Accounting Systems And The Financial Management

1062 WordsNov 11, 20155 Pages
1. Companies create and maintain accounting systems because the accounting systems is an important role in the financial management. They bring a lot of benefits in the business management for accessing the financial statements, reporting business transactions, accounting pay and fee, and minimizing the problems with tax authorities. 2. In the Balance Sheet, the assets, liabilities, and stockholders’ equity which are reported by companies at a specific date. They also are related in the basic accounting equation which is: Assets = Liabilities + Stockholders’ Equity. Assets are the resources that will provide future economic benefits for the companies. Assets are divided into four categories which are current assets, long-term assets, property, plant and equipment, and intangible assets. The first one is current assets are assets that a company expects to convert to cash or use up within one year.(49) It includes cash, receivables such as account receivable (less allowance for doubtful accounts) and interest receivable, inventories (inventory and supplies), prepaid expenses (insurance or rent). The companies list current assets in the order in which they expect to convert them into cash (50). The long-term assets which are generally investments in stocks and bonds of other corporations that are held for more than one year, land or buildings that a company is not currently using in its operating activities, and long-term notes receivables (50). Property, plant and equipment
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