Why Do Companies Need An Accounting System?

Collection of information is essential to support the major functions and activities of the organisation. To ascertain this it is essential to have regular reports of the organisation and to do this you need regular financial reports and audits. A true vision of the organisation will give any management a better understanding of their situation and will thus help them to make a good viable decision.

3. Was the firm able to generate enough cash from operations to pay for all of its capital expenditures?

All businesses and organisations have to check to see that the information they have stored is accurate. For example, the money coming in and going out have to be correctly recorded otherwise it will look as if the company has not made much profit and it can affect the share prices of the company, affect the employees as the company might not be able to pay the employees and will have to cut down on staff, lenders will not agree to lend money, etc.

during year 12 and year 13. However, in year 13 and year 14 total current assets fell

The financial performance of the company over the years six t thirteen is shown in table no 7. The data includes Revenue generated over the years, Earning per share, Return on Investment and Stock Prices. Chart 5 shows that there has been a decline in the revenues generated. Charts 6 to 8 all show a decline in Earnings per Share, Return on Equity and Stock Prices suggesting a poor financial performance by the company.

The income over the last three years has been fluctuating.. This tells us the company has an initial growth period. Sales also drop between years 7 and 8 and the gross profit margin decreased as well. This may be due to operating expenses. This leads to the prospect of stable future sales. The stakeholders are continuing to back the company and the company does predict sales will remain stable. The modest increase in sales does not show enough to recover without making adjustments to free capital.

To consider this I will be looking at the Income Statement. If the company’s revenue exceeds its expenses it will report net income or will report a net loss. This will report on the success or failure of the company’s operation by reporting its revenue and expenses.

How did the corporation perform the past year overall in terms of return on investment, market share, and profitability?

When the CEO looked at the financial statement for the previous year he found that they had a loss of $256,000 (Rakish et

The return on shareholders’ fund, capital employed, total assets all have gone down during this period. The ability of the company to pay its short term debt hasn’t varied much, but the administrative expenses have gone up by a very large amount.

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

The cash flow situation started falling from the end of year 12. The company should have known from this.

Ethical and legal obligations apply to all members of society. As one in society, the obligation to act in an ethical, law abiding manner on a daily basis is vital to the integrity of daily life. Many professions have their own code of ethics. Financial reporting is not exempt from such ethical and legal standards. One’s lively hood depends on decisions made in the business world. Business transactions are done daily and can impact one’s economic stability. Trust is placed in the hands of corporate America and an obligation of financial reporting to reveal a complete honest and legal picture of an entity’s accounting practices is important in attaining trust. This paper will discuss the obligations of

To illustrate the importance of maintaining a good accounting system for tracking company sales and expense data.

January 2000, a major shortfall in profits relative to previous expectations. In June, the quarterly