Client Understanding Paper

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

The value of fixed assets typically decreases over time. The amount of the decrease each year is accounted for and is called depreciation. Depreciation for the year is expensed on the income statement and added to the accumulated depreciation account on the balance sheet. So the value of the fixed assets on the balance sheet is reduced by the accumulated depreciation.

Section 360-10-35-17 of the Code states that an impairment loss shall be recognized if the carrying value of a fixed asset is not recoverable and exceeds its fair value. The carrying value of the fixed asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and disposal of the asset. An impairment loss shall be measured by the amount by which the carrying value exceeds the fair value.

Accounting theory including recording, valuation, and statement presentation of assets, liabilities, capital, and earnings. Funds statements, financial analysis, interest theory and applications.

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

DQ 1:   What are the differences between the direct and indirect presentation of cash flows?  What are the advantages and disadvantages of the direct and indirect methods and which does the Financial Accounting Standards Board (FASB) favor and why?

Is necessary to understand the proper and logical accounting literature to address the matter previously presented.

The purpose of this paper is to define accounting, and identify the four basic financial statements. The paper also explains how the different financial statements are interrelated to each other and why they are useful to managers, investors, creditors, and employees.

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

If proper and adequate depreciation has not been provided on the fixed assets the result would be more profits in the Profit & Loss Account. This book profit might have been distributed as dividend and leaving no funds with which to replace the assets at the right time.

This case analysis commences by explaining the type of accounting officer needed to execute the job functions for the client, Big Spenders Inc. The next objective will be to examine the income statements of the two prospective business entities that the client intends to choose from concerning investment – in order to diversify its portfolio. The strategies that will be explored in terms of the analysis of the income statements includes the computation of (i) operation profit margin, (ii) gross margin, (iii) net profit margin, and (iv) return on equity – for both companies of interest. The results of examinations will put the accountant in a position to make sounds recommendation to his superior at BUSI 1043 LLP, so that Big Spenders Inc. can be properly guided.

Net book value at end of year 1 is $8,793. Less what you received on the sale $7,500. Gives you a disposal loss of $1,293 using the straight-line method of depreciation. You then add the disposal loss from the previous years depreciation $1,880, which results in a total income statement impact of $3,173.

Feedback: A clear understanding of accounting terms and concepts is required of those who have a financial interest in an enterprise if they are to understand and communicate about the enterprise. Accounting

Depreciation expense is the way that the use of an asset is matched with the revenue that is generated from the asset on the income statement during the time period being reported. Each asset used in a business has a useful life as disclosed by the company’s depreciation policies for each category of asset. The other piece of calculating depreciation is the assumed salvage or “residual” value. There are several different methods of depreciating an asset:

An explanation of the accounting and business techniques that have been used, including a discussion of their limitations