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analyzing an accountant system - Essay Example
Finance & Accounting
Pages 8 (2008 words)
Analyzing an accountant system Name of the Student Student Number Course Number Seminar Day and Time Answer 1 As is evident from the income statement, it can be seen that MTS’s revenue has increased to a certain extent from $260,034 in 2011 to $360,547 in 2012…
The owner still has a debt obligation towards his relative ($100,000) which when accounted for is severely impacting the revenues generated by the company, thereby resulting in severe losses. The expenses for the purpose of conducting the business are of random nature which does not explain the exact purpose of incurring such expenses. As an example, it can be cited that the owner of MTS spends 40% of its allocated advertisement budget on business lunches involving local theatre producers and directors and the rest 60% is spent on advertising in local newspapers, theatre programs, sponsoring local children`s theatre and delivering flyers to the community. No clear rationale can be identified from this distribution strategy. As is evident from the income statement, the expenses incurred from advertising and promotion contributes significantly towards reducing the revenues generated by the company. For a startup company which is highly leveraged, efforts are needed to be put in order to reduce the obligations. The company needs to restrict its expenses behind advertising and promotion. ...
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