Log in
Accounting
1
answer
0
watching
37
views
29 Jul 2019

"Business Formation” Please respond to the following:

Explain the major advantages and disadvantages of a businessowner with minimal accounting experience maintaining the company'sbooks instead of hiring an accountant. Discuss the major impact tothe users of accounting statements if the statements are preparedin error. Provide support for your position.

Watch
1
answer
0
watching
37
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Hubert Koch
Hubert KochLv2
30 Jul 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

Changes in Accounting Principles and Changes in AccountingEstimates" Please respond to the following: From the e-Activity,discuss the accounting principles that the identified companychanged, and explain the major reasons why the company changedaccounting principles. Give your opinion on whether you believe thechange in accounting principles was to benefit the corporation orinvestors and creditors. Provide a rationale for your response.Imagine you are the senior accountant at your organization, andmanagement is not sure of the difference between a change inaccounting estimate and a change in accounting principle. Brieflydiscuss the difference between a change in accounting estimate anda change in accounting principle, and outline the impact thechanges will have on the company’s financial statements. Give youropinion on why a company should avoid reporting changes inaccounting principles and changes in accounting estimates. Providea rationale for your response.

Background: Judgment can at times be required to determinewhether an event should be accounted for as a change in accountingestimate or as the correction of an error. The accounting for thesetopics is addressed in ASC 250 (Accounting Changes and ErrorCorrections). After reading the following fact pattern, you will bechallenged to evaluate whether an event is an error correction orchange in estimate, and you will be asked to discuss thedifferences in the accounting treatment for these twoalternatives.

Facts: You are the owner of a lawn service company (LawnCo)which provides grounds and maintenance services to a range ofcorporate customers. Customers are expected to pay on the first ofeach month, in advance of receiving services. One of your corporatecustomers is an eldercare facility whose grounds you havemaintained for many years. The customer has not paid for the lastthree months of services (from Oct.-Dec. 20X1); nevertheless, tomaintain a positive relationship, your company continued to providemowing and weed control services to the eldercare facility duringthat time. Your company ceased providing services in January 20X2and found out in that same month that the eldercare facility filedfor bankruptcy in September. Your company now believes thatcollection of the missed payments is extremely unlikely. Yourcompany has already issued financial statements (for the periodending 12/31/X1) which reflected revenue and a correspondingaccount receivable related to this customer of $10,000 per monthfor services provided to this customer. Those financial statementsalso reflected the company’s standard allowance (reserve) amount onreceivables, of 4% of sales. In total, your company’s averagemonthly sales amount to $500,000.

Required:

1. Evaluate whether receipt of this information indicates youhave a change in accounting estimate or whether the customer’sbankruptcy should result in this event being considered an error inpreviously issued financial statements. First, locate thedefinitions of these terms; next, provide a list of factors whichwould support each alternative.

2. Next, describe the accounting treatment (as required by theCodification) for each alternative, then support your explanationswith draft journal entries. You are not required to provide detailon how financial statements would be presented/prepared, ratherfocus on describing the Codification’s requirements and how theyrelate to this issue, and include journal entries that you believeare consistent with those requirements.

3. Finally, briefly state which treatment appears to be moreappropriate given the circumstances. If you must make anyassumptions in reaching this conclusion, state these.

Please complete the following essay in a single page (nomore than two) Word document, double-spaced, 12 pt.font.

Instructions: Identify and discussa minimum of 5 managerial accountingtopics that could apply to the following situation! Pleaseanswer in complete sentences.

You have just graduated with your degree in accounting and areplanning on sitting for the CMA (Certified Managerial Accountant)examination. Managerial accounting was your favorite course ofstudy in accounting, and you can’t wait to show the world whatyou’ve learned! You have begun the interview process with severalmanufacturing companies. The larger companies look at you as justanother graduate. You have an interview with a smaller manufacturerwho is very impressed with you! Since the salary is the best you’vebeen offered, you’re just as eager to demonstrate your skills andknowledge. Your potential boss begins to tell you a little abouthis dilemma.

“I started this business with an idea and a prayer. For so long,I could do just fine operating out of my hip pocket. Then thingsreally started happening fast. Demand for our products increased,we built new manufacturing facilities, and hired more people than Icould keep up with. I think we are profitable, but I never knowuntil the end of the year when financial statements are prepared. Iwant to make sure the company can keep up with its growth, but Idon’t know what to do. That’s why I’m interested in hiring amanagerial accountant. Before I do, I need to know that whomever Ihire has some ideas as to how to help my company. I wouldappreciate it if you would prepare a short memo highlighting theareas that you think could use some attention. Once I have that, Ican make my decision about hiring you. I think you would be anasset (!) to our business, but I want to be sure I’m doing theright thing, not just hiring another worker for the office!

“Let me tell you a little about our company. We have threemanufacturing facilities in the United States, producingThis and That, but I’m not sure what the productcost is of each. We are in the process of considering production ofThe Other, which may involve construction of anothermanufacturing facility. We employ 250 people, including officestaff and managers. The overhead is a big chunk of money each year,and I don’t know what it goes for! I pay everyone what they’reworth, and try to give raises when I think I can. It’s really hardto know who is doing a good job since we’ve grown so big. Weusually handle things on a day-to-day basis, trying to resolvemajor problems as we go. Sometimes that means coming up short oncash to pay bills or product to meet demand. I’m sure there has tobe a better way. Do you think you can help us?”

You leave the interview confident that you will be the bestperson for this job! Your mind is racing with all of the things youlearned in accounting! With pen in hand, you begin expressing yourthoughts and suggestions...

please help. thank you!

Related Documents

AFA 100 Chapter Notes - Chapter 1: Retained Earnings, Sole Proprietorship, Certified Fraud Examiner
roseox134
ACC 203 Lecture Notes - Lecture 18: Financial Statement, Balance Sheet
oliveyellowjacket981
ACC 201
Final Exam
Study Guide
ACC 201 Study Guide - Quiz Guide: Standard Accounting Practice, General Ledger, Cash Flow Statement
sangriagnat800

Weekly leaderboard

Home
Homework Help 3,900,000
Accounting 580,000
Start filling in the gaps now
Log in