Case Study1

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[pic] Question 1: What information will Fuller need to manage the business? Classify thus information in two categories: accounting information and non-accounting information. The content of financial reports can be divided to accounting and non accounting information. According to Ahmed Belkaoui and Alain Cousineau (1977), accounting information is defined as quantitative, formal, structured, audited, numerical and past oriented material. While non accounting information is defined as qualitative, unaudited, narrative and it is future oriented prose. For accounting information, it can further categorized into 4 different categories: 1. Operating information 2. Financial accounting 3. Management accounting 4. Tax…show more content…
Assets must be acquired in a transaction. It must be an economic resource and controlled by the entity. The cost of assets at eh time of acquisition must be objectively measurable. Assets also serve as the purpose of provides future benefits to the entity. They are cash or can be converted to cash, or goods that are expected to be sold and cash received from them. They are items expected to be used in future activities that will generate cash inflows to the entity. Liabilities are obligations to transfer assets or provide services to outside parties arising from events that have already happened. In this case, it involved liabilities that are expected to be satisfied or extinguished during the normal operating cycle or within one year, which is call current liabilities. Owners’ equity is the amount the owners have invested in the entity. Paid-in capital is the amount the owners have invested directly in the business by purchasing shares if stock as these shares were issued by the corporation. Owners’ equity = Total assets – total liabilities The assets in Kim Fuller’s company are 1 used truck, 3 trailers, 1 used grinding machine, 1 new grinding machine, supplies and parts 1 PC, warehouse and cash in hand. The mortgage is his liability. The total value of the assets is $277,000. The owners’ equity = $277,000 - $112,000 = $165,000. Question 3: Now that Fuller has started to make sales, what information
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