Student Answer Key Module

* Documents used: customer order, sales order, shipping document, sales invoice, sales journal, remittance advice, bank deposit list, cash receipts jornal, credit memo, sales return and allowance journal, uncollectable account authorization form, a/r master file, a/r trail balance, monthly statement

2. For the most recent year, what is the amount of inventory in the balance sheet? What does this amount represent?

An unclassified balance sheet has three major categories, assets, liabilities, and stockholders equity. A classified balance sheet has the same three but then subdivides them so they can have useful information to help interpret and analyze by users of financial statements. The major categories of accounts that appear under assets is long-term investments, property, plant, and equipment. For liabilities it is current liabilities and long-term liabilities. For stockholders equity is the same as others.

‘Cash and cash equivalents’ include certain short-term investments and, in some cases, bank overdrafts. Like IFRS, ‘cash and cash equivalents’ include certain shortterm investments, although not necessarily the same short-term investments as under IFRS. Unlike IFRS, bank overdrafts are considered a form of short-term financing, with changes therein classified as financing activities. The statement of cash flows presents cash flows during the period, classified by operating, investing and financing activities. Like IFRS, the statement of cash flows presents cash flows during the period, classified by operating, investing and financing activities. The separate components of a single transaction are classified as operating, investing or financing. Unlike IFRS, cash receipts and payments with attributes of more than one class of cash flows are classified based on the predominant source of the cash flows unless the underlying transaction is accounted for as having different components. Cash flows from operating activities may be presented using either the direct method or the indirect method. If the direct method is used, then an entity presents a reconciliation of profit or loss to net cash flows from operating activities; however, in our experience practice varies regarding the measure of profit or loss used. Like IFRS, cash flows from operating activities may be presented using either the direct method or the indirect method. Like IFRS, if

The statement of cash flows explains the change during the period in cash and cash equivalents. Cash includes currency on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to cash (Flight. 2006). Because of this there are two recommendations for Tyva.

The accounts receivable master file does not reflect transactions that are included in the ending accounts receivable general ledger balance.

Note: In review of the Board of Director Minutes (GA-3.2), it was noted that the other receivables was an advance to Mr. Lancaster’s secretary. This was reclassed to an employee receivable (AJE# 3). It was also noted that the note carried a 1% interest rate. For the six month period this would be $5,000. Due to the nature of the note and the concern of whether Mr. Lancaster’s secretary will ultimately pay this back, no accrual is made here. It will be noted in the footnotes, however.

(ii) An account for each unit setting forth any shares of common expenses or other charges due, the due dates thereof, the present balance due, and any interest in common surplus.”

The cash flow statement shows the amount of cash within a company. Items that affect the cash balance are listed on the statement. The first section of the cash flow statement is operating activities, which shows the cash flowing in and out of the company in relation to its business operation. The operating activities section also includes net income and the change in dollars of certain accounts listed on the balance sheet. The next section, investing activities, shows cash the company received and spent on a company's capital investments. The financing activities section shows the inflows and outflows of cash related to the company’s issued financial securities, which is also listed on the balance sheet and statement of shareholders' equity.

Cash balance of $925,000. Only the checking account balance should be reported as cash. The certificates of deposit should be reported as a temporary investment, the cash advance to subsidiary should be reported as accounts receivable, and the utility deposit should be identified as a receivable from the gas company.

The interview with Colin Smith, from Office Products Depot, meant I was able to identify the accounts receivable subsystem they used and their accounts receivable management. I focussed on their policies for the offering and checking of credit, managing credit levels, charging the credit customers, receiving payment from credit customers and the general management of credit customers. I will be using the information from the interview with Colin as well as information from fictitious accounts receivable to explain their policies.

The total Accounts Receivable balance in the records of $4,752,257.70 was verified by setting a filter of

14-1: “Standard Costing Is Alive and Well at Parker Brass” by D. Johnsen and P. Sopariwala, Management Accounting Quarterly (Winter 2000), pp. 12-20.

asset. Hence, cash flow statement is very important in personal finance because it tells a person

Firms must hold certain cash balances that will cover payments of accounts payables and expected demand on cash. The rest of the cash assets are usually reinvested on in money markets accounts and firms earn interest on them. However, firms must have flexible accounts so it can withdraw all cash freely. Such accounts usually have low interest rates and if it doesn’t, firm can suffers from financial penalties. That is the dilemma many firms are facing and that is why firms are minimizing cash balances, so it can earn interest in high rated market account.