Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Accounting
This discussion contains research pertaining to the impact of cash-basis accounting on the distortion of the financial position and operating results of a business.
We began our discussion with a definition of cash base analysis. We concluded that this accounting tactic is used to examine cash and cash equivalents. This is done by separating cash flow transaction into one of three activities which include; operating, financing and investing activities.
Our investigation then explored why and how financial statements completed using cash-basis accounting can be distorted to present a misleading picture about the financial position and operating results of a company. Our investigation found that these distortions exist when accountants fail to provide a report of additional information that may not appear on the face of the financial statement. Additionally, we found that inconsistencies in the presentation of a financial statement can greatly influence the distortion of information that is found in the statement,
Introduction
Efficient accounting practices are essential to the success of any business. In recent years the accounting profession has come under great scrutiny for the use of questionable accounting methods. One method that has come into question is cash basis accounting. The purpose of this discussion is to examine whether financial statements prepared on a cash basis of accounting may distort the portrayal of financial position and operating results of a business.
According to a report published by the International Federation of Accountants, cash basis accounting is defined as, basis of accounting that recognizes transactions and other events when cash is received or paid. It measures financial results for a period as the difference between cash received and cash...
The primary financial statement is the cash flow statement." (Financial Reporting under the Cash Basis of Accounting, 2000)
The report explains that the cash flow statement allows viewers to examine the sources pf cash that were raised and used throughout the period and the balance of cash and cash equivalents. (Financial Reporting under the Cash Basis of Accounting, 2000)
Arguments
In some cases the cash basis of accounting can distort the portrayal of financial position and operating results of a business depending on how the financial statements are prepared and presented. The purpose of financial statements is to illustrate to the investor the means by which the business generates cash. (Financial Reporting under the Cash Basis of Accounting, 2000)
The financial statements are designed to demonstrate the amount of capitol needed to conduct and sustain business.
The portrayal of financial position and operating results can be misconstrued when accountants use legal but immoral tactics while reporting the sources and the uses of cash in the business. One such tactic involves a firm's failure to report detailed additional information that does not appear on the face of the financial statement but is relevant to explaining the cash flows of the business. (Financial Reporting under the Cash Basis of Accounting, 2000)
The cash basis of accounting may distort the portrayal of financial position and operating results of a business when firms that use it fail to perform several tasks. According to the report these tasks include; the failure to faithfully represent the cash flows of the entity, failure to remain free from bias, and failure to complete the report in all material respects as outlined by generally acceptable accounting principles. (Financial Reporting under the…
Reference List
Financial Reporting under the Cash Basis of Accounting (2000) Standards Report International Federation of Accountants.
Live on the Lakeshore Financial Statements. (2003) Retrieved August 19, 2003 at http://aliveonthelakeshore.gospelcom.net/aotlfinancial03.pdf.
Navani, Vinay S. (2002) IRS eases cash-accounting rules for small businesses
Journal of Accountancy, Vol. 193
Accounting Differential Cost Differential Cost strategy when used by an educational entity such as UOS means that the institution determines what it would cost to offer alternative forms of education based on the number of students interested in choosing those alternative forms. In other words, by offering choices to the students based on the student's specific needs and desires and then measuring the difference in cost when compared to other educational offerings,
" (Camfferman & Zeff, 2) Indeed, the purpose which seems to stand above many others as specific Standards are examined is the improvement of financial reports as informative documents inbuilt with the capacity to educate users as to the financial disposition and outlook of reporting entities. The declared purpose of the IFRS is to improve the comparability, clarity, relevance and reliability of accounting processes and the resultant financial reporting across a
Experimental Research Methods in Business Experimental Research Methods The author provides a survey of the literature illustrating applied experimental research methods in cross-sections of business and organization types. The advantages and disadvantages of the experimental research methods are discussed for each of the examples provided which run the gamut from depression-era agricultural economics to research conducted for the National Science Institute. While the article focuses on business research methods, the range of
Nursing Research Report The structure of a research report is simple. It is almost the same as the structure of the research itself: the problem, the methodology, the results, the conclusions, and the interpretations. The purpose of the research report is to inform readers about the problem investigated, the methods used to solve the problem, the results of the investigation, and the conclusions inferred from the results (Polit & Beck, 2004).
The third position means stepping outside the situation and seeing issues from the point-of-view of a third party. NLP reminds us that people receive information in various sensory channels: the visual, the auditory, the kinaesthetic (perception of movement of effort) and the digital mathematical or reasoned thinking (Taylor, 2000). The idea being that people use all of these modes, but may have a preferred mode. Ethnographic approach: this takes its
Government Accounting Office in America (GAO) This is an examination of the Government Accounting Office in America. The writer discusses the history, purpose and background of the GAO as well as the duties that the office is charged with performing. The writer then analyzes literature that illustrates the office in action. The final discussion revolves around the question, "Is the office effective or is it a waste of money." There were