Accounts Receivable Cycle
Riordan Manufacturing, an industry leader in the field of plastic injection molding, has facilities in California, Georgia, Michigan and China. The accounting functions are carried out in each individual location, and consolidated for processing in the corporate offices in California. The Georgia and Michigan locations, being newly acquired, are using systems that are not completely compatible with the corporate offices. This is causing problems on many levels and within this paper, Learning Team A will discuss the accounts receivable cycle as Riordan Manufacturing would like to achieve.
Learning Team A will discuss the strengths and weaknesses of the internal controls of the accounts receivable cycle, the
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Having this kind of format, all accounts receivable input from the different entities will be seamlessly connected into one system.
Value systems and value chains under REA ontology can also be used for the integration. Since accounts receivable deals with billing or collecting payments from customers and/or companies, value system level helps to exchange resources between the enterprise and its various external business partners such as suppliers, customers, creditors/investors, and even employees. Under value system, the three entities can easily trade data needed and provide reports or invoices to their customers (Dunn, et al, 2004). On the other hand value chain level focuses more on the resource flows between interconnected business processes, such as the three different entities of Riordan Manufacturing. Accounts Receivable Information Flow Chart
As the flow chart below illustrates, accounting information begins with the accounts receivable clerk for each location, who inputs and processes invoices, payments, collections and day end closing procedures. Reports created from the input of the clerks passes to the general accounting supervisor at the corporate offices, who oversees and audits the receivables and payables departments. Once the supervisor completes his or her duties, the adjusted reports are randomly checked by an external auditor to verify the information and from there it goes to the Director of Accounting and
Accounting is commonly described as the language of business. It is very important for all business owners to have very good understanding of their finances. Having the knowledge of your business finance, you will know where the money is going. Every business owner should have a good understanding of finance. To have a good understanding business owners needs to understand basic accounting steeps, how does accounting play a role in their business, how to define a financial statement and how the omission of any of these steps would affect the success of a business. Once you have an understanding of accounting/finance and the how it plays
The purpose of accounting cycle report is to keep the best accounting records up to date. It also assist in producing the best possible financial statement that shows the true pictures of the business or organization and help making a good call whether business is profitable or not.
6. MB4 Profit and Loss Account 2: A worked example of your solutions to your identified problems in P&L1
Agenda – Submit term projects to TURNITIN ASAP – Assignment #2 due April 1st 1159pm • List the coauthor’s name in the subject line. • Teaching Evaluation • Transfer pricing (cont.) – Stanco Inc. • Review chapters 11 and 12 & the practice final – Practice Q1 and Q2 • Review chapters 8 and 9 and the practice final – Practice Q3 and Q4 ACTG 2020
The entries used to record the disposition when the receivables are sold to a factor often detail the cash received plus the service charge. The company can then balance their receivables account. When a credit card company records a credit card
2. (TCO 2) As required to complete Course Project 1, one must follow the cycle that includes 10 steps to complete the accounting cycle. (1) Explain how information from the journal entries get into the ledger accounts (15 points) and (2) provide an example of information that would be transferred. (10 points)(Points : 25)
During the first two weeks, Learning Team “A” studied several objectives. During Week One, we learned how to prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods, ways to distinguish between tangible and intangible assets, the means to identify the entries associated with acquisition, disposal, and sales of plant assets, and closed out the week by distinguishing between revenue and capital expenditures, and the entries associated with each. As we advanced into Week Two, we studied how to differentiate among accounts payable, notes payable and accrued expenses, methods to properly
Objective: Prepare journal entries to account for transactions related to accounts receivable and bad debt using both percentage of sales and the percentage of receivables methods.
Question 3: Describe and show the journal entries illustrating how the company accounts for the transfer of its accounts receivable to financial institutions. Is this accounting treatment reasonable? What are the key assumptions made under this approach? Do you agree with these assumptions?
You may omit explanations of the transactions. Skip a line between eah set of journal entries.
The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.
Account Payable – records information about money that organization owes to suppliers and service providers
with a new partner, Harry Fowl. Harry has had some existing business and you are
Marvin Braun had just been appointed vice president of the Great Basin Region of the Financial Services Corporation (FSC). The company provides check processing services for small banks. The banks send checks presented for deposit or payment to FSC, which then records the data on each check in a computerized database. FSC sends the data electronically to the nearest Federal Reserve Bank check-clearing center where the appropriate transfers of funds are made between banks. The Great Basin Region consists of three check processing centers in Eastern Idaho—Pocatello, Idaho Falls, and Ashton. Prior to his promotion to vice president, Mr. Braun had been manager of a check processing
The Finance department is headed by the Accountant . The Assistant Accountants 1 & 2 reports directly to the Accountant.