Accounting Principles Essays (Examples)

Accounting Principles

To expressly explain the similarities and differences that exist between the GASB and FASB accounting standards it is imperative that we first examine the philosophical approaches that the boards have taken (Marsh & Fischer, 2011). These are found in the board's concept statements. The boards use the concept statements to develop accounting standards. The FASB conceptual framework focuses on provision of best information that influences decisions made by creditors, investors, and entities interested in commercial and not-for-profit activities. The GASB's framework, on the contrary, focuses on accountability and opposed to aiding in decision making processes (Marsh & Fischer, 2011).

Areas of potential differences between GASB and FASB lie in recognition, measurement, display, and disclosure. ecognition differences arise on whether an item should or should not appear in a financial statement. In as much as SFAS No. 116(1993a) addressed contributed services, the GASBS No. 33(1998) failed to (Marsh &…

GAAP

Generally Accepted Accounting Principles in Health Care

GAAP (generally accepted accounting principles) in health care

Within the United States, all businesses that keep financial records must adhere to GAAP or generally accepted accounting principles, including both for-profit and not-for-profit healthcare entities. "GAAP is not a single accounting rule, but rather the aggregate of many rules on how to account for various transactions" (Kramer & Applebaum 2013). The first two principles of GAAP are that "financial records must be separately maintained for each economic entity" in a separate fashion and that "an economic entity's accounting records include only quantifiable transactions. Certain economic events that affect a company, such as hiring a new chief executive officer or introducing a new product, cannot be easily quantified in monetary units and, therefore, do not appear in the company's accounting records" (GAAP, 2013, Houghton Mifflin Harcourt). These details may be included as qualitative data…

Budgets & Financial Plans

Provide the 10 main accounting principles and guidelines and describe each.

The ten accounting principles are described on the Accounting Coach website and are as follows:

Economic Entity Assumption -- This is the idea that a sole proprietor will keep personal and business transaction data and funds separate (Accounting Coach, 2015).

Monetary Unit Assumption -- This is the idea that all transactions recorded will be in U.S. dollars and that only transactions that CAN be reported as such will be done (Accounting Coach, 2015).

Time Period Assumption -- This is the principle that says that economic data will be defined based on specific time horizons such as a number of weeks, months, quarters and/or years (Accounting Coach, 2015).

Cost Principle -- This is the idea that there is a cash or cash equivalent that can and should be assigned to a given activity. For example, a…

GASB

Persons who use governmental financial reports have different needs than those who use business financial reports. These different needs are shown in the way the framework of the accounting and reporting standards are set up. The GASB framework is geared towards being user-friendly to citizens and their elected representatives in government. These users are not the primary readers and/or targets of business reports. Thus, while some businesses might use mark-to-market accounting principles, like those employed by Enron prior to its collapse in the early days of the 21st century, GASB puts accountability and transparency at the top of its principles. The purpose of its accounting, in other words, is to show constituents what their government is doing with taxpayer dollars (eck, 2015).

One significant example of how GASB standards address differences between governmental and business financial reporting is the Congressional Budget Office, which shows the use of fund accounting…

Accounting

Several terms and definitions are valuable to understand financial statements. In the United States, financial statements of public corporations are produced in accordance with the U.S. Generally Accepted Accounting Principles. These principles govern how the information for financial statements is compiled and presented. The purpose of these principles is so that all stakeholders can easily understand the statements and make comparisons across both time and across different companies, because the statements are produced and presented in a consistent manner. The International Financial eporting Standards (IFS) are the international equivalent of GAAP. While several countries utilize a national version of GAAP (U.S., Canada, UK, etc.), more than 100 countries use IFS, making this set of standards the most widely-adopted in the world. There is a move to converge national GAAP standards with IFS, including a multi-year project to converge U.S. GAAP with IFS. For now, however, IFS represents a different…

Accounting

The role of financial statements in investing is that they provide a consistent format that can be used by potential investors and other stakeholders to evaluate a company. There are several components that facilitate this happening. For publicly-traded firms, Generally Accepted Accounting Principles (GAAP) play a key role in the creation of financial statements. GAAP is a common set of accounting principles and procedures that companies use to compile their financial statements (Investopedia, 2012). ith companies having to produce their statements according to a common set of criteria, the information is easier to compare not only between different years at the same company, but also against other firms in the industry and all other publicly-traded firms.

The IFRS is essentially the international version of GAAP. Financial statements in many countries, especially those in Europe, are produced according to IFRS. There are a many areas where GAAP and IFRS diverge,…

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…

Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Sometimes they will merely confirm what the proprietor already knows, but there are inevitably going to be times when they will reveal that the proprietor's assumptions about the nature of the business are false. Moreover, accounting can act as essentially a second opinion. The proprietor may feel one thing is true, but the numbers can reveal something different.

Overall, accounting is an essential component of any business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. However, proprietors should not overlook the value of accounting. Accounting helps to reveal the business' past performance, but can also be used to enact organizational controls today and to help plant for more effective operations in the future. By understanding the firm's cost structure…

By re-characterizing the epo 105 dealing as a sale, Lehman detached the account from its balance sheet (Durden, 2010).

Lehman frequently augmented its utilization of epo 105 transactions in the time previous to reporting interludes to decrease its openly reported net leverage and balance sheet. Lehman's intermittent reports did not reveal the money borrowing from the epo 105 transaction, even though Lehman had in reality borrowed tens of billions of dollars in these dealings, Lehman did not reveal the acknowledged responsibility to pay back the liabilities. Lehman utilized the money from the epo 105 dealings to pay off other dangers, thus dropping both the entire debts and the entire assets accounted for on its balance sheet and decreasing its power percentages. Therefore, Lehman's epo 105 dealing was made up of a two-fold procedure: performing epo 105 dealings followed by the utilization of epo 105 cash borrowings to pay down debts,…

Accounting Fundamentals for ealthcare Management

This paper examines governmental and nonprofit accounting and discusses how it differs from commercial accounting. In the accounting field, there may not always be a clear distinction between the three types of organizations. The dividing line between business and nonbusiness organizations may depend on the incidence and relative importance of the nonbusiness characteristics found in an entity. The funds of such organizations are usually earmarked for specific purposes and must be used in accordance with laws, regulations, or contractual requirements.

One distinction of nonbusiness organizations is that they generally have no single indicator of performance, such as profit or net income. FASB:CS-4 provides two performance indicators for financial reporting for nonbusiness organizations:

They provide information about the nature and relationship between inflows and outflows of resources.

They provide information about service efforts and accomplishments.

FASB: CS-4 also sets forth the distinctive features of the nonbusiness…

Accounting, by its nature, requires a set of standards that are exactly the same industry-wide. If there were not established rules for determining revenues, profits, expenses, and other influences on a company's bottom line, there would be no way to evaluate a corporation's effectivity, production, or potential. A lack of established standards would also mean that no two companies could be honestly compared, since their accounting methods could be so significantly different that their financial statements showed vastly different accounting methods.

In light of these potential discrepancies in reporting methods, the bodies that govern accounting have established Generally Accepted Auditing Standards, or GAAS. Generally These principles are required to be applied in all accounting situations, and they are extensive enough so that almost every possible scenario has a standard response. Interest owed in Houston is reflected on a financial statement in the exact same way that interest owed in New…

Does Coca-Cola have the ability to influence CCE's debt levels?

The debt to equity ratio of Coca Cola is: .92 for 2009 and 1.33 for 2010. While CCE has a debt to equity ratio of: 1.51 for 2009 and 1.3 for 2010. Coca Cola does have the ability to influence the debt levels of CCE. The way that this can take place is to use Coca Cola's credit line to help the firm raise additional working capital in the public markets. This would cause the debt levels of CCE to increase. Another option is that Coca Cola can purchase CCE and assume a percentage of their debt. A good example of this can be seen with Coca Cola's acquisition of CCE North America. In exchange for increasing their ownership in this segment, there was also an agreement for Coca Cola to take on CCE North America's debt of $7.9 billion.…

"Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods."

ased on the data retrieved and the projections made, the accounting division will proceed to the development of the consolidated statements for all of GM subsidies and the overall group. There are 24 consolidated statements, as follows: Discounted Operations; Asset Impairment; Investment in Nonconsolidated Affiliates; Marketable Securities; Variable Interest Entities; Finance Receivables and Securitization; Inventories; Equipment on Operating Leases; Income Taxes; Property - Net; Goodwill and Intangible Assets; Other Assets; Accrued Expenses, Other Liabilities and Deferred Income Taxes; Long-Term Debt and Loans Payable; Pensions and Other Postretirement enefits; Commitments and Contingent Matters, Stockholders' Equity; Earnings per Share Attributable to Common Stocks; Derivative Financial Instruments and Risk Management; Fair Value of…

Accounting Case Study

Legal Plan Services

What type of product is Legal Plan Services selling? Tangible or intangible? What type of benefits does the client receive for his membership?

The kind of products that Legal Plan Services is selling is legal representation for civil litigation. The way the company's approach works is to provide customers with access to some of the top law firms for purchasing a membership. The services are considered to be intangible because this is not something that can be physically held. The benefits that the client receives are the ability to consult with any one of the attorneys from affiliate firms for free. This involves select cases including: personal injury, tax, criminal and civil related issues. If the client goes beyond a certain amount of hours is when the membership will provide a 25% discount on the firm's hourly rate. ("Intangible")

What accounting concepts, objectives, and…

They then proceed to detail their selected sample (76 NYSE firms that reported at least three annual losses in period's 1980-1985 and that reduced cash dividends. They then implemented various conditions to test their hypothesis that it is the troubled firm's aim to retain preservation of their company, rather than to make a bonus, that causes them to select a certain accountancy plan.

In section 2, the authors describe their methods used in selecting a sampled population and their bias controls. There is a great deal of numerical data, and the material is dense particularly when they elaborate on the earnings and cash flow performance of the various firms. Each unit is broken up into subunits. Scholarly tables condensed with data that for instance report accrual levels and changes for the 76 firms support their written text and the Tables are alluded to in the text. Statistical analysis of these…

Accounting Process and Financial tatements.

A reliable internal system of accounting is an essential element of a solvent profit or nonprofit business entity. By recording virtually every business activity or endeavor, with regards to the creation of monetary inflows of sales revenue and monetary outflows of expenses resulting from operating activities; an accounting system should provide the financial information needed to evaluate the profitability or effectiveness of past and operations. Along with maintaining data for reporting purposes, an effective accounting system will effectively report the status of asset resources, creditor liabilities, and ownership equities of the business entity. With today's rapid and ever expanding technological developments have lead to increasing operating speeds, convenient data storage capabilities, reliability and significantly reduced costs.

Historically, maintaining an effective accounting system involved extensive manual labor which was described as tedious, aggravating, and time exhaustive. Recording transactions, adding subtracting, summarizing, and checking for errors were…

It also publishes interpretations about certain rules.

WHEN AN ACCOUNTANT FAILS

The AICPA's Code of Professional Conduct is considered to be a binding agreement for every CPA in America.

As with other professions most accountants are ethical and honest in their dealings with their clients, however every so often a problem arises that must be disciplined. This can happen in a purposeful attempt to be deceitful, or it can happen by an error in judgment or an error in practice. egardless of how or why it happened a review is called for and a sanction or discipline course of action is decided upon (Badawi, 2002).

Most of the violations that occur are ethical dilemmas that are relatively easy to solve but some of the problems become quite in depth and resolution is more difficult to reach.

A study of conduct violations in a ten-year period produced the following result.

The…

Accounting includes recording, summarizing, and reporting of the economic activities and events of an organization. It is pertinent in business decision-making and the management and control of operations. The financial statements reported by a company include the income statement, balance sheet, statement of retained earnings and statement of cash flows. Globally, there are two sets of accounting standards, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). In particular, the GAAP are more often than not employed in the United States whereas IFRS are more often than not employed in Europe and international expanses. IFRS are regarded as being more principles-based and U.S. GAAP as being more rules-based. The establishments responsible for setting the IFRS and GAAP are the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) respectively (Gaspar et al., 2016). The purpose of this paper is to discuss the difference between GAAP…

1. How should the $25 Referral Credit be recorded in Runway's income statement?

In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient, in the sense that the vendor could have achieved the benefit through a third party, and not the purchaser. Secondly, the value that is provided has to be reasonably approximated by the vendor (IAS Plus, 2016).

In this case, Runway does meet…

When it comes to standard costing, what is referred to as a standard cost is assigned the costs (actual) of manufacturing overhead, direct labor as well as direct material. In this case, these costs are not assigned to a product. It therefore follows that amounts mirroring standard costs are what become identified first in regard to the cost of goods sold as well as inventories of a given manufacturer. In this case, it can also be noted that standard costing is regarded a rather important tool of management. Incase of any variance, the top leadership of the organization immediately becomes aware of the variation between planned/standard costs and manufacturing costs.

Conclusion

The information provided by cost accounting is critical when it comes to the effective management of an organization. Without such information, decision making would become an equivalent of operating in the dark for most businesses. For instance, firms would…

How should the $25 Referral Credit be recorded in Runway's income statement?

In accordance to ASC 605-50-45 Revenue Recognition, a cash consideration handed to a consumer by a vendor or retailer is deemed a decrease in the selling prices of the products or services retailed. This would imply that these cash considerations would be deemed as an expense and a decline in the revenue to be generated by the vendor. Nonetheless, the cash consideration can be deemed as an expense if it solely meets two requirements. First, the cash consideration has to give rise to an identifiable benefit that is separable from the purchase of the recipient, in the sense that the vendor could have achieved the benefit through a third party, and not the purchaser. Secondly, the value that is provided has to be reasonably approximated by the vendor (IAS Plus, 2016).

In this case, Runway does meet these…

Accounting Methods and Taxpayer Income

Depending on the type and size of company you own, the methods used to conduct your business accounting can vary greatly, and these differences may have significant impact on the eventual amount of income declared to the Internal evenue Service when you file taxes. Sole proprietors and small business owners who have not fully incorporated typically rely on cash-basis accounting, which is the "major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out" (Investopedia, 2011). Using this accounting technique is simpler for small businesses that operate on a local level, and allows the business owner to avoid the costs of hiring a professional bookkeeper. Cash-basis accounting also leads to a greater degree of manipulation, in the form of "under-the-table" payments, handshake agreements and deliberate fabrication of expenses. Large companies and corporations opt for the second major…

Accounting

International Accounting and Auditing Standards

International public sector accounting standards (IPSAS) are developed and put forth by the International Public Sector Accounting Standards Board of the International Federation of Accountants (IFAC). International private sector accounting standards are known as International Financial Reporting Standards (IFRS). They are put together and put forth by the International Accounting Standards Board (IASB), a self-governing standard generating body of the International Accounting Standards Committee Foundation. The IFRS for SME's is a self enclosed standard, intended to meet the requirements and abilities of small and medium-sized entities (SME's), which are anticipated to comprise over ninety five per cent of all corporations worldwide. It is constructed on the basis of full IFRSs, yet, a lot of the principles for distinguishing and gauging assets, liabilities, earnings and expenses have been cut down, subjects not relevant to SME's have been left out, and the amount of necessary revelations…

Accounting

One of the most important disciplines in the corporate world is accounting since it is applicable to nearly all job specialties. Accounting is important in the business world because of the significance of effective record keeping in enabling a business organization to survive efficiently and achieve productivity. Therefore, accounting is a discipline or field that needs to be understood by various stakeholders in the business world. The main function of accounting in business is to ensure various transactions are recorded i.e. incoming and outgoing transactions that are related with the company's operations.

Generally, accounting is the most foundational framework of a business organization because of its link to the daily operations of the organization ("The Importance of Accounting in Today's World," n.d.). Accounting is important for three major reasons including the fact that it acts as the language of business since it is related to the interpretation of a…

Accounting and Finance Soving Probems Soutions

P4-5: Microsoft Statements of Cash Fow 1999-2001

The Microsoft Corporation uses the indirect method to prepare the statement of the cash fow. The cash fow by operating activities is prepared by reconciing from the net income to the net cash. As being reveaed in the Microsoft statement of cash fow, the net income, depreciation, amortization, account receivabes and others are used to arrive at the net cash. In the cash fow statements, the depreciation and amortization are added to the net income based on its accrua basis.

The Microsoft added the unearned revenue to the net income because the company has aready received money for the product and services not yet fufied. As a resut, the company has the ega obigation to suppy these good and services to the purchaser. In other words, the unearned revenue is an equivaent of the net revenue that…

In aaccounting research, the model used would be called analytical modeling, which consists of sstudies that use models with no specific underlying economic theory but use mathematical techniques. The mathematical formulas are applied to test and establish laws and accounting practices. Simulation, or the practice where the analysis is so complex that it requires a computer, is also an example of an inductive accounting practice research methodology.

Finally, pragmatic research utilizes pragmatic validity, which views research from a prescriptive-driven perspective. For example, solutions to problems that actually occur in the complex and high field of practice are developed in a way that, while valid for a specific situation, need to be adjusted according to the context in which they are to be applied. In the accounting area, general empirical research is a catchall that includes primarily descriptive empirical work. Another example of an accounting research methodology that consists of pragmatic…

The proper authorization to complete an inventory also needs to include training on how to manage the exceptions that often occur when physical counting is taking place (Corman, 1988).

The third principle to have adequate documents and records in place that can be quickly be used by the teams completing the audits. This also needs to be preceded with a training session focused on how to also manage exceptions to the paperwork as well, as each company's physical inventory processes are unique to their specific business models (andall, 1984).

The fourth and fifth principles are physical controls and independent checks on performance. These two principles need to anchor all training activity and also be continually audited to ensure performance to standards set over decades are attained. Physical controls and independent checks are also indispensable to the audit and final approval of physical inventory levels, which is the first step in…

Absence of adjusting entries would most likely to either understate or overstate the accounts in the period of reporting and will have an adverse effect on the following reporting period. This is true except for bad debts or doubtful accounts and depreciation. eing in nature of an expense accounts and valuation accounts, absence of adjustments would overstate the operational performance of the business and at the same time overstate valuation of the particular asset it is supposed to reduce to its realizable value. Such absence would affect only the particular period where adjustment was omitted. To illustrate, salaries and wages of workers should be recorded as expense for the period, even if the actual payment falls on the following period. Failure to record the expense would understate salaries and wages for the year as well as understatement or omission of a liability regarding the same. The effect is an overstated…

Accounting

There are a couple of different issues with the Smith Company statements. The first question relates to the $45,500 worth of products. This would not be recorded as income, because the customer has not committed to the purchase. Revenue recognition rules hold that revenue cannot be recognized until the sale has been finalized (Investopedia, 2013). This revenue must be removed from the income statement. hile the description of the situation is unclear, it appears that this amount was removed from the revenue already, so that the $406,000 in revenue on the income statement is the correct amount.

The next issue is the inventory problem. The inventory account is currently showing $25,000, which was the result of a physical count. There was no adjusting entry to the inventory for the $45,500 that was added to and subsequently removed from revenue. The question appears to be implying, when it should be…

Accounting and Intrusion Detection

In a report issued by Paladin Technologies, Inc., entitled: "Security Metrics: Providing Cost Justification for Security Projects," 273 organizations were surveyed on the topic of security. The report illustrates in quantifiable terms the depth and reach of intrusion detection on the financial viability of the organization. The combined reported losses from the firms surveyed totaled $265.6 million in 1999. The highest loss categories were reported as follows:

Type of Loss

Estimated Dollar Value

Number of espondents

Theft of intellectual capital

m

Financial Fraud

m

Sabotage

m

The average annual financial loss of firms surveyed was estimated at $40 million. Forty three percent of respondents were able to quantify financial losses, and seventy four percent were able to acknowledge financial loss. Ninety percent detected cyber attacks within the most recent twelve-month period and seventy percent reported serious breaches other than viruses, laptop theft, and employee abuse of…

(5) Auditors and CPAs should consider several ways that the Sarbanes-Oxley Act and SEC implementation rules as a whole impact accountants and work closely with regulators to address these effects. (6) Public accounting firms need to reconsider external auditors' participation with their client's internal audit function and control structure. This reporting on the internal controls can be very useful and add value to the integrity and quality of the financial reporting process. However, management accepts full responsibility for the design and maintenance of the adequate and effective internal control system. (7) Auditors should advise their clients and make recommendations for the appropriate disclosures of financial information. A more timely, relevant, objective, and transparent financial reporting process should improve the quality, integrity, and reliability. (8) it is necessary to use more effective and objective audit procedures and related standards to improve audit efficiency. The role of independent auditors on financial statements…

An unaware analyst may think the second company to be better but in reality its low encouraging level is due to the fact that it is unable to secure additional funding. The companies may possess different capital structures and to attempt comparison of performance when one is all equity financed and another is a geared company may not suffice for a good analysis. The chosen application of government incentives to several companies may also twist the inter-company evaluation. There may be the possibility of providing a company with the tax holiday while the other within the same line of business not, and evaluation of such two enterprises may be misleading. (Session 15: Limitation of atio Analysis)

As a matter of principle, the accounting strategies are required to be applied persistently. Changes are required to be emphasized and the influence of variations from an original policy revealed. This is applicable when…

Accounting

The Impact of Distance Learning in Accounting Higher Education

This paper is intended as an Introduction to a research study in to the impact of distance learning on the teaching of accounting in higher education. The context of the research will first be introduced i.e., the background to the research. The research to be undertaken will then be introduced, as will the specific questions and sub-questions to be addressed. The significance of this study will then be analyzed, and the people who are expected to benefit from this research will also be outlined. The research methodology and the practical design of this research methodology will be discussed, and the primary and secondary sources to be used will be introduced, and a list of preliminary resources will be given in the ibliography.

Distance learning has grown in popularity amongst students over recent years, for many reasons, one of which has…

Rational people think on the brink of the margin. This means that a rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost. People tend to always respond to incentives. Behavior often changes when costs or benefits change (Principles of Economics, 2006).

People make decisions based upon two things. hat they are going to get out of the decision and how much is the decision going to cost. People weigh decisions by comparing the marginal benefits against the marginal costs (Marginal Analysis, n.d.) And since people strive to get the most bangs for their buck, making less risky and thus less costly decisions will most often win out. The economic system as a whole relies heavily on the fact that people are going to take some risks and make some decisions.

orks Cited

"Marginal Analysis." n.d. 16 May 2009

http://sorrel.humboldt.edu/~economic/econ104/marginal/

"Principles of…

Accounting

A static budget is defined as a budget that is "planned ahead of time based on the owner's best guess about future actual activity." This type of budget is therefore put together for the upcoming time period, and is often based on the data from past time periods, plus or minus different adjustments that management thinks will be necessary. In contrast, a flexible budget is one where the business management can make changes in the midst of an accounting period. Flexible budgeting allows for management to make better decisions on the fly, because the information used in those decisions is kept more up-to-date. Static budgeting relies only on the ability of management to analyze the numbers after the period in order to determine the magnitude and direction of variance, along with the causes of variance. For a flexible budget, management can identify issues with the budget right away, and…

Accounting

Operating income it typically defined to include all operating expenses other than depreciation and taxes (Investopedia, 2011). Because the airplanes are leased, there is no depreciation for West Coast Airlines to take into consideration anyway. The operating income is as follows:

evenue

AVG Passengers

Variable fuel

evenue/pass

Food & Beverage

F&B/pass

Fixed Lease

Ground Services

Flight Crew

Operating Income

The company right now is losing $31,012.50 on every one-way flight to Fiji.

If the company lowers the cost of the flight in order to generate an increase in volume, the operating income figures will look as follows:

evenue

Avg Passengers

Variable fuel

14000

evenue/pass

Food & Beverage

F&B/pass

Commission

Fixed Lease

53000

Ground Services

Flight Crew

Operating Income

-28924

By these figures, Fiji Air loses $28,924 per one-way flight with the lower ticket price and the higher average number of passengers. The bigger issue is that even under this…

These are considered to be unrealized gains, but for hold-to-maturity securities these gains/losses are not expected to be realized at any point. The company will note the fair value change in a footnote, but will not record such a change on either the income statement of balance sheet (Spiceland, et al.).

If, however, it becomes necessary to sell investments previously classed as hold-to-maturity, then the following adjustments are made. The cash received from the sale is recorded along with any discount on bond investment is sitting as an asset. The investment in the bonds will be recorded at face value. Any profit above face value will be recorded as gain on investments. This essentially ensures that the asset for discount on bond investment is reversed as a result of the sale. FASB No. 115 lists six conditions under which a change of security status from HTM could occur, including deterioration…

Naturally, to the extent the AMT applies to the specific segment of taxpayers to whom it was initially addressed, it is serves a beneficial purpose; on the other hand, that benefit must be considered against the unintended consequences and unfairness of its application to taxpayers completely outside the ranks of the very wealthy, particularly at the lower end of that income category. Undesirable Consequences:

The first major potential problem with the AMT is that it does not incorporate inflation at all; as a result, it applies to more and more taxpayers every year despite the fact that their wealth actually remains unchanged during that time. This is particularly important in times of economic recession, especially where income increases fail to keep pace with rising inflation. Whereas the AMT applied to a fewer than 200 households when first implemented in 1970, it currently affects as many as 15% of households earning…

production/income and so on. Some companies also include quality assessments as part of their analysis of department efficiencies.

5.Explain the role of the budget in the business control cycle.

Budgets can be used to help a firm meet goals and objectives. The business control cycle consists of four steps. The first is setting the standard, that is, creating the budget. The next is recording the performance of the company's departments. Third, variances from the budget are identified and analyzed to understand why they occurred. Finally, action can be planned to either correct problems identified this way, or to put preventive measure in place to enhance future performance.

6.Analyze internal and external control mechanisms that can be put in place to monitor and evaluate the budget.

Internal control mechanism could include consistent follow-up on internal and external audit findings and reporting findings of internal audits to the head of the organization…

Suggestion for Changes to the Proposal:

While the underlying concept of generating revenue by selling unwanted babies to families who wish to adopt them may be a good idea in many respects, there is no real necessity to structure it as an auction. The association with online auctions would only magnify the intensity of the knee-jerk reaction among many people who object to any notion of selling babies for profit. The publicity associated with the program would only be that much worse with headline like "Baby Ebay." A simple sales-based approach would still encounter significant opposition and moral condemnation, but it would probably be perceived somewhat more open-mindedly than the spectacle of last second bidding in the manner of other online auctions. Furthermore, the suggested changes to the format would also allow the program to consider the relative income of the prospective parents and require higher participation fees based on…

The common guiding principles of economics provide little direction. As a consequence, U.S. international tax policy is a clutter of rules with a diversity of political and economic reasons. It is frequently described as a concession that strikes a balance. Policy leans toward tightening foreign tax rules and putting foreign income on equal footing with U.S. income when it is thought that foreign investment hurts the U.S. economy. Then policy leans toward relaxing the rules and giving foreign income favorable treatment if it is thought that foreign investment promotes U.S. interests (Sullivan, n.d.).

Due to the fact tat every government charges taxes by its own process and at its own rates, the ensuing system of international taxation often warps investment and adds to reductions in international economic well-being. The environment of these alterations depends on the way of taxing profits from international investment. If investment earnings are taxed only at…

MICOSOFT: No terrorist is going to try to blow up Microsoft; no oil products are needed to run computer hardware and software; computers run the world of commerce; and Bill Gates owns a huge percentage of all things computer software-related, so the Microsoft steamroller is a great investment and not as vulnerable to world conditions as are the first two companies reviewed in this section.

One final conclusion: for EXXONMOBIL, albeit their fortunes can change because of the war and oil's vulnerability to war, their earnings for the 4th quarter of 2004 were their highest ever ($8,420 million), and they have friends in the White House in Bush and Cheney, so their financial picture remains very bright; for FOD, they experienced a $5 billion pre-tax profit from their "financial services" (auto loans) division, which is very impressive; moreover, car sales are booming and Ford will, in the near future, realize…

alternative accounting methods that have become increasingly popular. There are various merits and demerits of obtaining each of the accounting method for a firm however a company must choose the accounting method carefully as it proves to be a vital decision for the success of a company.

Accounting Methods are the guidelines and the basic rules based on which the businesses prepare and maintain their financial records. There have been a vast development in the accounting methods and practices over the years; however the two main accounting methods remain the same which are a) IFS (International Financial eporting Standards) b) U.S. GAAP (Generally Accepted Accounting Principle)

IFS (International Financial eporting Standards) were deigned to cater to the globalization of the businesses by providing an accounting method which is comparable and understandable beyond the regional boundaries. It was initiated to standardize the accounting methods for European nations by the European Council,…

Arthur Anderson: Questionable Accounting Parctices

Arthur Anderson: Questionable Accounting Practices

Arthur Andersen LLP was founded in 1913, and for over 90 years, the company would have become one of the "Big Five" largest accounting and auditing firms in the United States with the same standard comparable to PricewaterhouseCoopers, Deloitte & Touche, KPMG and Ernst & Young. In the 80s, Arthur Anderson name was synonymous with integrity, trust, and ethics. Such values are critical to the success of firms charged with auditing and firms confirming a company's financial statement, whose accuracy of a company's financial statements generally influence investor's investment decision. (Ferrell, Linda, 2012).

In the 1990s, Arthur Anderson became one of the fastest growing accounting and auditing firms in the United States with huge financial success during the period. However, starting from 2001, the company faced several lawsuits for accounting irregularities. In May 2001, "the company paid $110 million to…

This role is in response to clients' demands for a single trustworthy individual or firm to meet all of their financial needs. However, accountants are restricted from providing these services to clients whose financial statements they also prepare." (U.S. Department of Labor, ureau of Labor Statistics, 2009)

1. Public Accounting

The work entitled: "The Reality of the CPA's Role" states that modern CPAs work "behind the scenes as trusted advisors in nearly all significant business decisions. Successful accountants display the ability to think strategically and creatively and to be problem solvers and business advisors." (Douglass, 2006) Douglass states that the views of the CPA are widely varied "...whether from the viewpoint of the investing public or from the perspective of the companies that engage CPAs to audit their financial statements or perform other functions. In fact, many people not involved in the business management or accounting profession may perceive CPAs…

International accounting - Evaluate research theories and methodologies to classify accounting systems internationally

The necessity of accounting standards is given by the fact that financial statements should describe financial performance in a fair and consistent manner. Lacking standards, users of financial statements would be required to master the accounting rules of each company, and any comparison between companies' performances would be almost impossible.

Accounting standards are essential to the healthy development of an international financial reporting structure. Around the world several accounting traditions have been developed as a response to the needs of users who are in need of the financial information. Some countries, for instance, chose to build the structure of accounting standards around the needs of private creditors, while other countries were more concerned with the needs of tax authorities or central planners. As a characteristic of the United States, the needs of participants in the capital markets…

disclosure principle in accounting is the standard adopted by the accounting profession, which "calls for financial reporting of any financial facts significant enough to influence the judgment of an informed reader" (Kieso, Weygandt, & Warfield, 2007). Obviously, this definition is a very subjective one, because the reporting entity makes the determination of what facts are significant enough to influence an informed reader. "To reduce the amount of disclosure, it is customary to only disclose information about events that are likely to have a material impact on the entity's financial position or financial results" (Accounting Tools, 2011). However, the principle is not meant to be narrowly interpreted, and may require a company to report things that cannot be reduced to numbers on a balance sheet. For example, "this disclosure may include items that cannot yet be precisely quantified, such as the presence of a dispute with a government entity over a…

28)

This quotation shows how arbitrary MTM can be. Simply by terming Enron's cash shortage a sa minority interest as opposed to the proper term for it, debt, Enron was able to manipulate MTM to prevent such a sizeable loss from appearing on its balance sheet. Moreover, MTM's role in this transaction allowed Enron to repair its problem of a cash flow shortage since it credited $500 million via its sale of Treasury securities. The relative short duration in which Enron was able to take out a loan and repay it indicates how effective MTM was in providing Enron a favorable balance sheet, and in singled-handedly dancing around the reality of its shortages. Additionally, it also kept others (shareholders, stakeholders, not to mention its hard working employees) to know how tenuous an economic position the company was actually in.

In discussing Enron's MTM approach to accounting and the considerable role…

" (2004)

Ricol states in relation to the audit area that "...actions were recommended in two primary areas:

1) Reducing threats to auditor independence; and 2) Strengthening audit quality control processes. (Ricol, 2004)

In regards to corporate management and governance, it is related in Ricol's speech that the task force called for corporate boards to "demonstrate greater accountability for the information, financial management and internal controls necessary to produce trustworthy information. Sound corporate governance policies are especially important in emerging economies, directly impacting investor confidence and economic growth." (Ricol, 2004)

V. ACCOUNTING'S CENTRAL ROLE in the ECONOMY

Accounting clearly plays a central role in the economy through "building confidence in financial information and financial infrastructure." (Ricol, 2004) According to Ricol the accounting profession "cannot afford to look the other way and focus on capital markets in developed countries." (Ricol, 2004) Additionally stated by Ricol is that the accountancy profession needs…

The balance sheet includes two main categories, assets and liabilities and shareholders' equity. oth of these are in turn split into current assets and other assets. In terms of current assets, all three companies include inventory, cash and cash equivalents and receivables, while the liabilities cover short- and long-term debt, as well as the shareholders' equity.

The cash flow statement includes the three different categories, cash flows from operating activities, cash flows from investing activities and cash flows from financing activities.

In order to be able to properly evaluate, we need to mention that the net income "measures business revenues vs. expenses." In this sense, the income statement provides the best expression and explanations on how the business is actually performing, what could or should be improved.

On the other hand, the net cash from operating activities simply records how much money is received from customers, other firms, etc. In…

studied appeared a business accounting publications. A partial list publications article selected: The Accounting eview, Barrons, Wall Street Journal, Business Week, Fortune, Barrons, and Wall Street Journal.

GAAP article review:

Crovitz, Gordon L. (2008, September 8).Closing the information GAAP. The Wall Street

Journal. etrieved November 22, 2010 at http://online.wsj.com/article/SB122083366235408621.html

GAAP article review:

Crovitz, Gordon L. (2008, September 8).Closing the information GAAP. The Wall Street

Journal. etrieved November 22, 2010 at http://online.wsj.com/article/SB122083366235408621.html

The Wall Street Journal is famous for its pro-business, conservative editorials. So perhaps it is no surprise that in 2008, Journal editorial writer Gordon L. Crovitz praised the Securities and Exchange Commission (SEC)'s decision to mandate a shift to international accounting standards, in a phasing out of GAAP (Generally Accepted Accounting Principles) by 2016 for all U.S. firms. The Journal writer said that this was reflective of the "remarkably quickening pace of acceptance of a true lingua franca for…

Another challenge facing the industry today is the important legal issues that surround the Sarbanes-Oxley Act (Koehn & Del Vecchio, 2004). One of these is the fact that the process of due diligence practiced by many companies is now taking much longer (Koehn & Del Vecchio, 2004). There is a higher degree of caution than was previously utilized and because of this many companies are discovering information that would have gone unnoticed before the Act was passed. This is, however, not the only legal issue that the Sarbanes-Oxley Act has caused (Koehn & Del Vecchio, 2004). Another concern is that accountants and attorneys could now be required to report the known wrongdoings of corporations that they have business with to authorities.

Since lawyers are now required to disclose these types of issues, the attorney-client privilege has been compromised by this Act (Koehn & Del Vecchio, 2004). However, the Act was…

conception that is laid behind write-down of inventory is that the amount value of the inventory being considered can still appear in the financial statements only if the inventory still has some worth or value. This particular amount value is attained by getting the difference between the original costs of the inventory as the prevailing market replacement value. In accordance to IAS 2, if the loss on write-down of inventory is minimal or trivial, it can be reported on the financial statements as a part of the cost of goods sold. On the other hand, if the loss amount is high then it is imperative to report it in the income statement in a separate line. More so, these kinds of aspects typically develop into a violation. Examples of these instances include the case of Enron Company and also the case of WorldCom. On the other hand, IAS1 encompasses the…

elevance

Materiality

Quantitative

The Financial Year/Accounting Period Concept

Application of Literature eview into practice for IKEA's 3-year (2009-2010-2011) financial reports

What is missing and ok in the reports? The good and bad points of eports based on Literature eview.

103-year comparative ratio analysis and their interpretations

Literature eview of "Strategic Management Accounting Concept" and its application to facilitate the IKEA's ambitions for the future.

The concept of financial reporting is important to each and every organization. The information contained in financial reports is important since it helps in the reduction of financial risks while also acting as a tool for corporate governance (Kothari,2000; Berndt,2007).Financial report must have a series of desirable characteristics. In this paper, we use IKEA's financial reports in evaluating the desirable characteristics of financial reports. Also discussed is the possible effects of using the concepts of strategic management accounting and its methods in the promotion and facilitation…

unbeam Corporation's fraudulent accounting for its financial years 1996, 1997 and early 1998. The essay also reviews the historic audit failure that occurred, and discusses factors that contributed to the scandal and ways in which it might have been prevented.

unbeam, the consumer brand name that was to become well-known among generations of Americans, had its beginnings in 1893 when founders John K. tewart and Thomas J. Clark began manufacturing and selling a commercial horse clipping machine in Chicago. In 1897 the company was incorporated as the Chicago Flexible haft Company. When the company began manufacturing an electric iron named "The Princess," its first electric appliance, the product's introduction marked the beginning of the Electrical Appliance Division of today's Jarden Corporation (Jarden, 2011).

In the early years, the company's products, ranging from toasters to irons to mixers, were so successful that the company changed its name to the unbeam Corporation…

.....mission of the Emerging Issues Task Force (EITF) exerts upon the Financial Accounting Standards Board (FASB)

The Emerging Issues Task Force (EITF) was established with the main purpose of addressing and coming up with resolve for current issues being faced by professionals in the accounting field, which were not addressed by announcements of the Financial Accounting Standards Board (FASB). Prior to the establishment of ETIF in 1984, the FASB constantly faced challenges of not being able to offer well-timed and sensible solutions to developing practice problems. The EITF was therefore designed to disseminate and propagate carrying out guidance within the structure of the Accounting Standards Codification to decrease multiplicity when it comes down to it on a well-timed basis. In their field of profession, accountants experience a wide range of issues that are not comprehensively addressed in accounting pronouncements, and, which necessitate prompt resolve. In addition, such professionals insist that…

The major difference between cash and accrual basis accounting lies in when the expenses and revenues are recorded or recognized. The cash basis method accounts for revenues when money is actually received regardless of when the invoice was issued. Expenses on the cash basis accounting method are recorded when they are paid out and not when they were invoiced. The cash basis method is mostly used for personal finances and by small businesses. A good example for illustrating the cash basis method is a company could perform some work in a given year and receive payment in the following year. Using the cash basis method, the company would not report or record the revenue in the year the work was done, but rather it would record the revenue in the year the cash was actually received. Since the cash basis method of accounting does not match revenues earned and expenses…

ole of Accounting on Business and Our Society

Financial statements play a key role in reporting the financial performance of a business besides helping managers to make better decisions. Business leaders often would interpret the different financial statements in order to understand the position of their business, the necessary risks that their businesses are facing, and the financial actions that should be taken to make the business to grow. All the financial statements developed for the operation of a business are critical in providing necessary information on the accounts. They allow business leaders to understand the business and take of necessary investment or controls needed for the success of the business.

Financial statements have unique roles since they are essential in determining the extent of success in an organization. A cash flow statement is helpful in analyzing the amount of cash available and those needed to meet the operating costs…

EP systems for accounting

EP refers to enterprise resource planning which is a software package that supports all of a business's operations and day-to-day accounting processes. The EP system of accounting provides an integrated system for an entire business organization by relating and coordinating the basic organizational functions such as financial planning, marketing of goods and services and human resource management. Many business organizations in the world today, both for profit and non-profit adopt the use of EP due to its ability to integrate and coordinate information from all departments, operations and processes. EP is a sophisticated system that ensures accuracy and accountability in processing and organizing business functions within an organization. This system generally can manage a business by allowing inventory control, material purchasing, accounting, marketing and distribution.

The EP system consists of several enterprise software packages acquired based on specific needs, requirements and technical capabilities of a particular…

Economic Value Added (EVA) Accounting Practice

Although Economic Value Added (EVA) is not a new concept in economics and financial theory and is based on the 19th century concept of "economic profit," it has only been widely adopted recently by business firms as an accounting practice. In this paper we shall describe what EVA is, and look at its pros and cons from the point-of-view of the company adopting the practice and the investors. We shall also discuss how EVA differs from some other emerging accounting practices and the major issues relating to EVA as compared to other commonly used accounting principles. Finally, the possible problems and opportunities that a company adopting EVA principles can face shall be examined.

What is Economic Value Added (EVA)?

Economic Value Added (EVA) is the after-tax cash flow generated by a business minus the cost of the capital it has invested to generate that…