An Analysis of the Financial Management of Competition Bikes Inc

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Topic: Bike's Inc. Report Summary report Activity Based Costing is a method whereby costs are assigned to products or services based on the resource that they consume, it is an alternative of traditional accounting where business overheads, indirect costs such as lighting, heating, and market are allocated in proportion to an activity direct cost. The management of Competition Bikes, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Competition Bikes, Inc. internal control system was designed to provide reasonable assurance to the company's management and board of directors regarding the preparation and fair presentation of published financial statements. Competition Bikes, Inc. assessed the effectiveness of the company's internal control over financial reporting as of December 31, Year 8. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Tread way Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment we believe that, as of December 31, Year 8, the company's internal control over financial reporting is effective based on those criteria. "Cooper and Kaplan (1998) said that activity based accounting is characterized by value enhancing effect on pricing decision and profit performance. The company by adopting activity based costing will be able to realize remarkable profits since activity based costing allows better price

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