StudentShare solutions
Triangle menu

Accounting and Decision Making - Essay Example

Nobody downloaded yet

Extract of sample
Accounting and Decision Making

It is prudent to treat such income as accrued or deferred income as it has not been received and should not be treated as sales income (Nikolai et al 2009). The accounting standards require that revenue should be recognized when earned and received. Invoices raised on a long term contract for a customer show an ending balance of 219,750. The company is confident that the amount will be fully recovered. However, 137,000 relates to amounts due over 90 days. This amount may be written off as a bad debt since the customers industry is experiencing financial difficulties. No provision for bad debt has been made by the management. A prudent approach would be to make a provision in the 2012 accounts. It is advisable in the future for the management to create provisions if it anticipates making losses (Nikolai et al 2009). There are inventories worth 105,000 relating to a customer who signed a long-term contract. These inventories are neither sold to another customer. The customer is not in a position to clear unpaid balance and keeping such stock jeopardizes the liquidity position of the company since they are not moving. The matching principle requires that revenues should be matched with their relevant costs (Nikolai et al 2009).. It is advisable treat such stocks as losses by reducing the closing inventories. The carrying amounts of land and building increased to ?3 million as at December 2012. The facts are that a revaluation reserve has been created and the balance in the balance sheet adjusted upwards. However, the cost principle requires that assets be recognized on the basis of historical cost and not the current market value. Because of this principle it is advisable for the accountant to make changes in the land and buildings account and use the historical cost. The revaluation should also be a note of the financial statement in accordance with the principle of full disclosure (Nikolai et al 2009). Q2-Preparation of the Cash Flow Statement DITW           CASH FLOW STATEMENTS   FOR THE YEAR ENDING 31st DEC 2012     2012 a) Cash flow from operating activities     ?'000'   Profit from operations 727   Add: Interest 51   depreciation 317   Loss on sale of equipment 32   legal costs on patent rights 3   Operating profit before working capital changes 1,130       Working capital changes:     Increase in trade and other receivables (147)   Increase in inventories (55)   Decrease in trade payables (152)   Decrease in tax payables (185)   Decrease in dividends payable (325)   Cash from operating activities 266          b) Investing activities     sale of equipment 100   Investment In Homespun (800)   (700)  c) Financing activities     Interest paid (51)   Dividends paid (425)   (476)       Increase/(decrease) in cash and cash equivalents during the year (910)   Cash and cash equivalents b /f 9   Cash and cash equivalents c/f     (901) Q3-Performance evaluation Looking at appendixes 1 and 2 below, the actual results of the budget are lesser than the original amounts thus giving a rise to variances. Variances can either be favorable or unfavorable. In the case of Homespun, the actual results are unfavorable since the actual amounts are less than the budgeted amounts. The variance has been caused by an increase ...Show more

Summary

Four critical areas of subjective judgment There are pre-invoiced sales for a customer and the goods will be sent in January 2013. The revenue has been already been recognized in December 2012…
Author : bergearmando
Accounting and Decision Making essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Accounting and Decision Making"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Managerial Accounting for Decision Making
Tanya should have explained that management accounting systems are planning and control systems which are usually concerned with the planning and controlling activities of the organization. Management accounting can be defined as: ‘The process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information that assists executives in fulfilling organizational objectives… a formal mechanism of gathering and collecting data for the ends of aiding and coordinating collective decisions in light of the overall goals and objectives of an organization.
16 pages (4000 words) Essay
Accounting Information in Decision Making
Accounting Information in Decision Making Outline i. Introduction ii. Models of decision-making and their limitations (constraints) a. Individual: Subjective Expected Utility b. Group: Theory of the Firm iii. Role of managerial accounting in providing information to aid individual and group decision-making a.
4 pages (1000 words) Essay
Management accounting & decision making
118,061 123,853 132,169 141,196 Closing Cash 126,620 118,061 123,853 132,169 141,196 172,700 Income Statement In ? For the six months ended September 30,20X0       Revenue 454,500 Cost of Purchases (90,900) China glass and cutlery (10,000) Bed linen and towel (10,000) Miscellaneous items including toiletries (5,000) Labor Cost (90,900) Overhead Cost (113,625) Depreciation (133,167) Losses in inventory (2,000) Net loss (92) Balance Sheet In ?
8 pages (2000 words) Essay
Accounting for Decision Making
Analyzing the statements prepared under the absorption system, the company seems to have made a significant improvement in the second quarter. The gross profit margin has improved from 28% in the first quarter to 40% in the second quarter; whereas the net profit margin has increased from 14% in the first quarter to 28% in the second quarter as seen in appended figure 5.
5 pages (1250 words) Essay
Accounting For Decision Making
This is a financial report that focuses its analysis on two companies; Fantastic holdings limited and super retail group which previously was called Super cheap auto group limited. The report analyses the performance of the two companies over time and tries to evaluate which company between the two has good economic performance.
9 pages (2250 words) Essay
Accounting for Decision Making
Break-even Analysis and Planning.Accounting for Decision Making Break-even for the two strategies at each level of output Strategy #1 Fixed Cost = $20,000,000 Selling Price = $170 Variable Cost = $35 Break-even level of output = (Keiso, 1999) Break-even level of output = = 148,148 units.
5 pages (1250 words) Essay
ACC501 - Accounting for Decision Making
It has an extensive network of dealers in all the regions of the world. The company as of 2009 has 90 plants scattered in the different locations of the world with 198,000 employees. Ford is an American Based company, with its head
5 pages (1250 words) Essay
Decision and accounting making
From the look of the reports, the company still needs key decisions to make in order for the company to maintain its positive growth since acquisition. This report evaluates the company’s status and the necessary actions that can be taken to ensure that the
10 pages (2500 words) Essay
Accounting for Strategic Decision-Making
This summary reports the weaknesses and strengths of the paper. It further asks three questions concerning the paper to the class members who will present this work. The various strengths of the
2 pages (500 words) Essay
Accounting decision making
The second part (done in excel) is the restatement of Ausdrill’s financial statements (Balance sheet, income statement and statement of changes in equity). The third part includes Ausdrill’s five services,
9 pages (2250 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Click to create a comment