Weygandt, & Kieso, 2010, p. 163). Expenses necessary to earn revenue must be posted in the same accounting period when the revenue is posted; this is expense recognition. Cash Basis Accounting In cash basis accounting, revenue and expenses are claimed when the company receives cash. This particular basis of accounting can be inconsistent and when it comes to formal entity financial reporting. Cash basis accounting violates the generally accepted accounting principles (GAAP) because it does not meet the revenue recognition and expense recognition principles. Adjusting Entries Adjusting entries are important because they follow the revenue recognition principle as well as the matching principle required by GAAP. Adjusting entries are created and entered into a company’s journal and the general ledger. Inputting these entries increases the accuracy of a company’s true financial standing at the end of a reporting period (Kimmel...
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...2. The account is classified as a current asset on the balance sheet. 3. A subsidiary ledger includes a separate account for each customer. C. A note receivable is more formal than an account receivable. 1. A note receivable is a written promise to receive cash; a promissory note is a negotiable document that serves as evidence of the receivable. 2. A note receivable may be classified as either current or long-term, depending on its maturity date. D. Other receivables may include loans to employees or subsidiary companies; these may be either current or long-term assets. Objective 1: Design internal controls for receivables A. Internal control over collections of cash on account is important. 1. Cash-handling duties should be separate from cash-accounting duties. 2. The bookkeeper should not also handle cash receipts. A bank lock box accomplishes the same control over receipts of cash. 3. The person posting the accounts receivable subsidiary ledger should not also handle cash receipts. B. The credit department is responsible for evaluating and approving new credit customers as well as monitoring the payment...
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...type of company and the amount of products being produced determines the market structure for any given company. Each market structure is used to help determine the pricing and non-pricing of the products. The economy in the US is very competitive with numerous of buyers and sellers. Monopolistic Competition According to McConnell & Brue (2004), the idea that each market has its own pricing method is known as a monopolistic competition. In this structure is there are several vendors, variety of products and an easily accessible industry. Each company has the ability to determine its own pricing and can make adjustments according to the sales threshold. However, these industries gain a small percentage of the market price and they will adjust their products to meet customer demand in order to remain profitable. The idea is to make the product more attractable than to make a profit. For instance, if Nike creates a fabulous running sneaker then Adidas will try to imitate and create fancier running sneaker to remain competitive and profitable. According to Wikinomics (2010), the industries in this market rely heavily on advertising in order to entice consumer to purchase their products. Another example of a monopolistic industry is the auto industry. The auto industry constantly displays advertisements and commercials in order to get consumers to purchase their products. The company can experience an economic loss or a profit but easily exit the market if they failed in the markets...
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...IMPORTANCE OF ADJUSTMENT ENTRIES Importance of Adjustment Entries Jourdain M. Yardan American Intercontinental University IMPORTANCE OF ADJUSTMENT ENTRIES ABSTRACT Adjustment entries are made to handle issues that occur from events that directly affect expenses and revenue for accounting periods. The four types of accounting entries are accrued revenues, unearned revenues, accrued expenses, and prepaid expenses. Input forms for the journal entries that have supported information for each transaction are used to record information into a computerized accounting system. Ethical issues come up in the world of adjustment entries therefore the necessity to have approved entries. Keywords: Adjustment Entries, Revenue, Transaction, Ethical, Accrued IMPORTANCE OF ADJUSTMENT ENTRIES Importance of Adjustment Entries Adjustment journal entries are made to adjust account balances and events that affect revenue and expenses for accounting periods. Since all transactions can be hard to annotate, adjustment entries are used to account for items that do not get recorded in daily transactions. There are multiple ways to complete adjustment entries such as hiring an accountant that will give you copies to enter into a general ledger or by simply completing it by yourself. Adjustment entries create complete and accurate...
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...provides an opportunity to observe a simple accounting system in action. The knowledge and understanding of the manual system will serve as a foundation for the topics to be discussed in the remainder of the course, and in future courses, especially auditing. REQUIRED: Review entire instructions, flowcharts, and ledgers booklet before you begin the project. Complete all requirements in Part III. Requirements starting on page 10 of the instruction booklet. Use Option 2 for recording monthly transactions, and use Transaction List A, the blue one. Important: This project is very time consuming. Please plan ahead so that you have time to check the solutions manual or consult with peers or the instructor. You are encouraged to post and respond to questions using the discussion tool via D2L. HELPFUL HINTS: General 1. Make the documents and reports neat; use a pencil so that you can erase errors. 2. Make sure all general journal entries are correct. Use the reference book with your packet if you are having trouble. 3. Make sure you carefully follow the flowcharts and put proper signatures/initials on the documents. If there is no designated space for the signatures/initials, just be consistent and visible. 4. Write checks only when explicitly directed to do so. Do not write a check because money is due, wait until instructed to write the check. If you run out of checks, or have extras at the end, you have done something wrong. 5. You may wish to replace the separator tabs (Mailed/Given...
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...Review Modern’s financial statements and the notes prepared by Asha Patel. In a Word document, prepare explanations to Asha for each item. Ensure that, for each item, you identify why it is an issue, analyze each issue using the relevant CPA Handbook section(s) and provide a recommendation that is consistent with your analysis. Ensure you discuss how your recommendations will impact the relevant users. It is important to consider the users’ needs. Also, ensure that your response is clear and concise. In addition, in Excel, prepare the necessary adjusting entries and revised financial statements, incorporating your adjusting entries. At this point, do not recalculate tax expense. Leave the tax instalments paid in income tax expense (in other words, don’t adjust for tax yet). You do not need to add accounts to the financial statements or prepare financial statement note disclosures. For your calculations, please start with the template I have attached to this email. Also, just for your information, I have included a summary of Modern’s operations. This information will help you throughout the module. Your memo, not including Excel, should not exceed seven pages. NOTE: FOR THIS OFFERING OF CORE 1, THE IMMERSIVE CASE IS TAKING PLACE IN 2016. (FOR INSTANCE, THIS “EMAIL” WAS SENT ON JANUARY 10, 2016). THROUGHOUT THE CASE, THERE WILL BE REFERENCES TO THE “CURRENT YEAR-END” AND THE “PRIOR YEAR-END.” THIS WILL BE RELEVANT AS YOU WORK ON ACTIVITIES SUCH AS FINALIZING THE FINANCIAL...
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...Adjusting Event • Other Issues -Date of authorization for issue -Dividends -Going concern -Disclosure Introduction • Bursa Malaysia requires large publicly traded companies to lodge their unaudited financial statements within 2 months of fiscal year-end and full financial statements within 4 months • Business continues during this “subsequent period” and events could take place that have an impact upon the firm’s financial statements for the preceding year • These events are referred to in the accounting literature as subsequent events or post-balance sheet events. Introduction • The IASB has released IAS 10, dealing specifically with the accounting for subsequent events. • IAS 10 requires that companies adjust the reported amount of assets and liabilities if events occurring after the balance sheet date provide additional information about conditions that existed at the balance sheet date. • IAS 10 requires that disclosure be made of significant subsequent events that is indicative of events that arose after the reporting date What is an event after the reporting period? • Time lag of many weeks or months between: • end of financial...
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...higher commitment levels. * This is especially so for the managerial levels : regional manager, store manager and assistant store manager. Hire Yourself or Outsource * Hire yourself, because the characteristics and traits an individual possess is very important as to whether the individual would be suited to work in Tanglewood and to get accustomed to its culture. * Outsource would risk the vendor to hire candidates with characteristics unsuited for Tanglewood as they may not be clear of Tanglewood’s culture. * However, if Tanglewood is in labour shortages, outsourcing the recruitment of retail assistants may be possible. External or Internal Hiring * Internal hiring, because Tanglewood's success is due entirely to its strong culture. * To cultivate a stable, committed workforce, it will have to emphasize internal hiring. * This allows employees to use the internal labour market as a springboard for launching long-term careers within the organisation. * This is especially so for the managerial levels : regional manager, store manager and assistant store manager. * However, external hiring might be necessary when there is rapid organization growth, but it should be restricted to entry-level jobs. Core or Flexible Workforce * Core workforce. Tanglewood should focus on using a core workforce as it is viewed as essential for the...
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...largest retailer, Wal-Mart, penetrating and expanding into the Canadian grocery market. Wal-Mart has a full grocery offering in their SuperCenters, which means that consumers can now do all of their shopping in one place. Not only will competition drive prices down but Wal-Mart's efficient use of IT in their supply chain will force competitors to adjust to become more efficient. The fact that Wal-Mart already has a very large presence in Canada and that the food industry is growing makes the opportunity extremely attractive for the company. With such international success, it is unlikely that the world's number one retailer will be unable to generate similar success in Canada. Loblaw's main goal should be to protect and increase their dominance in the Canadian grocery industry. The first step is to evaluate their current strategy and determine whether or not any changes must be made to counter the Wal-Mart threat. Loblaw should focus on their competitive advantages that allowed them to prosper in the industry. By doing so, they can reinforce Wal-Mart's barrier to entry and hopefully hold on to their market share. It is important that Loblaw does not try to compete with Wal-Mart head on. They should focus on attracting customers by offering unique products that can only be found in Loblaw stores. Enhancing their President's Choice brand and expanding their customer loyalty program are other ways that Loblaw can further differentiate themselves in the...
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...your time and read all instructions carefully. Understanding Project Scheduling A typical project is composed of tasks and resources. After tasks are identified, you organize the tasks in a logical hierarchy, also called a Work Breakdown Structure (WBS). Eventually, this sequence will show the interdependencies of each task. Then each task is given a duration. In MS Project, this can be in weeks, days, hours or minutes. You can also specify a milestone, which will represent an event that marks the completion of a group of related tasks. To accomplish any task, you need resources. Resources can include people, equipment, material or special facilities necessary to complete a task. Resource availability and scheduling are important constraints to completing a task. Once you establish a plan, complete with tasks and resources, you will often need to refine the plan before saving it as a baseline. The baseline is your guideline to help manage the project. MS Project Basics When you first...
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...a statement of cash flows. It was also discussed how one would use ratios and vertical and horizontal analysis in regards to deciphering financial statements. Lastly, we talked about preferred and common stocks are issued, placed as journal entries on financial statements and the paid out in dividends. With these topics we got to see why financial statements are compiled the way they are and it gave us a better understanding of how they work for a company. Each week the understanding is getting greater on financial statements. Financial statements are analyzed by corporations so that they are able to see and identify their strengths and possible weaknesses. Identifying the relationship with the balance sheet and a company’s profit and loss accounting will help in the decision making process on whether to proceed with certain things or to either change or eliminate them all together. External users of a company look at the information on financial statements to decide whether or not they want to invest or issue credit but the company also uses these statements to help make the hard decisions that management needs to build a company with staying power. Through issue of common and preferred stocks we must pace the journal entries on our statements and then we use that information when we are paying out dividends as well. There are multiple ways to analyze financial statements, this week we focused on ratio, vertical and horizontal analysis. In the statement of cash...
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...diagram above, the first step of the accounting cycle is analyzing the business transactions. The accounting cycle starts with identifying and analyzing the business transactions taken place. It is important to identify the business transactions that take place. Furthermore, not all the events are recorded in the accounting system. The company must identified the transactions that are related to the business are recorded in the accounting system. For example, a business transaction is occurred when the company purchased a motor vehicle. As a result, the event was identified and the new asset purchased should be added to the accounting...
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...the ability to conform its business model to the Asian market. EBay inability to tailor its product to the Asian Market has also been a major reason for their failure in the Asian Market. In major markets like Japan, Korea and China, Yahoo subsidiary have outperformed EBay. EBay has a simple business model of drawing revenue from passing information between seller and buyer, which require no necessity to have inventory or ship goods. This business model was embraced by foreign markets including UK, France, Germany and surely became a leader in e-commerce in the US. This success didn’t translate to the Asian Market. The reason is due to neglect of the four P’s concept, adoption, standardization, and entry time and entry market. EBay begin its entry into the Asian market in Japan, but missed their ideal time to enter the market. Yahoo had entered the Japan market six months prior to EBay. This allowed yahoo enough time to accumulate enough market power to force EBay out. Not only did EBay enter the market late, it did other things wrong also. EBay charged five percent commission, targeted inappropriate audiences, and neglected traditional Japanese payment methods. Japan is...
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