Xacc/280 Week 3 Regression Analysis

| (TCO 1) The Accounting Equation is used to develop the organization's financial reports. (1) Describe what assets value would be if Liabilities are $12,000 and Owners' Equity is $50,000 by showing the Accounting Equation (10 points), and (2) provide an example of two asset accounts that could contain the value. (10 points)

After reading Chapter 6 of the textbook and the materials I found that I was struggling to understand the material more than usual. Before reading this chapter I had a slight idea of how much effort went into keeping track of the costs and inventory. The most that I knew was that you had to keep track of it, I didn’t know that there are different ways to keep track of those costs. After reading more into the different ways to keep track of inventory I found that the one that stuck out most to me and was the one that I spent the most time trying to understand was the LIFO (Last In First Out).

Inventories are stated at the lower of cost or market. The method of determining cost for each subsidiary varies among LIFO, FIFO, and average cost.

(TCO D) Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

The Company uses the LIFO inventory costing method, and takes advantage of all cash discounts. All units per order cost the same price.

a. Arrange the following asset, liability, and owner’s equity elements of the accounting equation: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Common Stock/Dividends, and Revenues/Expenses. (See Exhibit 1.5)

In chapter eight there was information on the accounting equation. I feel this information is something everyone should be aware of. These deals with people’s finances and everyone should be aware of those. Accounting equation means Assets = Liabilities + Owners Equity. Assets are anything that is valuable to the firm. Liabilities are things

The second types of inventory methods to value its inventory that CVS uses is the most common one used for most business the First-In, First-Out (FIFO). First-In, First-Out (FIFO) is defined as the first inventories bought are the first ones to be sold. CVS only uses FIFO for Some Retail Pharmacy and Rest of Business (Front store). CVS utilizes this method because; the fresher products have to be out the door first. Also, FIFO is an easier method than Weighted Average Cost. And most importantly it may over inflate cost because the last products bought and out the door first are usually the most expensive products.

The three main events in the life of an asset are the acquisition, useful life, and disposal or retirement. At the end of an asset’s life, gain or loss of its disposal is recorded. A gain or loss will take place at the disposal of any assets and should be logged as journal entry along with any related incidental cost. The unrealized gains and losses are noticed according to its earnings. All changes whether upward or downward that involves investment shares are shown as income or losses with a change in market value that requires an adjustment to its carry value.

35. What method does it use to value Inventory? – Inventories are stated at the lower of cost or market, with cost determined on an average-cost basis.

Items of value to a company such as equipment or supplies needed for running an efficient business are called an asset. A liability is when a company owes for a service or pay for employees. After a liability is subtracted from an asset this becomes the owners interest in the company or owners’ equity. Regardless of the standards followed by accountants, they will always classify accounts into these three categories resulting in the Accounting Equation: (Editorial Board, 2012, p. 9- 10)

The accounting equation is, Assets are equal to Liabilities plus Stockholders’ Equity. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of a business. Stockholders’ equity represents the claims of owners on the assets of the business. This equity is divided into two parts: common stock and retained earnings. The balance sheet reports assets and claims to assets at one specific point in time. Claims to assets are subdivided into two categories: claims of creditors and claims of owners. The accounting equation must always balance. Each transaction has a dual effect on the equation. As an example if an individual asset is increased,

Our team placed in rank 76 and our overall cash balance was $1,357,252. Our strategy was to optimize inventory in order to reduce lead times, ultimately increasing revenue. We decided it was necessary to start as soon as possible in order to maximize our time available for the simulator and be able to make the most money. However, we did not end up making changes until Day 104, which may have been the cause of our results as we did not get to start as early as we had planned. Also, we started off with contract 1 and it wasn’t until Day 128 we opted for contract 2. It would have been beneficial to start accepting a better contract earlier in order to maximize revenue.

I have chosen three different companies that use three different cost assumption methods just to get the full scale of each. K-Mart uses the FIFO (First in-First out) method, Sears Domestic uses LIFO (Last in-First out) and Sears Canada uses the Average Cost method. Benefits to each would be reporting higher income and real time current inventory cost for the FIFO cost assumption, Lower income taxes and real time income due to inflation for LIFO cost assumption, and Average Cost assumption is a good middle ground between the other two.

The process of recording and posting the effects of business transaction is done in a double entry t-form. The total dollar amount of debits must equal the total dollar amount of credits, with debits to the left and account credit to the right. Broken down, Assets = Liabilities + Stakeholder Equity. “Since debits increase assets, expense, and dividend accounts, they normally have debit balances. Conversely, because credits increase liability, capital stock, retained earnings, and revenue accounts, they normally have credit balances.”( Edwards, J. D., Hermanson, R.H., & Maher, M. W. (2011). p.84)