Accounting Analysis Essay

Since the business does not have enough funds to continue paying its long-term financial obligations, as repayment of debt Angela has decided to exchange Wheeler’s accounts receivable for an $80,000 corporate note payable by the corporation. The remaining assets will be distributed to Angela and she will assume personal liability for the other accounts payable. Furthermore, Wheeler will distribute the real property to Angela who will assume personal liability for the repayment of the mortgage.

If some research is undertaken that provides evidence that capital markets do not always behave in accordance with the Efficient Market Hypothesis, does this invalidate research that adopts an assumption that capital markets are efficient?

1. On March 12, Bill Jones accepted a $12,000 note in granting a time extension of a bill for goods purchased by Ron Prentice. Terms of the note were 13% for 90 days. On April 24, Bill could no longer

Since the business does not have enough funds to continue paying its long-term financial obligations, as repayment of debt Angela has decided to exchange Wheeler’s accounts receivable for an $80,000 corporate note payable by the corporation. The remaining assets will be distributed to Angela and she will assume personal liability for the other accounts payable. Furthermore, Wheeler will distribute the real property to Angela, who will assume personal liability for the

| If a company uses the allowance method of accounting for bad debts, which one of the following statements is true?Answer

Assess the degree to which the firm’s accounting reflects the underlying business reality. Identify accounting distortions and evaluate their impact on profits and the sustainability of profits.

The accounting system we use today started in Venice in renaissance period over 520 years ago. The trade business increased hugely during this time and all the financial recordings had to be written down to help people see how their business is doing. During that time in 1494 the first book about was published in accounting by Luca Paciolli and was called “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality”. He was called “The father of Accounting” and most of his described principles have been used up until this day.

When an account receivable is determined to be uncollectable it is no longer qualified as an asset and should be written off. A write off reduced the balance of the customers

The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate

The purpose of this memo is to respond to prompts regarding fair value accounting using the 2012 10-K report of JPMorgan Chase. According to ASC 820-10-35-2, fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (FASB, 820-10-35-2). Fair value measurement is recommended for some assets and liabilities reported.

Financial world is at the pace when the accountants are moving their steps towards fair value accounting, moreover FASB and IASB is motivating accountants to increase the use of fair value accounting by establishing new rules. Most of the people concur that fair values are the most reliable measure for financial assets and liabilities that an entity strongly trades, on the other hand some believes if management wants to hold an asset or liability till their maturity then historical method is best for measuring financial assets.

At the end of each month, Sarah prepares a bank reconciliation statement for her business bank account. As 31 May 2012 her ledger balance was $2,759 (Credit) and her bank statement showed that she had funds of $131 at the bank. She has the following information:

Fair value measurements have the power to provide users of financial statements with an accurate depiction of the value of the company’s assets. IFRS and GAAP are strict in the fact that they require the firms to include information regarding fair value measurement practices in the notes of financial statements. When following either system, the companies will be required to report assets at either book value or fair value. The outcome really just depends on the situation. All assets in the same class must

In the past, historical cost measures were mainly used for reporting as they are reliable. However, historical cost is only relevant upon acquiring the asset and becomes irrelevant as time passes. On the other hand, fair value-based reporting, which accounts for changes in fair values, can produce balance sheet figures that provide a better reflection of the company’s value. This is also why accounting bodies are moving towards fair value accounting (FVA).

According to this concept the asset is recorded in the books of accounts at the price paid for it and not at its market value. For example: if a business entity purchases a building valued at $15 million from a friend for $12 million, this asset would be recorded at $12 million and not at $ 15 million, because for the business entity the cost was $12 million and not $15 million.