...describe the purpose of these four reports and how they would be of use to both managers and employees as an internal component. It is also to describe the external use to investors and creditors. The four monetary financial statements are the balance sheet, income statement, capital statement as well as the statement of cash flows. A balance sheet shows what a business has. A balance sheet is a statement of business or institution that lists the assets, debts, and owner’s investment as of a specified date in time. An income statement is a summary of a management's performance as reflected in the profitability (or lack of it) of an organization over a certain period. It itemizes the revenues and an expense of past that led to the current profit or loss, and indicates what may be performed to improve the results. The capital statement is wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment (businessdictionary.com). In layman’s term money invested in a business to generate income. The statement of cash flow reports the money received as well as used during a specific time frame. The cash receipts as well as payments indicate a company’s cash status. Internal users, such as managers and employees use monetary reports to evaluate a company’s performance. Internal users use the monetary reports as information toward upcoming budget issues. The reports...
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...UNIVERSITY OF ABUJA FACULTY OF MANAGEMENT SCIENCE DEPARTMENT OF BANKING AND FINANCE COURSE: FINANCIAL ACCOUNTING (ACC312 QUESTION: THE RELEVANCE OF CORPORATE REPORTING BASED ON HISTORICAL ACCOUNTING PRACTICE HAS CONTINUED TO GENERATE INTENSIVE DEBATES OF DIFFERENT FORCES IN THE WORLD, WHICH IS ESPECIALLY TRUE IN A HIGH INFLATIONARY AND DISTORTED ECONOMY LIKE NIGERIA. DISCUSS THE STATEMENT IN RELATION TO JUSTIFICATION FOR INFLATION ACCOUNTING IN NIGERIA. NOVEMBER, 2011. INTRODUCTION Inflation account is a system of accounting which, unlike historical cost accounting takes into account changing prices. Inflation accounting is a term describing a range of accounting systems designed to correct problems arising from historical cost. Historical cost basis in financial statements Historical cost accounting became more widespread after values overstated during the 1920s were reversed during the great depression of 1930s. Most principles of historical cost accounting were developed after the Wall Street crash of 1929, including the presumption of a stable currency. Under a historical cost based system of accounting, inflation leads to two basic problems, first, many of the historical numbers appearing on financial are not economically relevant because prices have changed since they were incurred. Second, since the numbers on financial statements represent dollars expended at different points of time and, in turn, embody different amounts of purchasing power...
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...In accounting, historical cost is the original monetary value of an economic item.[1] Historical cost is based on the stable measuring unit assumption. In some circumstances, assets and liabilities may be shown at their historical cost, as if there had been no change in value since the date of acquisition. The balance sheet value of the item may therefore differ from the "true" value. While historical cost is criticised for its inaccuracy (deviation from "true" value), it remains in use in most accounting systems. Various corrections to historical cost are used, many of which require the use of management judgment and may be difficult to implement or verify. The trend in most accounting standards is a move to more accurate reflection of the fair or market value, although the historical cost principle remains in use, particularly for assets of little importance. Depreciation affects the carrying value of an asset on the balance sheet. The historical cost will equal the carrying value if there has been no change recorded in the value of the asset since acquisition. Improvements may be added to the cost basis of an asset. Historical cost does not generally reflect current market valuation. Alternative measurement bases to the historical cost measurement basis, which may be applied for some types of assets for which market values are readily available, require that the carrying value of an asset (or liability) be updated to the market price (mark-to-market valuation) or some other...
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...Next plc is a multinational firm which is operating in UK and it has several stakeholders which can be categorized into two groups, internal stakeholders and external stakeholders and also Next plc as an organization has it aims, objectives and goals which they target to achieve in future though they have achieved some in present too. Economic system is an organized way on how allocation of resources in an economy is done, how goods required by the consumers have been produced and how it is distributed, basically there are three types of economic systems where in all three economic system allocation of resources is done by different parties. Economic policies are implemented by the government the economy, both policies that the government use have a direct impact on country’s economy. Next plc as an organization also can affected when the government implements economic policies to the country’s economy. Next plc exports products to other countries and by doing this it enables international trade to take place. International trade brings several advantages to Next plc but it also must face certain issues due to international trade. Certain countries over the...
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...replacement cost/ current value: means the amount need to replace an item with an identical item. Ex: XY Co purchased a machine five years ago for $15 000. It is now worn out and needs replacing. An identical machine can be purchased for $20 000. Historical cost is $15 000 Replacement cost is $20 000 +) net realisable value: is the expected price less any costs still to be incurred in getting the item ready for sale and then selling it. Ex: XY Co's machine from the example above can be restored to working order at a cost of $5 000. It can then be sold for $10 000. What is its net realisable value? Net realisable value = $10 000 – $5 000 = $5 000 +) deprival value: is the loss which a business entity would suffer if it were deprived of the use of the asset. Value to the business, or deprival value, can be any of the following values: (a) Replacement cost: in the case of non-current assets, it is assumed that the replacement cost of an asset would be its net replacement cost (NRC), its gross replacement cost minus an appropriate provision for depreciation to reflect the amount of its life already 'used up'. (b) Net realisable value (NRV): what the asset could be sold for, net...
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...CONTENTS A. GENERAL OF MONETARYPLICY | 2 | 1. Concept | 2 | 2. The purpose of monetary policy | 2 | a. Price stability | | b. Ensure full employment | | c. Economic Growth | | 3. Tools of monetary policy | 3 | a. Open market operation | | b. Obligatory reserves | | c. Rediscount policy | | 4. Types of monetary policy | 4 | B. MONETARY POLICY IN VIETNAM (2008-2012) | 5 | 1. Monetary in 2008-2009 | 5 | 2. Monetary in 20010 -2011 | 11 | 3. Monetary in 2012 | 12 | A. GERNERAL OF MONEYTARY POLICY 1. Concept Monetary policy is one of economic policy that is proposed and implemented by the central bank with aims to stabilize prices, promote economic growth and create jobs in the society. Essence of monetary policy is specified measures to impact on the money supply in the economy. 2. The purpose of monetary policy Purpose of monetary policy is price stability, promote economic growth and create jobs in the society. These targets are close relationships; support each other, not separated. However, to achieve these goals in a harmonized manner, the central bank should coordinate monetary policy with other policies, such as fiscal policy, income policy, etc... a. Price stability Price stability is the primary objective of monetary policy and long-term goals, the empirical process showed stable to stable prices, the value for money, stable currency value is stable the purchasing power...
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...Global Business Strategies Week 4 Discussion Questions MGT/448 May 02, 2013 Global Business Strategies Week 4 Discussion Questions What are the elements of capital budgeting? How do you determine these elements in the Global business arena? Provide examples of how you would use capital budgeting analysis to determine the desirability of global projects. There are three different types of capital budgeting processes: centralized, decentralized and integrated. In centralized capital budgeting, top management make all important strategic capital budgeting decisions. Operating managers bid on implementing projects selected by top management. In decentralized capital budgeting operating managers identify and initiate projects that are approved by top management based upon projected financial performance. Integrated capital budgeting has elements of both decentralized and centralized capital budgeting. Capital budgeting process defines the set and size of a firm’s real assets, which in turn generate the cash flows that ultimately determine its profitability, value, and viability. In principle, a firm’s decision to invest in a new project should be made according to whether the project increases the wealth of the firm’s shareholders. The two things to consider when you would use capital budgeting in global projects are the following; What will the Project Cost? This is the first and most basic question a company must answer before pursuing a project. Identifying the cost...
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...Definition Micro means small. Thus, micro economics analyses individualistic behaviour. It studies an individual consumer, producer, price of a particular commodity, household, etc. According to Prof. K. E. Boulding, "Micro Economics is the study of particular firm, particular household, individual prices, wages, incomes, individual industries and particular commodities." Subject Matter or Scope of Microeconomics Micro Economics is concerned with the following topics :- 1. Commodity Pricing: Prices of individual commodities are determined by market forces of demand and supply. So micro economics makes demand analysis (individual consumer behaviour) and supply analysis (individual producer behaviour). 2. Factor Pricing: Land, labour, capital and entrepreneur, all factors contribute in production process. So they get rewards in the form of rent, wages, interest and profit respectively. Micro economics deals with determination of such rewards i.e. factor prices. So micro economics is also called as 'Price Theory' or 'Value Theory'. 3. Welfare Theory: Micro economics deals with optimum allocation of available resources and maximisation of social welfare. It provides answers for 'What to produce?', 'When to produce?', 'How to produce?' and 'For whom it is to be produced?'. In short, Micro economics guides for utilizing scarce resources of...
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...1 historical cost accounting (hca) is the situation in which accountants record revenue, expenditure and asset acquisition and disposal at historical cost: that is, the actual amounts of money, or money's worth, received or paid to complete the transaction. 2 nature of historical cost accounting this is one of those idiosyncratic headings that teachers dream up (me too, probably!) that meant nothing to me without further explanation 3 the big advantage of hca is that it leads to absolute certainty and it fits in perfectly with the cash flow statement. Hca tells us exactly what has been paid and what has been received and therefore there is no doubt about balance sheet amounts. The alternatives, where accountants attempt to take inflation into account, can lead to many problems. There have been several forms of current cost accounting, purchasing power accounting and so on since the mid 1970s that have been proposed as alternatives to hca. The reason the alternatives have not survived, and IAS 15 on inflation accounting is about to be replaced, if it hasn't been already, is that no one can agree on the best way to represent accounting values. Hca provides definite values, other methods don't! 4 the disadvantages of hca include the fact that hca values can relate to transactions that could be a year old, 10 years old and as much as 100 years old. It's true that some businesses have old equipment and old stocks (inventories) that are still working well but that were bought a...
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...standard of value a. Ludwig b. Francis Lusac c. Raymond Kent d. Terence Gaugh 7. The object or commodity should be used in its original context and must possess intrinsic value a. utility b. stability c. portability d. divisibility 8. The commodity itself could be cut into smaller portions a. utility b. stability c. portability d. divisibility 9. The object or commodity must be of general acceptance, allowing passage from one hand to another without question of origin a. utility b. stability c. divisibility d. general acceptability 10. Refers to the change in the value of money being circulated a. stability of value b. utility c. divisibility d. general acceptability 11. The use of ornamental objects or articles associated with hunting and fishing a. metallic money b. nonmetallic money c. bimetallism d. simetallism 12. Designated by law to be acceptable as payment for...
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...Financial intermediation 陈鸣杰 F1003 201048950504 CONTENTS The process of financial intermediation………………………………..2 The deposit-taking financial intermediaries…………………………..4 The non-deposit-taking financial intermediaries………………………6 The Impact of non-depository financial institutions…………………..9 How to facilitate the transfer of liquidity from surplus to deficit units in the economy………………….. ………………….. …………………..10 The process of financial intermediation In a market economy, the savings - investment into the process is carried out around the financial intermediaries to financial intermediation of savings into investment in the basic process of institutional arrangements. The basis of the existence of financial intermediaries such as the field has been the concern of financial. Financial intermediaries to discuss the issue, we must first make the meaning of the definition of financial intermediaries. Financial intermediation by the banking financial intermediaries and the general non-bank financial intermediaries form, specifically including commercial banks, securities firms, insurance companies, and information consulting services and other intermediary institutions, finance is the core of modern economy. Books related to financial intermediation. In the modern market economy, the financial activities closely with the economy, the scope of financial activities, quality directly affects the performance of economic activity...
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...Current Account Goods Services Maintenance and repairs Services Transport Travel Construction Insurance and pension services Financial Services Charges for the use of intellectual property Telecommunications, computer and information services Other business services Personal, cultural & recreational services Government goods & service Primary income Secondary incomeCapital Account Acquisitions/disposal of non-produced non-financial assets Capital transfersFinancial Account Direct investment Portfolio investment Financial derivatives Other investmentReserve AssetsStatistical Discrepancy | 57,348125,614-14,003101-28,01226,893-3,202-1,273-697-4,317221-1,994-1,309-415-36,024-18,239159252-93-23,037-21,74858,388954-60,632-3,873-30,579 | 39,907108,230-16,693------------34,126-17,504-20.9---15,807-5,450-3,041-253-7,062-14,649-9,430.1 | 49,508125,064-20,546------------37,390-17,619280.6---76,495-17,101-37,867-975-20,55336,338-9,631.6 | Balance of Payment for Malaysia from 2012-2014 (in RM Million) (Taken from website of Department of Statistics Malaysia Official Portal) The balance of payments (BOP) is the method countries use to monitor all international monetary transactions at a specific period of time. Usually, the BOP is calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP in order...
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...related substances are the well-being administrations choice making, it is basically the director at all levels comprehending the fundamental ideas of social insurance account and how these ideas are utilized to improve the monetary prosperity of the association (Carroll, 2007). The real businesses in the medicinal services division include: Health services: The health services industry comprises of suppliers of well-being administrations, including restorative practices, clinics, facilities, nursing homes, home health awareness organizations, and hospices. Health Insurance: The health insurance industry which makes the majority of the installments to well-being administrations suppliers incorporates...
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...factors that helped hold back the economic growth. One major factor was weather. Weather actually decreased consumption of housing and goods, although it did boost spending on utilities. During 2013, exports to China and business investments on aircraft were very high. A partial pullback in these areas also contributed to an abysmal GDP Growth Rate. The stockpiling of inventories dropped by the extensively as they were moving at unsustainable rates at the end of 2013. U.S. GDP only grew in 2013 at a rate of 1.9%. There are many factors that will only allow slow growth in the GDP. These factors or forces are the following: • Washington’s attempt to cut government spending. • High structural unemployment. • Personal consumption is at 70% of the current GDP. There are a few forces that are worrying analysts about the growth of the United States GDP growth rate. These forces while they will only happen in certain scenarios will also weigh on the GDP growth rate. Below are the forces that and what their effects are on the GDP growth rate. A cutback on the quantitative easing by the Federal Reserve is huge fear of analysts. The cutback will result in higher interest rates on loans and mortgages making getting a loan for individuals and business more expensive. The key here is that this will only happen if the core inflation rate rises higher than the Fed’s target inflation rate of 2% or if the unemployment rate falls below 6.5%. If this happens the cost of getting...
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...contemporary accounting Current purchasing power accounting a form of accounting that measures profit after allowing for the maintenance of the purchasing power of the shareholders' capital. ‘There are various prescriptive theories of accounting that were advanced by various people on the basis that historical cost accounting has too many shortcomings, particularly in times of rising prices’ (Page 83 Chapter 4). | Theory and Purpose of |CPPA |Maintain purchasing power |Adjustments to income | |accounting | | | | |Measure of non-monetary |HC (historical cost) |historical cost accounts adjusted for |Holding gain/loss on net monetary | |assets’ value | |changes in the purchasing power of the |assets/liabilities only recognised in | | | |dollar (not recognise in PNL) |PNL | Historical cost accounting assumes that money holds a constant purchasing power (Page 84). As Elliot states: “An implicit and troublesome assumption in the historical cost model is that the monetary unit is fixed and constant over time. CPPA was developed based on a view that in time of rising prices, if an entity were to distribute unadjusted profits based on historical costs...
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