"Accounting / Auditing" Essays

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Depreciation Is a Very Important Concept Essay

Essay  |  2 pages (580 words)
Bibliography Sources: 2

SAMPLE TEXT:

Depreciation is a very important concept in regards to identifying asset values in a particular firm. Stakeholders, particular investors, use depreciation to better determine hidden or overstated value of assets. Depreciation also provides a means for those who study financial statements to better ascertain the book value of a company. Simply stated, depreciation is the process by which costs are allocated to plant assets over its remaining life. Depreciation however, does exclude some items such as land or real estate. Depreciation is very important in financial reporting as it helps to properly identify asset values of plant and equipment. The purpose of depreciation is to closely match the costs of plant and equipment, with a useful life of more than a year, to that of the revenues earned on the asset. This process is difficult as it is hard to find a direct correlation between exact revenues and the cost incurred. As such, it is commonplace for the costs to be spread throughout the useful life of the asset through depreciation. Depreciation is used under various names depending on the asset. For example, if the asset is intangible, such as a brand, symbol or intellectual property, the process of allocating costs over time would be referred to as amortization. In regards to natural resources such as oil, natural gas, minerals, etc. The process would then be termed, depletion. Depreciation irrespective of the working, in many respects, does not indicate the fair value of an asset. In fact, the market value of the assets can increase while the stated book value due to depreciation will decrease (Elliot, 2004).

There are various methods of depreciation that are used depending on the underlying operations of a firm. These methods provide ample flexibility on…… [read more]


Financial Statements in This Text Essay

Essay  |  2 pages (613 words)
Bibliography Sources: 1+

SAMPLE TEXT:

¶ … Financial Statements

In this text, I discuss the order followed in the preparation of financial statements. In addition to identifying the order of preparation, I also comment on the logic behind the same. In so doing, I will concern myself with four financial statements. These are the Income Statement, Statement of Owner's Equity, the Balance Sheet and finally, the Cash Flow Statement.

The relevance of financial statements cannot be overstated when it comes to the communication of information regarding a given entity's performance as well as financial health. Thus businesses typically prepare financial statements so as to facilitate the communication of vital financial information to the intended users of such information. Users in this case include but they are not limited to shareholders, the government, creditors etc. On preparation of the adjusted trial balance, businesses undertake to prepare the other main financial statements while adhering to the logical order highlighted below.

1. Income Statement

The income statement according to Porter and Norton (2010) "summarizes revenues and expenses." Typically, this statement is prepared first based on the impact it has on the other financial statements. For instance, this statement facilitates the computation of the net income or loss figure which is utilized in the preparation of the statement of owner's equity.

2. The Statement of Owner's Equity

In the opinion of Cunningham et al. (2011), "the statement of changes in owner's equity summarizes the transactions that affected owner's equity during the accounting period." Information contained in this statement is utilized in the preparation of some sections of the balance sheet i.e. The stockholder's equity section.

3. The Balance Sheet

The balance sheet can in basic terms be described as a "financial statement that summarizes the assets, liabilities, and owner's equity of a company" (Porter and Norton, 2010). The balance sheet is regarded a rather important…… [read more]


Dead Organizations Essay

Essay  |  2 pages (622 words)
Bibliography Sources: 1+

SAMPLE TEXT:

Dead Organizations

The Value of Autopsies That Analyze Dead Organizations

The rapid demise of enterprises that reached such great heights of success very quickly in their lifecycles only to come plummeting to the ground provide fertile examples of how not to run a business. These cautionary tales can form a framework for evaluating how a given business is defined, managed and invested in for growth or not. In Arthur Anderson, Enron, Tyco, MCI and many others, there is a fundamental foundation of business ethics that needs to be evaluated in the context of how these enterprises were run. It is the intent of this analysis to argue for more rigorous post-mortems to be done, autopsies at the process and systemic level, audits not just of operational issues but the ethical factors as well.

Postmortems on the Fallen: Why Corporations Die

It is invaluable to understand and appreciate why one business started within a year can have specular success while another dies quickly and with great public disgrace. it's invaluable to see at the most structural levels and at the core of assumptions, why a given business fails and other succeeds. The more one studies Arthur Anderson, Enron, Tyco and others, the most fundamental truth emerges. Corporations who fail are built on a foundation of ethical assumptions and hypotheses that by their very nature invite destruction. In analyzing these firms which have failed so quickly, it is apparent that the assumptions that anchored their business models were ethically challenged. Enron selling futures contracts not only on energy but on the price of energy, from electricity and natural gas to oil, all wrapped up in a highly secretive private trading exchange that sought to optimize price per option and projected futures demand level set a precedent of a lack of accountability and transparency with investors that was easily defensible over time (Sherman, Chambers,…… [read more]


Transparancy and Public Trust Transparency Essay

Essay  |  2 pages (659 words)
Bibliography Sources: 2

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Once the trust has been broken, it is difficult to repair. Even though trust can be rebuilt by apologizing and giving a detailed explanation of what went wrong, organizations must sometimes go to great extents to gain the trust back (Poppo and Schepker, 2010).

Three steps that can be taken to provide transparency and accountability is to first refer back to the mission statement to get a clear sense of what the organization stands for and how it will serve the public. All employees should be reminded of the mission statement on a regular basis. Next, processes and procedures must be clearly written out, understood and agreed upon with each and every employee of the organization. A signed form acknowledging these processes and procedure should be placed in every employee's file. A third and very important step is to have regular checks and balances (audits) to make sure everything is running the way that it should. An organization that is solid with transparency and accountability is an organization that has gained the public's trust.

There were really no insights on what could have been done differently with Maurice's organization. The frequent audits done legally and financially, as well as the every ninety (90) day audits done by The Department of Human Resources is what made his example stand out from the others. Frequent audit is extremely important to transparency and accountability because it serves as a reminder to those involved of what the organization's mission is and how they must serve the public that they have decided to serve. Transparency and accountability is necessary in order for any type of public agency to succeed.

References

Fard, H.D., & Rostamy, A.A. (2007). Promoting public trust in organizations: Explaining the role of public accountability . Public Organization Review, 7(4), 331-344.

Poppo, L., & Schepker, D.J. (2010). Repairing public trust…… [read more]


Legislative Oversight of Regulatory Term Paper

Term Paper  |  2 pages (570 words)
Bibliography Sources: 2

SAMPLE TEXT:

The committee is also in contact with all congressmen and may begin investigations after the prompting by a congressmen based on the requests of that congressman's constituents. Informal oversight is conducted at the state and local level by supervisory agents. Informal decisions are considered vital to the overall effectiveness of the agencies in ensuring that local operations run smoothly as opposed to being disconnected through the use of bureaucrats in Washington.

Legislators face many challenges regarding regulatory agencies both from the executive branch and their constituents. While the president has the power to create regulatory agencies, congress has the power to provide the agency's funding and power. This split role often causes tension between the two branches as the executive branch often attempts to enlarge regulatory agencies, alleviating the pressure on the executive branch. However, Congress may find the enlargement unnecessary or detrimental. Additionally, constituents may be opposed to actions taken by a certain agency and are often vocal in expressing this to their Congressmen.

Agency administrators have even greater challenges because they are subject to the oversight of a federal committee that is often disconnected from what the agency actually does. Often Congressmen are unaware of how certain policies and procedures effect the regulatory agencies, making the agencies ineffective and thus starting a downward cycle. Overall, however, an effective regulatory agency administrator will be savvy enough to report the necessary numbers and trends to the Congressional committee to ensure continued funding and support.

Resources

Kaiser, Federick; Oleszek, Walter; Tatelman, Todd. Congressional Oversight Manual, June 10, 2011.

Lipton, Bradley. 2010 Accountability, deference, and the Skidmore doctrine Yale Law Journal (June, 1),http://www.thefreelibrary.com/Accountability, deference, and the Skidmore doctrine.-a0231092161 (accessed February 26, 2012)… [read more]


Lee College Financial Activities Term Paper

Term Paper  |  5 pages (1,346 words)
Bibliography Sources: 1

SAMPLE TEXT:

To calculate the loss suffered by the college, the paper deducts Unrestricted Revenues from Total Expenses revealing there is a loss in the total operating income. However, overview of the Lee College financial activities reveals that there are Net Assets Released from Restriction totaled $1,800,000, which comprises of $1,160,000 for the Plant acquisition Restrictions and $640,000 program restrictions. Based on the revenues accrued from net assets released from restrictions, Lee College could boast of the increase in net assets by $980,000. Despite the increase in the Lee Colleges, expense there is an increase in the unrestricted net assets as being revealed in a statement of change in net assets.

A Statement of Change in Net Assets

A statement of change in net assets comprise of the following:

Unrestricted Net Assets

Temporary Restricted

Permanent Restricted

Unrestricted net assets of the Lee College consist of following:

Total Unrestricted Revenues

Net Assets Released From Restrictions

Total Unrestricted Expenses and Losses

Increase in Unrestricted Net Assets

Lee College records $16,230,000 for total unrestricted revenues and $1,800,000 for the net assets released from restrictions and $17,050,000 for total unrestricted expenses. Lee College is able to record $980,000 as an increase in the unrestricted net assets.

From July 1, 2011 to July 30, 2012, there have been an increase in the Net Assets of Lee College totaled $4,920,000. On 1 July 2011, Lee College recorded $3,000,000 in the Net Assets. However, on the 30 July 2012, Lee College records $7,920,000 in Net Assets revealing $4,920,000 increase in Net Assets.

To calculate the increase in net Assets amounted $4,920,00, the paper adds the increase in unrestricted Net Assets totaled $980,000, increase in temporary restricted totaled $650,000 and increase in permanently restricted net assets amounted $3,290,000.

Increase in the Net Assets from 1 January 2011 to 31 December 2012 is $4,920,000 revealing the increase in the 164% in the Net Assets. Lee College has recorded high increase in the Net Assets between 2011 fiscal year and 2012 fiscal year revealing 164% increase. With increase in the organizational Net Assets, Lee College has demonstrated sound financial health despite that the total expenses is higher that the Unrestricted Revenues.

Restatement of the thesis

The paper reviews the financial activities of Lee College in the following format:

A Statement of Unrestricted Revenues

Expenses

Other Changes in Unrestricted Net Assets

A Statement of Changes in Net Assets.

Lee College statement of activities statement reveals that more than 99% of the Lee College revenues are being generated through the combination of tuitions and fees, and sales and services making Lee College to demonstrate sustainable financial activities because largest percentage of college revenues are being generated by operations and sales activities rather than contributions and donations.

To present Lee College financial activities, the paper calculates all the unrestricted revenue of Lee College and all unrestricted expenses. The calculations reveal that Lee College records operating loss for the fiscal year 2012 because the total expenses are greater than total unrestricted revenue. However, from revenues generated… [read more]


Costing System for Use Assessment

Assessment  |  1 pages (403 words)
Bibliography Sources: 0

SAMPLE TEXT:

It is important to note that a costing system is not intended to replace an accounting system. Instead, the systems actually work within the broad framework of general accounting to extract specific data for quick and easy analysis. By making use of a costing system, it is possible to quickly identify expenditures that were intended to benefit the company, but are failing to do so in a significant way. This makes it possible for managers to make the necessary adjustments to the company's strategy and thus exercise a more responsible use of resources. Furthermore, the information on the cost of a product or service can be used by managers to set the prices of the product, control operations and develop financial statements. From this perspective, it can be said that regular use of a costing system can help to minimize waste and also make it possible to direct available resources in more productive directions rather than continuing to spend money on items that are accomplishing little for the company.

Sources Used: Orloff, A. & Mullis, D. 1998, The Accounting Game: Basic Accounting Fresh from the Lemonade Stand, Sourcebooks, Inc.,…… [read more]


CPA Advice for Homer Simpson Research Paper

Research Paper  |  2 pages (454 words)
Bibliography Sources: 0

SAMPLE TEXT:

Therefore, I would suggest you ignore Moe's comforting statement that it will "literally" meet IRS requirements. As stated above, a taxpayer would have to prove that they are doing the financial transaction for other purposes than to economically benefit from the tax evasion.

The federal government has been tightening the laws about unethical profit for some time now. You may recall Martha Stewart's insider-trading scandal, or the accounting fraud of Enron that resulted in the Sarbanes-Oxley Act of 2002. Though both do not directly relate to your situation, it is clear that one should not attempt to fool the United States government. Once in court, Martha Stewart and the accounting staff of Enron were found guilty. Martha Stewart was convicted of conspiracy and served time in jail, while guilty Enron staff served jail time for fraud.

It is to my recommendation that you receive the advice of your wife as more justified than the advice of Moe. Unethically selling an investment in time for a large reported loss will surely trigger a red flag to the IRS, and your defense will be weak. On top of this, every business venture has some risk, so returns are not even guaranteed, and thus might not end up in your favor anyways.

Please do not hesitate to contact us if you have…… [read more]


Life in a Bag Essay

Essay  |  2 pages (765 words)
Bibliography Sources: 1

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INTRODUCTION

A. Attention Getter: Google, Apple, Microsoft, GAP and Banana Republic among other companies all have at least one thing in common- they have an accounting department. Accounting is one of the most important parts of how a company's work.

B. Relevance to Audience: Accounting is a highly relevant and important part of a lot of companies and firms, and the skills that are also used in accounting is something that is highly applicable in day-to-day finances.

C. Credibility Statement: As a student of accounting classes, I have realizes the importance of how accounting fits into the bigger picture of companies and firms, as well as find the skills that I have acquired in class in the real world when I am shopping or paying bills. Further to my classroom education and experiences surrounding it, I have also done additional research to further reinforce my understanding of how accounting fits into the world.

D. Thesis Statement: There are necessary steps that one needs to take to be an accountant and understand what an accountants functions are before one can evaluate the impact that it has on a company.

II. BODY

A. To become an accountant, it necessary to take the coursework necessary in the field of accounting and ultimately, to become certified as an accountant, one must pass the "Certified Public Accounting" or CPA exam.

1. A Bachelors Degree is the minimum required degree to be an accountant at a firm.

a. Many aspiring accountants will need to further supplement their education with a CPA certification in order to attain the national standard of education that is required and looked favorably upon by employers.

b. The exam has been developed in order to "protect the public interest by helping only qualified individuals become licensed as U.S. Certified Public Accountants (CPAs)" (American Institute of CPAs).

2. The Certified Public Accounting exam is administered, similar to other standardized tests and is required to practice accounting for a company.

REFERENCES

American Institute of CPAs, . "The Uniform CPA Examination." American Instiute of CPAs, 2011. Web. 25 Oct 2011. read more-->[read more]


Olla Aljboul Edmonton, Alberta T5x-1g1 Resume

Resume  |  1 pages (369 words)
Bibliography Sources: 2

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Education

Bachelor of Commerce- Accounting

Complete: April 2012

High School Diploma

Queen Elizabeth High school, Edmonton, AB

Complete: June 2007

Relevant Courses

Business Negotiations and Supplier Mgmt., Purchasing, Global Sourcing and Logistics,

Supply Chain Planning Coordination, Management Information and Control Systems,

Strategic Management, Finance, Financial and Managerial Accounting and Cost Accounting.

Qualifications

Progressive continuing educational track as a chartered accountant

Effective team member who works well both individually and in a group

Enthusiastic, intrinsically motivated individual with superior interpersonal, communication, and organizational skills

Employment

CIBC

Aug 2011- Current

Customer Accountant Representative

Edmonton, AB

Building new accounts and maintaining relationships with clients

Dulcee Apparel Nov 2007 - Jan 2011 Edmonton, AB

Manager, Purchaser

Count money to ensure that amounts are correct there is adequate change

Issue receipts, refunds, credits, or change due to customers.

Responsible for ensuring that all employees are doing their jobs correctly, thoroughly

Ensuring objectives and goals are being met or exceeded

Responsible for ordering the inventory as well as managing inventory

Paying company bills by cash, vouchers, or checks.

Ensuring that employees are given regular feedback about their performance,… [read more]


Enron in His Book Book Report

Book Report  |  2 pages (603 words)
Bibliography Sources: 0

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One of the key conclusions that Eichenwald makes is that "it was Enron's tragedy to be filled with people smart enough to know how to maneuver around the rules, but not wise enough to understand why the rules had been written in the first place."

In dissecting the Enron scandal, Eichenwald attempts to tie the issues that Enron had with a blight that affects corporate America and the American economic system in general. He is motivated to do so by the desire to see sufficient systemic reform that such a scandal does not occur again. While it may be a reach to see Enron as a proxy for a broken system -- it was and remains a uniquely large and complex case of fraud -- Eichenwald uses such hyperbole to drive home the lessons he thinks America -- in particular those in the securities and accounting professions -- needs to learn. His book is effective in this respect, but perhaps it can be said that to extrapolate these lessons the Enron situation needs to be put into a better sense of context. Understanding what makes Enron special in the first step, but peeling away the elements of the scandal that were unique to Enron to reveal underlying systemic issues is the most important part of the argument. That part of the argument can be useful in the understanding of corporate and accounting ethics, because such situations can arise in any company. Eichenwald attempts to do this, but is limited by the focus on the scandal of a single company -- the work should be taken with studies of other scandals of the era in order to put Enron's debacle in full perspective.… [read more]


Organizational Behavior -- Research Paper

Research Paper  |  8 pages (2,386 words)
Bibliography Sources: 8

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Organizational Behavior -- Case Study

Organizational Background

Under the Inspector General Act of 1978, every United States federal agency and federal program is subject to the oversight of an inspector general (IG) with appropriate jurisdiction (CULS, 2011; Edwards, Wattenberg, & Lineberry, 2009). Generally, the office of inspector general (OIG) monitors compliance with applicable federal rules, laws, and regulations, in addition… [read more]


Improvement in a Government Agency Essay

Essay  |  7 pages (2,094 words)
Bibliography Sources: 3

SAMPLE TEXT:

¶ … Improvement in a Government Agency

Introduction to the Organization and the Operation Process

A family member of mine works as an auditor for a U.S. (federal) government agency in the office of the Inspector General for Audit Services. The main function of their office is to conduct financial audits of the various recipients (mostly state and local agencies… [read more]


Business -- Organizational Development Cases Case Study

Case Study  |  5 pages (1,580 words)
Bibliography Sources: 5

SAMPLE TEXT:

He explained that from now on all audit reports were to be reviewed by Charles, that the point of report development where that occurred would be jointly determined by Charles and each audit manager; and that all of the changes or corrections suggested by Charles would have to be incorporated or discussed in detail with Charles; and that unless a very specific justification existed to oppose those suggestions, that the audit managers defer to the writer to avoid delays and embarrassment in front of David Long and Joe Vengrin. Immediately thereafter, Richard, Elliot, John, and Jack began to follow the same protocol for editorial review of their teams' audit reports as had been in place between Jim Cox and Charles for months. Within the first report cycle, all five audit managers in federal Region II were producing uniformly improved audit draft reports and headquarters commended Jim Edert for his effective implementation of the new protocols and procedures in his region.

References

Daft, R. (2005) Management. Mason, GA: Thomson South Western.

Edwards, G., Wattenberg, M., and Lineberry, R. (2009). Government in America: People,

Politics, and Policy. New York, NY: Longman.

Nowolinski, G. (2008). A Brief History of the Health and Human Service Office of Inspector General. USGPO: Washington, DC.

Robbins, S.P. And Judge, T.A. (2009). Organizational Behavior. Upper Saddle River,

NJ: Prentice Hall.

USHHSOIG. (2006). Department of Health and Human Services Office of Inspector

General Review of Medicare Prescription Drug, Improvement, and Modernization Act Modifications to Calendar Year 2004 Proposal -- Horizon

Healthcare of New Jersey, Inc. Services. Retrieved June 28, 2011 from:

http://oig.hhs.gov/oas/reports/region2/20501015.pdf

USHHSOIG. (2011). Health and Human Services Inspector General-Office of Audit Services. Retrieved June…… [read more]


Milwaukee Surgical Supplies, Inc Term Paper

Term Paper  |  2 pages (646 words)
Bibliography Sources: 3

SAMPLE TEXT:

Milwaukee Surgical Supplies

For MSS, the average collection period is a weighted average of the three different collection times. This is as follows: (.3)(10)+(.4)(30)+(.3)(40)

= 27 days.

The firm's current accounts receivable balance will be figured out by calculating the average daily sales and then multiplying this by the average days receivable. The average daily sales is calculated as: $1,200,000 / 360

= $33,333.33.

Thus, the current accounts receivable balance will be $33,333.33 *

= $900,000.

If all non-discount customers paid on the 30th day, the new average collection period would be: (.3)(10) + (.7)(30) = 24 days.

The new receivables balance given this would be $33,333.33 * 24 = $800,000.

The difference between the receivables level before and after is $900,000 - $800,000 = $100,000. Financing this at 8% per year would cost $8,000. ($100,000)(.08). This is the amount that would be saved by tightening the credit policy.

Financial statement analysis is based specifically on financial statements. This type of analysis includes ratio analysis, common size analysis and time series analysis. Financial accounting underlies financial statement analysis, since financial statement analysis is based on the output of financial accounting. As a result of using standardized statements as the basis for analysis, the indicators and ratios that are used will also be standardized, allowing for cross-period and cross-firm comparison.

Operating indicator analysis is typically based on the output of managerial accounting. The measures are typically not based on financial statements but on other measures the firm devises. These measures are not standardized, and therefore vary from firm to firm. They are only useful for comparison over time, internally, because of their proprietary nature. Some operating indicators are common to the industry, however, but the specific definitions and rules for their calculation may not be standardized between firms.

Both types of analysis are useful for health services managers because both provide insight into the firm's performance. The financial statement analysis provides some insight into…… [read more]


Acquiring a Company Case Study

Case Study  |  2 pages (704 words)
Bibliography Sources: 2

SAMPLE TEXT:

d.)

Would your answer to the first requirement change under IFRSs? Explain your rationale supported by the guidance.

No. Under IFRS guidelines all of the deliverables are must be reflected as actual revenues in the quarter that they are received. This includes all of the various streams of revenues that are generated off of each deliverable. In the case of SolvGen, this means that their deliverables will be reflected during every quarter they are receiving any kind of income from it. Evidence of this can be seen by looking at various guidelines provided by the FASB. Where, it says, "In the year of adoption, vendors will be required to disclose information that enables users of its financial statements to understand the effect of adopting these in this update." ("Revenue Recognition," 2009) This is important, because it confirms how the new changes under IFRS standards will not have an impact upon the way different revenue streams are accounted for. As far as Careway is concerned, they are not receiving any kind of income from this transaction until the final drugs have been approved for sale to the general public. Therefore, they will not have to list any kind of income that they are receiving until this time.

Clearly, the new standards will have an impact upon how deliverables and milestone payments are reported. Where, they will be listed as actual revenues received in the quarter when payment was made. In the case of the IFRS changes that are being proposed, this would have no impact upon the way this is accounted for. This is because this basic standard is requiring all companies to report: their different deliverables and milestone payments in the quarter that they were received. Therefore, this will have no impact upon how these revenues are being recognized by both organizations.

Bibliography

Case 10 -1. (2006).

Revenue Recognition. (2009). FASB. Retrieved from: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175819938544&blobheader=application%2Fpdf

Revenue Recognition Milestone Method. (2010). FASB. Retrieved from: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175820624057&blobheader=application/pdf… [read more]


Rules of IAS 37 Pertain Research Paper

Research Paper  |  5 pages (1,254 words)
Bibliography Sources: 2

SAMPLE TEXT:

¶ … rules of IAS 37 pertain to the measuring and reporting of liabilities that are not covered by other standards and rules published by the IASB, "such as liabilities to decommission assets and liabilities arising from legal disputes" (IFRS 2010). The major changes that were proposed as amendments to IAS 37 involved the recognition of certain obligations not entirely or clearly defined by the IASB as liabilities, requiring stricter measurement and reporting measures for these obligations (IFRS 2010). The proposed amendments would also change current regulations by requiring liabilities for which measurement was impossible to still be reported, with uncertainties displayed in the measurement rather than leading simply to omission (IFRS 2010). This would mean that a more accurate representation of liabilities would be achieved in balance sheets, and not only in notes that are provided as explanations and addendums to these required balance sheets (IFRS 2010).

The proposed amendments and request for comment issued by the IASB received a great deal of response and suggestions. Many of the recommendations, adjustments, and direct responses to the questions asked by the IASB involved the new proposed methods for measuring certain obligations and liabilities, with a variety of concerns raised from a variety of corners (IFRS 2010). One recurrent theme in the commentary on the proposed amendment is a dislike for the inclusion of certain costs in the measuring of liabilities when they run the possibility of being reflected elsewhere on the balance sheet, as well, such as external costs that will be paid from stated resources.

Exposure Draft Differences

The issues with Exposure Draft #1 primarily consisted not of objection to the definition of contingent liabilities or attempts to measure and report these contingent or non-financial liabilities, but rather had to do largely with specifics of those these contingent liabilities were to be calculated and reported (IFRS 2010). The same basic commentary applies to constructive obligations, another form of non-financial liability or responsibility taken on by a company; under the proposed amendment, these obligations would be quantified according to what would be "rationally paid" regardless of how they were going to be paid for (IASB 2005). Problems in both the quantification of these non-financial liabilities (i.e. In the measurement of their specifics) and the method of their reporting on company balance sheets were raised in comments on the first draft (IFRS 2010). These issues were largely addressed in Exposure Draft #2 by a consideration of different funding resources to be used in discharging these responsibilities and liabilities (IASB 2010).

The issues that are raised with Exposure Draft #2 are essentially part of the same areas of concern that were identified in comments to Exposure Draft #1, primarily because Draft #2 really only addressed the concerns that were raised with Draft #1 (IASB 2010). Other minor changes were made, but ultimately concerns still primarily exist in regards to precisely what has to be measured and how it has to be reported. Comments and concerns were addressed, but some uncertainties with the… [read more]


Westmount Retirement Residence Case Assessment Assessment

Assessment  |  4 pages (1,256 words)
Bibliography Sources: 3

SAMPLE TEXT:

Westmount

Westwood Retirement Residence

Case Assessment

Activity-Based Costing

ABC Costing at Westmount

Westmount Retirement Residence has not met its expected return on investment that has been established by its historical performance history. The industry in which this organization operates is growing at an exponential rate given the fact that the population, on the whole, is aging as well. It is reasonable to suspect that the increase in demand should equate to an increase in profitability as well. Unfortunately for Westmount this has not been the case and therefore inquiries into the causality of such a trend has prompted Westmount to investigate its accounting methods to find solutions.

The current method of accounting allocates costs to residents based on the square footage of the room they occupy. Furthermore, based on this system, the residents are billed on a flat rate no matter which services or how often they utilize them. This system benefits currently benefits the residents that frequently use services and furthermore financially punishes those who do not use all the services available to them. For example, a resident with a larger room doesn't necessarily use services more than someone who is staying in a smaller room. However, the current model of accounting assumes that the individual uses a proportionally equal amount of services to that of their room size.

Therefore it is recommended that a different model for cost accounting be integrated into company's accounting procedures. The ideal method for attributing the costs to the residents would be with an activity-based costing method. Under this method, the residents would be charged in accordance with what services they use and how often they use them. Therefore, the cost to the residents for items such as dietician services would be independent of the room size and, more likely than not, be nearly the same for most residents. Other items, such as physical therapy services would vary greatly to the residents based on the amount of usage they require. Operating margins in this industry can range from roughly 15% to 40% given the occupancy rate and the organizations ability to control costs (GMB, 2006). Give a conservative 20% margin the organizaiton should of made roughly 490,000. Thus the urgency to revamp the pricing/costing system should be immediately considered.

Activity-Based Costing

Activity-based costing (ABC) is a method of allocating overhead into costs in a company's accounting functions. The method has had mixed receptions in different industries. It was first introduced primarily in the manufacturing industry in order for executives to better identify the most profitable mix of products that they manufactured (Turney, 2008). Since then, like any other technology, it has evolved and new applications have been identified for its use. Turney (2008) has developed a model of the lifecycle of ABC that identifies its adoption rate among accounting professionals.

The hype cycle illustrates how the ABC method increased exponentially in popularity in the beginning but then declined as rapidly. Other metrics were developed during the down cycle that contributed to its decline… [read more]


Balance Sheet Financing the SEC Thesis

Thesis  |  3 pages (870 words)
Bibliography Sources: 3

SAMPLE TEXT:

Lehman regularly increased its use of Repo 105 transactions in the days prior to reporting periods to reduce its publicly reported net leverage and balance sheet. Lehman used the cash from Repo 105 transactions to pay down other liabilities, thereby reducing both the total liabilities and the total assets reported on its balance sheet and lowering its leverage ratios. A few days after the new quarter began, Lehman would borrow the necessary funds to repay the cash borrowing plus interest, repurchase the securities, and restore the assets to its balance sheet. Lehman never publicly disclosed its use of Repo 105 transactions, its accounting treatment for these transactions, the considerable escalation of its total Repo 105 usage in late 2007 and into 2008, or the material impact these transactions had on the firm's publicly reported net leverage ratio.[footnoteRef:2] [2: http://www.zerohedge.com/article/repo-105-scam-how-lehman-fooled-everyone-including-allegedly-dick-fuld-and-how-other-banks-a]

PRINCIPLES of OFF BALANCE SHEET FINANCING

A separate legal entity such as a special purpose vehicle (SPV) may be established as either a spin off or partnership for a particular purpose. All associated assets and liabilities are removed from the parent company's balance sheet and transferred to the SPV's balance sheet. Companies use this to get around debt covenants and increase earnings and quality of earnings by setting up the SPV to take on extra debt. Banks may create SPV's to purchase credit card receivables with proceeds from a bond offerings backed by the receivables themselves, the proceeds from the cardholders being used to pay the bond investors. Thus much of the credit risk is removed as with the removal of the asset, associated liabilities are also derecognized. The SPV holds assets and pays the pass-through's security's investors the net cash flows those assets generate. In this way, the SPV's assets and liabilities are automatically cash matched, so there is no asset-liability risk.

Another approach to off balance sheet financing is by using the difference in accounting treatment for capital and operational leases. Capital leases are treated as purchases with the related asset and lease obligations (liabilities) appearing on the lessee's balance sheet. However in operational leases, the leasing company retains ownership with the lessee payments appearing as operational expenses. Operating leases have to be disclosed in footnotes to the financial statements. As operating leases keep substantial liabilities away, this may have the effect of distorting performance measures such as return on assets and debt to capital ratios. Synthetic leases may also be used to… [read more]


Corporate Shenanigans at Healthsouth Term Paper

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Corporate Shenanigans at HealthSouth: Who Did What and Why

The recent subprime mortgage meltdown was preceded in time by the corporate shenanigans that took place in Enron, WorldCom and HealthSouth, all of which are instances of accounting practices that were intended to mislead investors and auditors concerning just how much, where and how money was being made. In the case of HealthSouth, the accounting scandals that emerged from an investigation found numerous instances of such practices that were driven by pressure to perform in an increasingly competitive for-profit healthcare industry. To determine the key actors and what happened, this paper provides a review of the relevant literature concerning the accounting scandal at HealthSouth, followed by a summary of the research and important findings in the conclusion.

Review and Discussion

In his book, the Corporate Transformation of Health Care, Geyman reports that, "HealthSouth is the largest investor-owned chain of for-profit rehabilitation hospitals in the country. It is now besieged by federal investigations for longstanding accounting and tax fraud" (2004:25). These violations, Geyman suggests, are compounded by the flagrant hypocrisy that the corporation has demonstrated over the years. In this regard, Geyman notes that, "HealthSouth, with about 1,800 facilities in all 50 states and abroad, bills itself in its marketing materials as committed to providing high-quality, cost-effective care. Yet its claims are belied by a persistent story of predatory greed since its founding" (2004:25). One of the key players in the litigation that would follow was that corporation's founder, Richard Scrushy, described by Geyman as being "a former physical therapist" who "was the driving force in building a large chain of health care and rehabilitation facilities, including inpatient, outpatient, surgical, diagnostic, occupational, and other medical centers" (2004:25-26).

An analysis of the corporate shenanigans that took place at HealthSouth over the years by Jennings notes that, "Richard M. Scrushy, HealthSouth's CEO, began the company in 1984 with just $55,000 in capital he gathered from three friends. The company's stock climbed during the period from its first public offering as an obscure stock in late 1986 for about $1 per share to a darling of Wall Street selling at nearly $31 per share in 1998" (2004:7). What followed would likely amount to insider trading in anyone's book, but some of the key players in the HealthSouth scandal were apparently more culpable than others because not everyone who was caught was convicted. According to Jennings, "In September 1998, Scrushy and other executives, including the company's CFO, sold off their shares of HealthSouth just prior to announcing a reduction in forecasted earnings because of a change in Medicare rules; however, the change in the Medicare rules would have reduced forecasted earnings about $20 to $30 million, not the $175 million HealthSouth announced" (7). Although the company managed to recover from this financial setback in 1998 to increase its stock from $5 to almost $16 by mid-2002, HealthSouth's stock took another beating when the company announced that it was discontinuing its previous accounting practice of billing Medicare… [read more]


Convergence of GAAP and IFRS Research Paper

Research Paper  |  4 pages (1,144 words)
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convergence of GAAP and IFRS

IFRS, GAAP and convergence

The two acronyms stand for International Financial Reporting Standards and for Generally Accepted Accounting Practices. The International Financial Reporting Standards were created by the International Accounting Standards Board and they represent a set of principles, rules and regulations on reporting and accounting. The aim of these standards is that of creating a "single set of high-quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles" (Website of IFRS, 2010).

The Generally Accepted Accounting Principles are the reporting regulations used within the United States and some other countries. Their global presence is reduced in comparison to that of the IFRS and their popularity is registering significant decreases. Today, emphasis is being placed on the convergence of the two and the creation of a globally normalized reporting system.

Throughout the past recent years, efforts have been intensified in the direction of a convergence between IFRS and GAAP. The number of countries subscribing to the regulations of IFRS has significantly increased and by 2013, their total numbers are expected to be around 150 states. Before adopting the International Financial Reporting Standards, countries traditionally form their own divisions to investigate the current reporting systems in the country and to develop a plan for convergence to the IFRS. The convergence plan usually spreads out through a duration of several years. Within the United States of America, the convergence process was commenced by the Securities and Exchange Commission (SEC) and its scope is that of aligning the reporting standards in the GAAP with those of the IFRS with the final benefit of simplified and standardized reporting system which reduce the complexities of international reporting (United Nations, 2007).

2. Differences between IFRS and GAAP

The process of convergence is slow and implies tedious work. One of the reasons which created delays in the competition of the convergence is given by the differences between International Financial Reporting Standards and the Generally Accepted Accounting Principles. Some of the existent differences have been resolved throughout the past recent years, but some of them continue to raise difficulties through today. The most relevant differences which continue to exist are as follows:

a. General approach -- in case of the IFRS, the general approach is a principles-based one, whereas the general approach in the case of GAAP is a rule-based one

b. Comparative information -- the IFRS requires one year of comparative information, whereas the GAAP does not take an official stand in this aspect (SEC does however state a three-year requirement for comparative information)

c. Extraordinary items -- they are prohibited by the IFRS but accepted as rare by the GAAP

d. Jointly controlled entities -- IFRS allows both proportionate consolidation as well as equity, whereas GAAP normally requires the equity method

e. Revenue recognition -- IFRS contains 18 principles, whereas GAAP are wider as they are industry specific

f. Development costs -- capitalized and amortized under IFRS and incurred with GAAP

g. Property, plant and equipment --… [read more]


Ethics Case Essay

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Ethics Case

a) There are a number of different stakeholders in this case. The shareholders are one of the stakeholders, since their return on investment is dependent on the actions of the company's management. The employees of the company are also stakeholders. Securities regulators are also stakeholders. The controller and the president are the most important of the internal stakeholders, though all employees are indirect stakeholders. If there is a pension plan at the company that holds company stock, then that plan is a shareholder and therefore also a stakeholder.

From the controller's perspective, professional ethical standards apply. The controller is bound by professional ethics as well as the company's code of ethics and his or her personal ethical standards as well. Securities regulators also have an impact on the ethical standards to which the controller must adhere in this situation.

b) The president's request does present an ethical dilemma for the controller. The allowance for doubtful credit is intended to be used to help make the financial statements more accurate by accounting for the fact that some of the accounts receivable will not be converted into revenue. The rate at which this allowance is recorded is based on the firm's need for accurate reflection of this default risk. The president's request that the rate be changed is not based on a change in the level of default risk that the firm faces on its accounts receivable. The request is based on the desire to manipulate earnings levels and manage the expectations of the shareholders.

Thus, the request is in bad faith. The controller could comply with the request, but in doing so would be complicit with an attempt to deceive…… [read more]


Control Techiques for Bentley Business Plan

Business Plan  |  2 pages (662 words)
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Control Techiques for Bentley Motors

Control Techniques for Bentley Motors

The control processes at Bentley Motors are complex and present at all levels of the organizational activities. The control techniques are vast and they include actions such as the control of the staff members, the control of the product quality or the control of the financial statements. In terms of financial statements, the actual involvement of Bentley is limited to the verification of the correctness of the information to be integrated in the construction of the financial statements. Since Bentley is not an individual and independent organization, but an integrant party of the German Volkswagen Group (Automotive Intelligence), the parent company is the one creating the financial statements. At the level of the group however, the control of the financial statements is a dual one -- it is first conducted by internal parties within the group and this is called internal audit. Once the internal audit is completed, external audit organizations commence to conduct their own controls; these actions are organized under the generic name of external audit.

Despite the limited power and interference of Bentley in the control of the financial documents, the automobile manufacturer plays a pivotal part in the quality control. The control of quality is an ongoing business operation by which the quality of the products and services is continually assessed during both production as well as delivery (Tutor2U). The managerial team at Bentley Motors takes great pride in the highly "rigorous quality control" (Website of Bentley Motors, 2010) they implement and on the fact that this rigorous quality control is integrated at all organizational levels and ensures high quality of the automobiles as well as the annex services and product.

The detailed quality control commences with the automobile components to be integrated in the final product and spreads through all operations up until sales and marketing, as well as post purchase customer service. The strong emphasis on quality control has allowed the company to create and…… [read more]


Balance Sheet Is a Good Thesis

Thesis  |  1 pages (342 words)
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¶ … balance sheet is a good way to gauge the health of a company's finances. However, I have found that financial statements must always be taken into context, and the context is not always apparent. Firms in different types of industries, for example, will naturally have balance sheets that look different, the most glaring example being financial institutions.

The balance sheet is also a snapshot, which can be frustrating. This means that if the firm makes a significant change, it will not be reflected right away in the financial statements. This means that the balance sheet may not accurately reflect the firm's current situation. Similarly, the balance sheet can become skewed by major transactions. A firm can take on a significant amount of debt for an acquisition, leaving it with a poor balance sheet for a year or two. However, the long-term implications of the acquisition might be very positive.

Working with the balance sheet means taking a wide range of factors into consideration. Liquidity ratios can be valid, but…… [read more]


Financial Statements: Introduction, by David Harper ) Article Review

Article Review  |  3 pages (1,019 words)
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Financial Statements: Introduction, by David Harper (2009), there are objectives, definitions, tools, and techniques that are all addressed, as well as assets, liabilities, cash flow, and pension plans. It is very important to understand all of the issues that surround financial statements, too, because analyzing them will not work without a clear understanding of what is being looked at and how it all goes together. The advantages of studying and analyzing financial statements are also talked about, because not everyone realizes how beneficial this can be and how important it is to do it correctly.

I agree with the viewpoint of the author, and I am not the only person who appears to feel that way. A similar article on the Accounting for Management Web site is similar in nature in that it indicates the significance of paying attention to financial statements and actually understanding what they are saying so that investments can be made wisely (Financial, 2009). If one does not know what the financial information means, one cannot make a rational decision as to whether that information is good or bad when it comes to investing.

Harper's (2009) article is divided into sections and each of those sections addresses a specific issue. That is very important, since trying to learn about everything all at once can be very confusing and can lead to a decision that is not the best for the investor or for anyone who is studying the financial statements of a company for any reason at all. That is worth noting and paying attention to, because not all financial statement articles -- especially those that talk about analysis -- are broken up into sections that are easily digestible and that make enough sense to be accessible to everyone who reads them.

It would be impossible for Harper's (2009) article to discuss everything related to the analysis of financial statements because there is simply too much to put into one article, but that does not mean that a lot of information cannot be put into there so that people who have even the most basic understanding of financial statements can move forward, learn more, and make good decisions about investing and other issues. Investing is not the only reason that people have when they look at financial statements and try to analyze what those particular statements have to say. There are many other reasons that can cause a person to analyze financial statements. However, investing is the most common.

It is important to know how well a company is actually doing before one invests in it, and if a person does not understand what the terms on a financial statement mean, he or she will be at a loss as to what is good, bad, acceptable, or questionable. It is very possible to miss a red flag in a financial statement if there is a lack of understanding about it, and Harper (2009) is quick to point that out. Harper (2009) also mentions that it is… [read more]


Problem Formulation and Identification Essay

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¶ … organization identifying problems after the fact. When a strategy failed to yield the expected results, an audit was conducted to determine the source of the deviation. This form of activity audit was used in response to negative stimulus. The style is known as results analysis (Low & Heil, 2007). The strength of this type of problem identification is that because the deviation is a known entity, it can be easier to identify the specific issues that lead to the deviation. However, the main negative impact is that because the deviation has already occurred, the organization has already suffered a negative impact of the problem. Fixing it now may mitigate the damage, however, and defend against future occurrences off the problem. While it is preferable to anticipate problems, it is inevitable that some problems cannot be anticipated. Therefore, it is recommended that the organization have a formal means to address deviations in outcome that do occur, rather than to simply assume that they will always meet their targets.

Although…… [read more]


Fraud: Madoff vs. Enron Bernie Madoff Scandal Essay

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Fraud: Madoff vs. Enron

Bernie Madoff scandal has been a much bigger scam than Enron both in its impact on the world and in the scope of its effect on individual lives. Hundreds of thousands of honest investors had trusted Madoff with their hard-earned cash and their lifelong savings. When Madoff's Ponzi scheme was revealed, these people practically lost everything they had. Some even had to go back to work after they had been retired for years and were looking forward to a comfortable life. But unfortunately for them, no such relief was available to them since they had invested their money with a person who was not investing it further in stocks and ventures as it was believed, but instead was using their money to pay returns to other investors. With Enron, the problem arose not with their actual business method but with their auditing practices. They company would pay its auditors Arthur Anderson to have their financial records altered. This way they could show that company was making profits when in reality it was not. People would invest in Enron stocks believing they were making a wise choice based on the financial records. But since these records had actually been fake representation of the reality, eventually everyone who had invested anything in Enron stocks ended up suffering major losses. With Madoff, auditors must been involved but…… [read more]


Affirmative Action at Disney Company the Walt Thesis

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Affirmative Action at Disney Company

The Walt Disney Company has struggled with and often been involved with litigation over a lack of diversity in hiring practices, both in its theme parks and throughout its many entertainment businesses. Claims that the company ignores Affirmative Action (AA) initiatives at its theme parks (Van Maanen, 1991) has led to the company being required to perform Equal Employment Opportunity Commission (EEOC) audits periodically to ensure compliance to AA initiatives. The intent of this paper is to evaluate how The Disney Company has managed the litigation surrounding their AA violations and the steps they have taken to ensure EEOC audit compliance.

Disney Diversity Initiatives Defined As A Result of EEOC Audits

In addition to the reported violations throughout their theme parks, The Disney Company was considered to be in violation of Affirmative Action in their retail stores and call centers as well (Saseen, 1993). The most significant outcomes of the litigation the company went through was the requirement of completing periodic EEOQ audits, the result of which would be published to employees and also shared with the EEOC itself. What emerged from these audits was the discontinuous approach to AA compliance which had been in place before, and highlighted the need for creating a lifecycle-based approach to managing AA initiatives over time and serves as the foundation of the Disney Diversity Initiatives program. Disney realizes there had been a low level of learning with regard to AA compliance, and as a result defined the first phase of their model as "No Awareness" which is where associates went through periodic training programs. Second, the Disney Diversity Initiative program sought to integrate EEOC compliance and hiring practices into the company's core business model and mission, as the EEOC audits had shown a significant disconnect between their intended AA actions and results. The third phase of the Disney Diversity Initiative was defined as Understanding. This was the largest and most costly of the steps of the Disney Diversity Initiative to complete. It involved ensuring each employee in…… [read more]


Difference Between ABC and TDAC Essay

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¶ … ABC and TDAC

The concept of activity-based accounting first appeared in the manufacturing sector during the 1970s and was formally defined by Robert S. Kaplan and W. Bruns in 1987 (Kaplan and Bruns, 1987). Traditional activity-based costing (ABC) is considered a "push" model of costing where an accountant starts with total expenses spent on various types of resources, such as salaries or supplies, and then determines what percentage of that resource is associated with each product or service (Ni u). Then the accountant applies that ratio to the total cost to generate a cost allocation for a given product (Ni u). In this way, overhead costs are assigned products and services according to their actual consumption so that organizations have a better picture of their true costs. Calculating baselines for activities, developing the modeling and retesting the model after it is implemented take a lot of time and is costly (Kaplan and Anderson, 2006).

To address concerns with ABC, Robert S. Kaplan and Steven R. Anderson developed time-driven ABC which is a "pull" modeling of costing (Ni u). "Time-driven ABC…… [read more]


Public Budgeting in America Holistic Systems Theory Term Paper

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Public Budgeting in America

Holistic Systems Theory #10

Inputs #11

Outputs #3

Marginal Cost Analysis #9

Crosswalk #7

Qualitative revenue-forecasting analysis #14

Method of averages #16

Econometric forecasts #20

Trend Line Forecasts #12

Productivity #1

Auditing #2

Internal Audits #4

External Audits #6

Demand-responsive programs #17

Directed programs #8

Overhead #19

Direct Costs #18

Forecasting #15

Post-Audit #13

An issues assessment will help the agency to understand what issues it might face. The most important subject of an issues assessment is for the organization to gain a better understanding of its own outputs, procedures and deficiencies therein. The agency must identify those areas in which it underperforms and attempt to determine the cause of that underperformance. If the agency does not understand what the issues are, it will never be able to solve them.

Issues assessments can include both qualitative and quantitative components. The latter will involved gaining an understanding of the key stakeholders, the details of the issue itself and the objectives that will be achieved in dealing with the issue. The issue will be assessed with respect to the costs that are needed to achieve these objectives and the organization's ability to meet these objectives within the given time frame. By the end of the issues assessment, the agency will understand what the issue is, why it is an issue, who it affects, and how the issue can best be solved.

Issues assessments seek to determine the root causes of issues. This helps guide government response to the issue, allowing for better allocation of human and financial resources. The root causes of the issue will allow for the sources of errors or weakness to be identified and subsequently dealt with. By doing this, agencies can improve their efficiency overall.

Lastly, an issues assessment must look at the chains of responsibility. By understanding how the system works, the issue can be more easily solved. Thus, understanding chains of command, managerial roles and responsibilities, and organizational constraints, the issues assessment can help the agency better understand the issues…… [read more]


Career Living in 'The Present': Reflections Thesis

Thesis  |  3 pages (882 words)
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¶ … Career

Living in 'The Present': Reflections on my life and career as a management accountant

In pursuing a career path in life, one must find meaning in it, both professionally and personally. Professionally, an individual's career must be meaningful not only in financial or monetary terms, but must also be intellectually stimulating and psychologically healthy to his/her well-being. On the other side of the coin, one's chosen profession must also be relevant to the personal life of the individual. That is, his/her work must be relevant to the person's life outside of work, and that s/he must skillfully create a balance in maintaining his/her image as a professional while at the same time, not sacrificing his/her personal identity distinct from his/her work identity.

This delicate balance between work and non-work (i.e., personal) identities are especially critical among individuals whose work takes up most of his/her time. Working people talk about aspiring for and/or achieving the 'work-life balance,' wherein one's professional life must not dominate his/her personal life, and vice versa. While this may be considered an important goal for working individuals, more crucial for me is to be able to pursue my desired career path by achieving both professional and personal fulfillment -- not necessarily aspiring for and achieving work-life balance, but learning to make these two elements contribute to my development as an individual, holistically.

This paper discusses life's meaning from both work and personal life perspectives. Using learnings from the book, "The Present" by Spencer Johnson, career facts and information from the Bureau of Labor Statistics (BLS), and first-hand information from an interview with a professional, who has chosen the career path I intend to pursue, as an Accountant specializing in Business Management. This paper posits that insights from Johnson's book and the personal interview from Ms Dale, as well as supporting details about Management Accounting, are triangulated to develop the thesis that meaningful life begins by enjoying 'the present,' and that immersion in the present with the help of lessons from the past ensures that the individual will experience a life just as or more meaningful than the present.

The first phase of the triangulation process is to integrate facts about Management Accounting with insights generated from "The Present" and the personal interview with Ms Dale, who is a management accountant. From data generated from the BLS, the bureau reported that accountants as a profession in the country is projected to have a "strong growth," that is, there will be a continued demand for accountants in the period 2006-2016. Moreover, increased enrolment in accounting courses further made this projection a positive one, as more graduates of…… [read more]


Cash Flow Statement Research Proposal

Research Proposal  |  2 pages (656 words)
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Cash Flow Statement for the Year to 31.12.07.

Operating profit

Depreciation for 2007

Loss on disposal of fixed assets

Changes in stocks / inventories

Changes in debtors / receivables

Changes in creditors / payables

Net cash flow from operating activities

Taxation paid this year

Investing activities

Payments to acquire fixed assets

Receipts from sale of fixed assets

Financing activities

Issue of shares / stock

Repayment of loan

Dividends paid this year

Change in cash over the year between the Balance Sheets)

This cash flow statement tells us many things about the company's performance that are not found on the profit and loss report. It does this by isolating the three main types of activities - operating, investing and financing. In general, when evaluating the performance of the company year-over-year, the most important component is the operating activities. To accomplish this, the cash flow statement begins with net profits and then deconstructs this, to isolate the causes for the company's change in cash position.

With ABC company, the firm's bank account went from a £12 million overdraft to a £29 million positive balance. To the casual observer, this would indicate strong performance. However, we can see that the majority of cash flows at ABC in the past year were attributable to investing and financing activities. The company spent £115 million on new investments; in part this was paid for via a £50 million stock issue.

The operating activities for ABC show that the firm actually earned £155 million in cash in the past year. Some of this was leaked from the income statement in the form of depreciation. Much of the rest was spent on new buildings and equipment. All told, the firm's success last year was understated on the profit and loss report because of these investments and the effect of depreciation. Therefore, we can see that in 2007 the firm had very strong operating results, five times better than what was indicated on the profit and loss…… [read more]


Business Management Functions Term Paper

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Business Management Functions

Business Profile:

The business entity profiled is a component of the United States Department of Health and Human Services (HHS); specifically, the HHS Office of Inspector General

OIG) Office of Audit Services (OAS). This component is the principal federal agent for conducting audits of all HHS program-related professionals, professional organizations, and non-profit institutions throughout the United States, and Puerto Rico. Generally, the primary function of the office consists of auditing selected individuals and organizations to identify improper use of federal funds and lack of compliance with federal requirements regulating HHS-funded service providers.

As a result of the findings of HHS-OIG-OAS audits, the office issues formal reports detailing recommendations ranging from the return of federal funds to extensive reorganization of business practices affecting the health and welfare of HHS program beneficiaries. The Inspector General's Act of 1978 gives the weight of federal law to the recommendations issued by the OIG, with criminal prosecution and sanctions authorized for failure to comply with its directives (Nowalinski, 2001).

Organization:

The HHS Inspector General in Washington, DC is the organizational director of all eight regional HHS-OIG offices, which includes the following separate components:

Office of Investigation (OI), Office of Evaluations and Inspections (OEI), Office of Counsel to the Inspector General (OCIG), and Office of Audit Services (OAS). Each component maintains regional offices throughout the eight federal regions across the country, under the direction of a Regional Inspector General (RIG) for that component (HHS.gov, 2006). The RIG administrates approximately 3-8 audit managers, each of whom supervises a team of approximately 8-15 federal auditors, working in audit groups of 4-8 federal auditors. Generally, each audit group consists of one senior auditor and several junior auditors. The audit manager monitors the progress and results of all audits conducted by each audit groups within his audit team (HHS.gov, 2006).

Planning:

Every year, the HHS Inspector General in Washington, DC directs audit objectives for the eight regional HHS-OIG-OAS field offices located throughout the country. Generally, the RIGs also contributes to the general audit objectives in Washington by proposing audit issues they have reason to believe require formal OIG review. Potential audit issues that affect many regions may generate a national audit, whereby each regional office conducts the same audit of all related individuals, programs, and entities within its respective regional jurisdiction (HHS.gov, 2006).

In addition to audits assigned by the HHS Inspector General, each RIG also convenes with his audit managers to select additional…… [read more]


Interpersonal Group and Collective Behavior Dynamics Term Paper

Term Paper  |  3 pages (937 words)
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Management - Organizational Behavior

DEPARTMENT of HEALTH and HUMAN SERVICES OFFICE of INSPECTOR GENERAL OFFICE of AUDIT SERVICES

Department of Health and Human Services (HHS) is this country's largest federal agencies with an annual budget that amounts to one quarter that of the entire federal budget and employs more than 60,000 individuals. Within the agency, its varied responsibilities are divided into major operating divisions, such as the Centers for Medicare and Medicaid Services (CMS), which administrates healthcare assistance to millions of beneficiaries; the National Institute of Health (NIH), which oversees medical and health-related research and funding; and the Food and Drug Administration (FDA), which monitors the quality of foods and drugs.

Within HHS, the Office of Inspector General (OIG) monitors all state and local agencies receiving federal funding provided in conjunction with all programs within the authority of HHS. The OIG comprises four separate organizational components: Office of Inspections and Evaluations (OIE); Office of Investigations (OI); Office of Counsel to the Inspector General (OCIG); and Office of Audit Services (OAS).

The HHS-OIG Office of Audit Services is the component organization of the Office of Inspector General responsible for auditing federal expenditures in connection with all federal funds or awards granted to state and local agencies, as well as private medical practitioners and equipment suppliers providing services to beneficiaries of HHS programs. The HHS-OIG-OAS headquarters is located in Washington, DC, and six other regional offices are located around the country. They are individually responsible for conducting audits of entities within their specific regions. Regional Inspector Generals for Audit Services (RIGAS) report to the Deputy Inspector General (DIG) in Washington, who in turn, reports to HHS Inspector General Dan Levinson.

At regional HHS-OIG-OAS offices, federal auditors perform audits of programs and institutions as selected by OAS managers in their annual audit plans in much the same way as Internal Revenue Services auditors conduct taxpayer audits. Within regional OAS offices, managers report to the Inspector General for Audit Services (RIGAS). Each manager maintains a staff of approximately 8 to 12 federal auditors who work in audit teams of 3 to 4 auditors, each. The work of HHS-OIG-OAS audit teams consists of targeting specific issues selected by their managers from the annual HHS-OIG-OAS audit plan, as assigned by each team's manager. Once an audit is planned, the audit team visits the offices of the auditee's facilities and examines all pertinent documentation, such as receipts and patient billing records. After the fieldwork is complete, the individual auditors analyze the data contained in the records and the team reassembles to report its conclusions and issue recommendations on different segments of the audit. Identified audit issues generate lawful instructions issued by the Inspector General requiring auditees to improve compliance where they are deficient and repay federal funds received or expended improperly. Generally, audit issues selected…… [read more]


AICPA American Institute of Certified Public Accountants Term Paper

Term Paper  |  1 pages (387 words)
Bibliography Sources: 1

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Pre-Paid Phones

How could you imagine yourself using the AICPA website as your career develops?

The AICPA (AICPA: American Institute of Certified Public Accountants) website is full of many resources of use to professional accountants, not simply individuals embarking upon their first jobs in the profession. First and foremost perhaps, the website offers helpful articles about recent changes in accounting law. Given the current federal and state regulatory climate after highly publicized recent accounting scandals at respected firms, it is important that members of the profession keep well-abreast of changes in the law. This is not only true of laws specifically pertaining to accounting, but also changes in healthcare policy, for example, which can affect client deductions.

Early on in an accountant's career, it would be helpful to examine the provided links about becoming a CPA, and information about career development and state licensing. For persons who are already working in the profession and who have completed their required education, the website provides links to professional conferences and offers subscriptions to professional journals and online newsletters that can help recent graduates and older accountants learn about new or unexplored opportunities. These real life…… [read more]


Human Resource Management HRM Managing People to Achieve Organizational Effectiveness Term Paper

Term Paper  |  3 pages (723 words)
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SAMPLE TEXT:

Human Resources

Problems Posed by the Behavior of Richard Painter and Why in order to understand the problems posed by Richard Painter in terms of his specific actions, it is first important to understand the system in which he works, how that system relates to him and his personal enrichment, and the conflicts of interest and moral temptations that the system delivers to someone like Richard Painter and can lead them astray quite easily.

First, the dynamic of Richard's role as Chief Audit Executive, or CAE needs to be fully understood. Richard essentially has a dual role in this position due to the desire on the part of the organization to modernize his position; this dual role essentially consists of two main areas- the performance of internal control audits and financial auditing, and within his position, he holds the potential to be able to receive substantial compensation bonuses and increases based upon favorable results presented in the internal control audits. The staff that conducts these audits, thereby basically holding the keys to additional compensation for Richard, are in fact overseen and guided by Richard- herein a conflict of interest definitely lays because of the potential for abuse by him in his supervisory capacity.

Sure enough, Richard soon began to cut the staff of the internal auditing team, thereby reducing its ability to effectively present information that may be damaging to Richard's potential for promotion and compensation, failing to focus on the all important internal auditing functions, and to make no distinction between financial and internal control audits, thereby basically killing all internal auditing functions and giving him free reign to be able to act as he wished, be compensated and rewarded for achievements, while all the time, his real motives and misdeeds were shaded by the lack of oversight by other staff members. Essentially, Richard was able to report huge cost savings, but these cost savings in fact came at the cost of the protections of the firm- from individuals like Richard himself.

Speaking in human resource terms, the HRM functions that the behavior of Richard presents a problem to be those of Manpower Planning and Employee Motivation, both in some…… [read more]


Partnership Agreement Term Paper

Term Paper  |  2 pages (944 words)
Style: APA  |  Bibliography Sources: 2

SAMPLE TEXT:

Partnership Agreement

This PARTNERSHIP AGREEMENT is made on July 4, 2007 between John Doe and Sally Mae.

The parties hereby form a partnership under the name of the Partnership to conduct a retail business. The principal office of the business shall be in Brisbane, Australia.

TERM. The partnership shall begin on July 4, 2007, and shall continue until terminated as herein provided.

CAPITAL. The capital of the partnership shall be contributed in cash by the partners as follows: Each partner will contribute and equal one half of the total capital, placed into a separate capital account which shall be maintained for each partner. Neither partner shall withdraw any part of his capital account. Upon the demand of either partner, the capital accounts of the partners shall be maintained at all times in the proportions in which the partners share in the profits and losses of the partnership.

PROFIT and LOSS. The net profits of the partnership shall be divided equally between the partners and the net losses shall be borne equally by them. A separate income account shall be maintained for each partner. Partnership profits and losses shall be charged or credited to the separate income account of each partner. If a partner has no credit balance in his income account, losses shall be charged to his capital account.

5. SALARIES and DRAWINGS. John Doe shall receive a salary for his management services rendered to the partnership. Sally Mae shall not receive a salary for her services rendered to the partnership. Each partner may, from time to time, withdraw the credit balance in his income account.

6. INTEREST. No interest shall be paid on the initial contributions to the capital of the partnership or on any subsequent contributions of capital.

7. Management DUTIES and RESTRICTIONS. John Doe is the manager of the partnership and thus has the right to the management of the partnership business. As manager, John Doe has the right to act without the consent of the other partner in order to borrow or lend money, or make, deliver, or accept any commercial paper, or execute any mortgage, security agreement, bond, or lease, or purchase or contract to purchase, or sell or contract to sell any property for or of the partnership other than the type of property bought and sold in the regular course of its business.

8. BANKING. All funds of the partnership shall be deposited in its name in such checking account or accounts as shall be designated by the partners. All withdrawals are to be made upon checks signed by either partner.

9. BOOKS. The partnership books shall be maintained at the principal office of the partnership, and each partner shall at all times have access thereto. The books shall be kept on a fiscal year basis and shall be closed and balanced at the end…… [read more]


SEC vs. FASB Term Paper

Term Paper  |  1 pages (397 words)
Bibliography Sources: 1+

SAMPLE TEXT:

SEC FASB

Should the FASB be abolished?

Outlining the major arguments for and against the SEC replacing the FASB

Both the Financial Accounting Standards Board (FASB) and the Securities and Exchange Committee (SEC) play critical roles in establishing the standards of GAAP. Only the SEC has the power and authority of United States law to set and enforce accounting standards. The FASB is a private organization that is supposed to show professional leadership in establishing and improving the accounting methods used to prepare financial statements. It functions much as the National Bar Association or American Medical Association might, in establishing professional guidelines.

The argument for subsuming the SEC into the FABC is that the recent accounting scandals such as Enron, demonstrate that legal 'teeth' are needed to enforce accounting procedures in a uniform fashion. Until now, the FASB has shown little proactive action in addressing ethical issues. For example, the SEC had to ask the FASB to add revenue recognition, concerns about the pooling-of-interests method of accounting, and accounting for financial instruments at fair value, and transparency issues related to derivatives, investments and loans to its agenda for review because the number of SEC enforcement actions related to…… [read more]


SEC That Is Responsible Term Paper

Term Paper  |  4 pages (1,120 words)
Bibliography Sources: 1+

SAMPLE TEXT:

The plane was estimated to have a fair market value of $950,000 at the end of 2002. How much depreciation expense should Red Airways record in 2002 on this plane on December 31, 2002?

a. $30,000

16. On October 1, 2002, the Golden Triangle Gazette received $1,400 for newspaper subscriptions spanning October 1, 2002 through April 30, 2003. Throughout 2002 and 2003, the Gazette delivered daily newspapers to individual subscribers. How much revenue should the Gazette recognize in 2002 relative to these subscriptions?

a. 600

17. Joyner Distributing is estimating its allowance for uncollectible accounts at January 31, 2002, based on the following information:

Accounts Receivable, January 1

$1,375,000

Total Accounts Receivable write-offs during January

$200,000

Allowance for Uncollectible Accounts, January 1

$175,000

Total sales for January

$10,000,000

Sixty percent Joyner's total sales for January 2002 are credit sales. Based on past experience, Joyner estimates that 5% of its credit sales will be uncollectible. What is uncollectible accounts expense for January 2002?

a. $300,000

18. On July 10, 2002, Fins and Feathers Pet Shop purchased 100 bags of Koi Chow at $10 each from Far East Distributing Company. On July 11, Fins and Feathers sold 60 sacks bags at $15 each. Fins and Feathers uses a perpetual inventory system. Related to the sale of the 60 bags, the company should recognize, respectively, increases of ____ in sales revenue and in ____ cost of goods sold.

a. $900 and $600

19. When FIFO and LILO are compared,

a. LIFO yields a higher net income during inflationary times than FIFO.

20. The principal reason for reconciling the cash balance per books with the balance shown on the bank statement is to:

a. Determine the amount of cash in the account actually available to the entity.

21. Which one of the following statements about inventory errors is true?

a. Ending inventory and cost of goods sold have an inverse relationship; that is, if the value of cost of goods sold is too low, the value of ending inventory is too high.

On January 1, 2002, Run N' Go Pizza purchased a delivery truck for $50,000. The truck has a $5,000 salvage value and a four-year useful life or 56,250 miles.

22. If Run N' Go uses the straight line method, how much depreciation expense should Run N' Go recognize in 2002?

a. $11,250

23. If Run N' Go uses the double-declining balance method, how much depreciation expense should Run N' Go recognize in 2002?

a. $25,000

24. If Run N' Go uses the units-of-production method and puts 18,500 miles on the truck in 2002, how much depreciation expense should Run N' Go recognize in 2002?

a. $14,800

25. On January 1, 2002, Green Pharmaceuticals purchased a patent for a new arthritis medication from Winwood Research Labs for $1,000,000. The patent has a remaining legal life of 10 years and an estimated useful life of 5 years. What adjusting journal entry should Green prepare on December 31, 2002, relative to this patent?

a. Amortization… [read more]


Financial Statements Attn: Aunt Cookie Term Paper

Term Paper  |  2 pages (436 words)
Bibliography Sources: 0

SAMPLE TEXT:

As such, the interest for the note is listed, whether paid or not, during the period in which

it was incurred -- in this case, December of this year. It is listed as a liability and not an expense, since it is a debt note for future payment and not immediately due, the way an expense (for example, employee wages) would be.

C) The advance received from a club which is organizing its annual fundraiser is not revenue; it is actually a liability until delivery of the complete order is made. This is because "unearned revenue" is a sort of loan from the client based on the expectation that services will be provided because of the advance. This means that the cash advance will be classified as a liability until actual delivery of the cookies to the club is made, at which point it will become income along with the rest of the payment for the order.

The interest mentioned in paragraph B. above is the only one of these transactions that directly effects owner equity. It does this because the adjusted interest expense for the month is subtracted directly from expenses, making a direct change to how much equity the owner has…… [read more]


Watts's and Zimmerman's Research Term Paper

Term Paper  |  5 pages (1,518 words)
Bibliography Sources: 1+

SAMPLE TEXT:

Volume 7 Number 3 Fall 1994. Page 3. On the Internet at http://www.studyfinance.com/jfsd/pdffiles/v7n3/rezaee.pdf

4. Watts. R.L. & Zimmerman. J.L., (1978), "Towards a Positive Theory of the Determination of Accounting Standards," The Accounting Review, Vol. 53, No 1, pp. 112-134.

5. Sidhu, K; Whittred, Greg. The Role of Political Costs in the Deferred Tax Policy Choice. Australian Journal of Management. June 2003.

6. Nujaki, Merridee. A citation trail review of the uses of firm size in accounting research. Journal of Accounting Literature. 1997

1978. Page 113. From Milne, Markus J. Positive Accounting Theory, Political Costs and Social Disclosure Analyses: A Critical Look. University of Otago. Page 4. On the Internet at http://www.commerce.otago.ac.nz/acty/research/pdf/postive_accounting_theory.pdf

Ibid.

Rezaee, Zabihollah. AN INVESTIGATION OF THE RELATIONSHIP BETWEEN MULTINATIONAL COMPANIES ATTRIBUTES AND THE MARKET EFFECTS OF SFAS NO. 52. Journal Of Financial And Strategic Decisions. Volume 7 Number 3 Fall 1994. Page 3. On the Internet at http://www.studyfinance.com/jfsd/pdffiles/v7n3/rezaee.pdf

Watts and Zimmerman. Page 115.

Milne, Markus J. Positive Accounting Theory, Political Costs and Social Disclosure Analyses: A Critical Look. University of Otago. Page 4. On the Internet at http://www.commerce.otago.ac.nz/acty/research/pdf/postive_accounting_theory.pdf

Martien Jan Peter Lubberink. Financial statement information: the impact of investors and managers. Groningen: SOM, 2000… [read more]


Guidance for Revenue and Expense Recognition Methods Term Paper

Term Paper  |  4 pages (1,072 words)
Bibliography Sources: 1+

SAMPLE TEXT:

¶ … guidance for revenue and expense recognition methods, both standard and percentage of completion criteria. It also discusses the pros and cons of expensing stock options.

It concludes with recommendations for a manufacturing company to carry out given this information.

Revenue and Expense Recognition Methods

SEC Staff Accounting Bulletin No. 101 (SAB 101) - Revenue Recognition in Financial Statements summarizes views in applying generally accepted accounting principles (GAAP) to revenue recognition in financial statements (Turner, 2001). SAB 101 is based on four principles established in GAAP. Those principles state that revenue generally is realized or realizable and earned when all of the following criteria are met:

Persuasive evidence of an arrangement exists, 2. Delivery has occurred or services have been rendered, 3. The seller's price to the buyer is fixed or determinable, and, 4. Collectibility is reasonably assured.

These conditions reflect the simple idea that revenue on a sale should not be recognized until the seller has fulfilled its obligations to the buyer under the sale arrangement. Expenses are recognized in the same period in which the benefits derived from those costs are recognized; this is referred to as the matching principle (Adjusting the accounts). Thus, recognition of expenses is dictated by revenue recognition, so associations between revenues and costs must be established.

The revenue recognition and matching principles mentioned above are used under the accrual basis of accounting (Adjusting the accounts). Under cash-basis accounting, revenue is recorded only when cash is received, and expenses are recorded only when paid. However, GAAP requires accrual basis accounting because the cash basis often causes misleading financial statements. With accrual basis, revenue must be recognized in the accounting period in which it is earned, not just when money is exchanged. In a service business, revenue is earned at the time the service is performed as discussed below.

Revenue from the rendering of services can be recognized by reference to the stage of completion of the transaction when the following conditions are met (Service and construction contract revenue, 2002):

1. The amount of revenue can be measured reliably

2. The flow of economic benefits to the entity is probable

3. The stage of completion at the period end can be measured reliably

4. The costs incurred to date and the costs to completion can be measured reliably

Management should delay the recognition of revenue until the above criteria are met. Revenue might therefore be recognized in certain instances after all conditions of the service or construction contract have been fulfilled, even when the contract spans more than one accounting period.

A straight line basis of revenue recognition should only be used for service revenues when the service is provided by an indeterminate number of acts over a specified time period and when there is no other method available that provides a better measure of the stage of completion (Service and construction contract revenue, 2002). Instead, revenue should be recognized according to the stage, or percentage of completion of the contract. There are different… [read more]


Fraud Awareness Scholarship Request Term Paper

Term Paper  |  1 pages (308 words)
Bibliography Sources: 0

SAMPLE TEXT:

My general degree in accounting helps me to understand that not only publicly traded companies have problems with fraudulent activities. My well-rounded accounting base will make me desirable for hire in both the public and private sector.

Lastly, I think that I can be of use working against fraud. I understand that fraud is not a victimless crime - that investors and creditors are the real victims. It is my hope to continue my studies and to work in fraud awareness in order to protect victims who may have little to no understanding of the crimes committed against them. Please consider me favorably for this scholarship, as I feel I can bring my knowledge, enthusiasm and perseverance to this field of accounting.… [read more]


Cash Basis vs. Accrual Term Paper

Term Paper  |  3 pages (871 words)
Bibliography Sources: 1+

SAMPLE TEXT:

The differences between the two systems can be shown in the following example.

AXY FARMS (Cash)

Year ending December 31

RECEIPTS

Cash grain sales

Government program payments

TOTAL CASH RECEIPTS

EXPENSES

Cash operating expenses

Interest paid

TOTAL CASH EXPENSES

Depreciation*

TOTAL EXPENSES

Net farm income from operations (cash basis)

Gain/loss on sale of farm capital assets

Net farm income, before tax (cash basis)

Income taxes & S.S. taxes paid

NET FARM INCOME, AFTER TAX cash basis)

AXY FARMS (Accrual)

Year ending December 31

REVENUES

Cash receipts from grain sales

Change in grain inventory

Government program payments

Change in accounts receivable

GROSS REVENUES

EXPENSES

Cash disbursements for operating expenses

Change in accounts payable

Change in prepaid expenses

Change in unused supplies

Change in investments in growing crops

Depreciation

TOTAL OPERATING EXPENSES

Interest paid

Change in accrued interest

Accrual interest expense

TOTAL EXPENSES

Net farm income from operations

Gain/loss on sale of farm capital assets

Net farm income

Income taxes & S.S. taxes paid

Change in income taxes & S.S. taxes payable

Changes in current portion of deferred taxes

Accrual income taxes & S.S. taxes

NET FRAM INCOME AFTER TAX accrual basis)

AXY Farms appears to be moderately profitable on a cash basis. However, after adjusting the cash basis income statement to approximate an accrual basis income statement for the same period, net income after tax increased from $18,000 to $46,000. Because of the accrual adjustments, gross revenues were greater by $25,000 (from $175,000 to $200,000) while total expenses were less by $19,000 (from $149,000 to $130,000). However, because of the accrued and deferred income taxes, the expense for income taxes is increased by $16,000 (from $8,000 to $24,000). After making the accrual adjustments to the income statement, AXY was shown to be more profitable than had been portrayed by the cash basis method of accounting. The more critical situation would occur if the accrual-adjusted net income showed the business to be less profitable than the producer may have been led to believe by relying solely on cash basis income statements. As this illustration shows, computing income on a cash basis can misrepresent true profitability for an accounting period when there is a time lag between the exchange of goods and services and the related cash receipt or cash disbursement. Such distortion can be substantially reduced by also considering the net changes in certain balance sheet accounts.

Bibliography

David Minars, Davis A. Minars Accounting: Themes, Keys, Formulas, Glossary of Accounting Terms for Your Introductory College Course Barrons Educational Series; February 1992.…… [read more]


Corporate Misconduct Term Paper

Term Paper  |  2 pages (671 words)
Bibliography Sources: 0

SAMPLE TEXT:

Watkins discovered the accounting problems while working for Fastow, who was indicted last month on 78 counts charging him with masterminding complex financial schemes that enriched him and helped doom the company. The element of personal greed and the need for power also likely caused Enron's corporate insiders as well as Arthur Andersen LLP to overlook the fact that Enron was not as profitable as the company alleged.

III. CONCLUSION

Corporations provide numerous invaluable functions, both on an individual and societal level. First, corporations offer individuals a source of income in the form of employment, stimulating economic growth both on a macro and micro level. Next, corporations offer individuals the chance to enhance their income by owning a portion of the corporation in the form of stock. Third, corporations develop products and services that are innovative, either because they improve on past products and services or because they invent a totally new product or service. Assuming everything is on the up and up, nearly everyone may reap the profits of a corporation.

In recent years, there have been numerous high-profile corporate scandals involving companies that were once well-respected. Generally, these corporate scandals related to corporate loans to insiders as well as to insider trading and accounting scandals (i.e., over-inflating income in order to please Wall Street analysts and shareholders). Examples of companies involved in such scandals include Arthur Andersen LLP, Enron, Global Crossing, and WorldCom. Not only do these corporate scandals hurt a company's profitability and reputation, but such scandals also de-moralize society and result in financial difficulties for employees who are laid off. In order to eliminate or minimize corporate scandals, there need to be refinements to existing laws (such as the July, 2002 refinement banning corporate loans to insiders) as well as greater oversight by neutral entities and individuals…… [read more]


Enron Debacle Term Paper

Term Paper  |  3 pages (1,072 words)
Bibliography Sources: 1+

SAMPLE TEXT:

Pleading ignorance, however, is not a viable option for the person ultimately responsible for a company's operations. He can still be held corporately responsible for the actions of those working for him.

It is not clear how many others might have been participating in the fraud, or had knowledge of it. According to the "Executive Bios" listed on Enron's Pressroom, two members of the executive board, Jeffrey McMahon, president and chief operating officer, and Richard A. Causey, executive vice president and chief accounting officer of Enron, both began their careers with Arthur Andersen & Co., in Houston. Both individuals, therefore, would have had first hand knowledge of the "unique methodologies to improve financial performance" as taught at Andersen. Watkins, the whistle-blower, was also a former Arthur Andersen accountant.

In a January 17, 2002 Press Release, Kenneth Lay acknowledged that Andersen was reportedly destroying documents after the SEC announced its investigation.

As the focus began its massive spread, the spotlight inevitably fell upon the present Bush administration, primarily because of the Bush team's extensive ties to the energy industries, and personal friendships with some of the key players involved in the scandal. According to a report in U.S. News and World, dated January 21, 2002, coming under particularly heavy fire was Dick Cheney who reportedly formulated a pro-development energy policy during secret meetings with business executives and lobbyists (20). Cheney is now citing "executive privilege" in order to keep from having to reveal what took place during the secret meetings.

The governing instruments that were first set up during the 1930s are still determining the standards for trading in this country. The Generally Accepted Accounting Principles are no longer working. Top elected government figures feel they no longer need to answer for their secret actions that impact the country.

It is clear that a new set of standards is in order, and it should extend not only to private corporations and the very base of the pyramid of economic structure in this country, but should also extend to the top of the pyramid - upon the top elected officials who feel they can invoke "executive privilege" in order to hide the corruption that has left many families devastated in its wake, and has destroyed the trust of a nation and possibly the world.

Works Cited

Andersen. "An 88-Year History of Looking Ahead." 2002. 2/5/02

http://www.andersen.com/website.nsf/content/AboutUsOurStart?OpenDocument

Associated Press. "Former Enron Exec. Found Dead." Hays, Kristen. Jan. 25, 2002.

A.P. story picked up in Washington Post. 2/5/02.

http://www.washingtonpost.com/wp-dyn/articles/A37789?2002Jan25.html

Enron. "Executive Bios." Richard Causey. 2/05/02

http://www.enron.com/corp/pressroom/bios/rickcausey.html

Enron. "Executive Bios." Jeffrey McMahon. 2/05/02

http://www.enron.com/corp/pressroom/bios/jeffmcmahon.html

Guardian Unlimited. "Kenneth Lay: Enron's Embattled Ex-Chairman." January 24, 2002.

2/4/02

http://www.guardian.co.uk/enron/story/0,11337,638645,00.html

U.S. News & World Report. "Business. The Enron Debacle Casts New Light on the Bush Team's Extensive Corporate Ties." Jan 21, 2002. (14-20.)

Washington Post. "Ex-Chairman of Enron Cancels Hill Testamony." Schmidt, Susan. Feb. 4, 2002. Page A01. 2/5/02

http://www.washingtonpost.com/wp-dyn/articles/A18257?2002Feb3.html… [read more]


Value of a Business Case Study

Case Study  |  2 pages (548 words)
Style: MLA  |  Bibliography Sources: 1

SAMPLE TEXT:

¶ … investment and speculation. Investment is forecasting the future yield of an asset over the life of the asset. Speculation is merely attempting to predict the near-term movement of price. It appears that management at M&M Pizza is attempting to appease the short-term speculative crowd at the expense of long-term shareholders.

To begin, management should only repurchase shares when they do not have any positive NPV projects to conduct within the firm. Cash should be used on these high NPV projects before any form of stock buyback. By compounding investor dollars internally through high NPV projects, the company is better able to generate higher shareholder returns through high cash flows. By deploying cash in high NPV projects, management is looking longer term. In essence, management is spending cash today in an effort to garner more cash in the future, thus enhancing shareholder value over the long-term. The proposed stock buyback however, is attempting to increase earnings per share through a simply reduction in the overall shares outstanding. This is only advantageous if management believes the shares are undervalued. There is no indication within the case the shares are actually undervalued relative to their intrinsic value. It is quite plausible that the shares have lagged because they were simply overvalued over the time period over served. Investors realizing that the shares were overvalued may have simply elected for business prospects to catch up to the share price. Moe Miller seems to be avoiding the simply notion of value when conducting share repurchased. If Moe Miller repurchases overvalued shares, he is actually destroying shareholder value. The share price indicated in the case is $25. Using…… [read more]


Proctor and Gamble Term Paper

Term Paper  |  2 pages (640 words)
Bibliography Sources: 2

SAMPLE TEXT:

A major sales and admin cost is the marketing. The costs in the income sheet will also include the deprecation cost for capital assets, both tangible, such as property, and intangible, such as good will.

Question 2

An examination of the income statement and the balance sheet shows a firm that is growing and in 2014 was able to increase its' overall sales and operating efficiently despite increased cost for the direct inputs (cost of products sold). The revenues increased from $82,581 million in 2013 to $83,062 million in 2014. The cost of goods increased, in 2013 it was 50.12% of the net revenue, and in 2014 it was 51.11%. However the firm found efficiencies elsewhere as the cost of the selling and admin fell despite the increase in the net revenues falling from $26,552 million in 2013 to $25,314 million.

The income statement and the balance sheet show that the firm has increased its' debt, on the income statement there is a higher level of interest paid, and on the balance sheet the long-term liabilities has increased. As there are earnings classified as coming from discontinued operations, we can also assert that there has been the closing, of divesture of some operations. Overall net profit, both before tax and after tax has increased, and it is likely that shareholders will be happy as the earnings per share have also increased from $3.89 in 2013 to $4.01 in 2014, and there has also been an increased dividend, which is a positive sign and may also be interpreted as management indicating they believe the growth will continue. The balance sheet also reflects the growth, as well as the increase in debt there is also an increase in the shareholders equity.

References

Proctor & Gamble Co, (2014), Annual Report, accessed…… [read more]


Holly Fashion Essay

Essay  |  2 pages (531 words)
Bibliography Sources: 0

SAMPLE TEXT:

BS - Tableau

Balance Sheet of the Holly Fashions Company: 2003-2006 Apple Inc. Income Statement Holly Fashions Income Statements: 2003-2006

(in 000s) (in millions) (in 000s)

mos to

2003 2004 2005 2006 Fiscal years ended Sept 26, 2010 6/25/11 2010 2009 2008 2007 2006 2003 2004 2005 2006

ASSETS: Net sales 79,979 65,225 42,905 37,491 24,006 19,315 Sales 985.0-1,040.0-1,236.0-1,305.0

Cash 40.4-51.9-38.6-10.6 Cost of sales 47,541 39,541 25,683 24,294 15,852 13,717 Cost of Goods 748.6 774.8 928.2 978.8

Receivables 153.2 158.9 175.1 224.8

Inventory 117.0 121.1 193.4 191.9 Operating expenses: Gross margin 236.4 265.2 307.8 326.3

Other current assets 5.9-6.2-7.4-7.8 Research and development 1,784 1,782 1,333 1,109 782 712

Total current assets 316.5 338.0 414.5 435.1 Selling, general, and administrative 5,574 5,517 4,149 3,761 2,963 2,433 Operating expenses:

Administrative 169.4 202.8 236.1 249.3

Gross fixed assets 44.8-58.9-78.1-96.4 Depreciation 10.8-11.4-13.6-14.4

Accumulated depreciation (12.0) (23.4) (37.0) (51.4) Total operating expenses 7,358 7,299 5,482 4,870 3,745 3,145

Net fixed assets 32.8-35.5-41.1-45.0 Operating income 56.1-51.0-58.1-62.6

Interest 7.0-6.0-5.0-4.0

Total assets 349.3 373.5 455.5 480.1 Provision for income taxes 6,115 4,527 3,831 2,828 1,512 829

EBT 49.1-45.0-53.1-58.6

LIABILITIES & NET WORTH Net income Taxes 19.7-18.0-21.2-23.5

Accounts payable 53.8-54.7-86.2-84.2

Debt due 10.0-10.0-10.0-10.0 Net income 29.5-27.0-31.9-35.2

Accruals 19.7-26.0-24.7-26.1

Total current liabilities 83.5-90.7 120.9 120.3

Long-term debt 60.0-50.0-40.0-30.0

Total liabilities 143.5 140.7 160.9 150.3

Common stock 150.0 150.0 180.0 180.0

Retained earnings 55.8-82.8 114.6 149.8

Total net worth (shareholders equity) 205.8 232.8 294.6 329.8

Total liabilities & net worth 349.3 373.5 455.5 480.1

IS - Tableau 1

Holly Fashions Income Statements: 2003-2006

(in 000s)

2003 2004 2005 2006

Sales 985.0-1,040.0-1,236.0-1,305.0

Cost of Goods 748.6 774.8…… [read more]


Account Describe How Accounts Receivable Arise Essay

Essay  |  1 pages (372 words)
Bibliography Sources: 2

SAMPLE TEXT:

Account

Describe how accounts receivable arise and how they are accounted for, including the use of a subsidiary ledger and an allowance account.

Accounts receivable arise from credit sales to customers. Accounts receivable are reported at their realizable value, which is their total amount less an estimate for the amount of uncollectible accounts. Accounts receivable are also recorded into an accounts receivable subsidiary ledger that separately lists amounts owed by individual customers. Example: X company sells its products of $1,000 to Y, and y assures that he will pay the same in the time period of 30 days then the accounts receivable are debited and sales are credited for the same amount i.e. $1,000.

All the balances of accounts receivable are transferred to the general ledger, and the subsidiary ledger is used to verify the general ledger. The subsidiary ledger is called the control account as it mentions all the details of accounts receivable of the company which is stated customer wise. It helps in giving a clear picture of amount that the company is likely to receive. The two general ledger accounts that act as…… [read more]


Caterpillar Finance Term Paper

Term Paper  |  2 pages (558 words)
Bibliography Sources: 0

SAMPLE TEXT:

Caterpillar Finance

Report on the Financial Health of Caterpillar, Inc.

This report will contain discussion of the financial condition and performance of Caterpillar Inc. In the fiscal year 2011. This discussion will include key ratios and will also include a comparison of our performance with industry norms.

In terms of liquidity, there are three key ratios that need to be taken into consideration -- the current ratio, the quick ratio and the cash ratio. The current ratio for Caterpillar is 1.33, the quick ratio is 0.82 and the cash ratio is 0.1. The industry averages for the current and quick ratios are known. They are 1.6 and 1.1 respectively. Thus, Caterpillar is underperforming its industry peers.

The profitability ratios are the gross margin, the operating margin and the net margin. For the fiscal year 2011, these were 27.5%, 11.8% and 8.2%. The industry averages for these measures are 32.7%, 13.3% and 9.85%. Again, Caterpillar lags the industry on these averages.

The important solvency ratios are the debt ratio and the long-term debt to equity ratio. The debt ratio is 83.5% and the ratio of long-term debt to equity is 1.92. The industry averages for these figures are 1.01 for debt/equity, which equate to 50.25% debt and 49.75% equity. Clearly, most firms in the industry have less debt than we do. All in all, our financial performance lags the industry in every key metric.

The company has been profitable for the past five years, so there is little excuse for this type of financial underperformance. The company's liquidity has actually improved, compared with where we were five years ago, when we had a current ratio of 1.14. The past year,…… [read more]


Vocabulary and Practice of Organizational Finance Thesis

Thesis  |  3 pages (751 words)
Bibliography Sources: 2

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¶ … Standard Financial Statements: A Case Study

Like most global companies, the microprocessor and graphics products manufacturer and marketer AMD suffered during the recession in 2008, though the company did not fair as poorly as many others. Between sales declines on one hand and major restructuring on the other, the company's financial statements suggest an entity with a great deal of staying power that definitely took some losses in 2008 yet remains profitable, innovative, and poised for growth when the market wile bar it. A somewhat deeper analysis of the company's annual report also demonstrates how AMD uses and reports its financial information, to the public and its investors as well as internally in its decision-making.

Informing Investors

The letter at the beginning of the annual report from CEO and president of AMD Dirk Meyer sets the tone for the interpretation of the financial data that appears later in the report -- some passages, in fact, appear to be repeated wholesale later on. This is especially true of the repeated invocations of the global recession, which is used as a background explanation for all company losses and most the organization's actions during 2008 (Meyer 2009). Though this recession undoubtedly had an impact on the company, and indeed was likely the primary cause behind the falling numbers witnessed by AMD in 2008, it also quite clearly becomes a form of spin within the annual report to assuage investor worries concerning the company's financial strength and fortitude in the near future.

Other financial information is presented in an equally leading manner; though not inaccurate or even untruthful, the presentation of financial information to investors in the company's annual report is unabashedly aimed at minimizing any culpability on the part of the organization for its losses while extolling the decisiveness and pragmatism of the company's reactions to the global recession. The contractual obligations that the company must meet in the near-term, for instance, are quite complex in their ultimate effect on the company and relative to AMD's current financial position. Yet they are presented in what appears to be a very straightforward table that indicates greatly reduced obligations within the next five years, which is borne out by the length explanation that follows (AMD 2009, pp. 75-84).…… [read more]


Evaluating the Performance of a Business Thesis

Thesis  |  2 pages (671 words)
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Performance of a Business

The overall performance of a firm must be measured against the firm's objectives. One objective is certain -- the firm exists to maximize shareholder wealth. The other objectives should be defined by management. These will vary depending on the firm. Metrics used can include market share, customer growth, or revenue growth. There can be non-financial measures as well, including those related to goals on ethics, corporate social responsibility and environmental stewardship.

As Milton Friedman (1970) famously wrote, the primary obligation of business is to maximize profit. The shareholders are the owners of the firm and management is the agent of the shareholders. Thus, measuring the success of management involves measuring the growth of the equity in the firm. If shareholder wealth is maximized, then management has been successful.

Kolstad (2007) argued, however, that maximizing shareholder wealth is not necessarily the ideal goal over a specific period of time. While it is true that business should maximize shareholder wealth over the long-run, the focus on wealth maximization over the short run can lead to a failure to maximize wealth in the long run. What this implies is that over any given period of time, there may be better and more firm-specific measures of success. These measures should relate to the long-run goal of wealth maximization. However, in the short run it may be more important to build market share, build revenues, improve corporate ethics or even demonstrate environmental leadership.

Thus, I would use net profit and equity gains as two financial measures, but would incorporate a variety of other measures that, when aggregated, will contribute in the long run but not necessarily in the short run to building equity growth and improving long-run profits.

Q2. The firm's financial statements can reveal a significant amount about the firm's operations. The quality of the firm's cash flows, earnings streams, balance sheet and other metrics can be measured against other firms in the same industry, and against the firm's past performance. This will yield sound…… [read more]


Subsidiary Consolidation the Necessity and Effects Essay

Essay  |  3 pages (839 words)
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Subsidiary Consolidation

The Necessity and Effects of revisions Concerning the Circumstances in which Subsidiaries are Excluded from Consolidated Reporting

Of the many changes to financial reporting methods enacted over the past decade, one of the seemingly most unnecessary is the change that has been made to the exclusion of subsidiaries from consolidated financial reporting. The legislation on this point has seemingly taken steps in both directions, mandating consolidated reporting in some instances that previously excluded subsidiaries from such reporting, and the IASB has proposed additional changes that would complicate which portions of a subsidiary's value -- whether presumed or actual -- can and should be included on a consolidated financial report form a controlling entity (Shortridge & Smith 2007). There is a great deal of disagreement as to how much this truly affects the accuracy of financial reporting from consolidated entities, and there is also understandable disagreement regarding the direction and degree of distortion that the changes to consolidated reporting rules may have created.

This distortion is understandable due both to the complexity and the seeming bi-directionality of the changes made. Certain circumstances that previously prevented consolidated reporting or allowed companies not to include subsidiaries in their consolidated financial reporting have been changes so that corporations are now required to report consolidated earnings under a broader range of circumstances (CPA Class 2009). At the same time, proposals for certain other exclusions based on percentages of ownership and the actual amount of control exerted on a subsidiary by a controlling company would affect which portions of a subsidiary's assets are listed on consolidated reports (Shortridge & Smith 2007).

First, an examination of the changes that have already been made to consolidation practices in financial reporting concerning subsidiaries is necessary in order to come to an understanding of the current situation. Previously, subsidiary companies -- those in which a controlling entity owned more than fifty-percent of the outstanding voting shares of stock or a majority voting interest by some other means -- were to be included in consolidated financial reports unless they were a foreign operation, if there was a large minority interest in the subsidiary company, if the operations of the controlling company and the subsidiary company were considered on-homogenous (e.g. A manufacturing subsidiary owned by a financial services company), or if significant doubts existed about a controlling interest's actual ability to exert control over the subsidiary (CPA Class 2009).

The modifications made to financial reporting policy generally eliminate most circumstances under which subsidiaries would not be included in consolidated…… [read more]


Corporate Scandals the Enron Scandal Emerged Thesis

Thesis  |  1 pages (386 words)
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Corporate Scandals

The Enron scandal emerged in 2001 as it became apparent that the energy trader was overwhelmed by its debts. Corporate failure alone is no cause for scandal, but in this case Enron had undertaken a variety of illegal activities. They had kept key transactions off of their books, thereby hiding losses from investors and regulators (Wee, 2001).

Enron executives misused data to perpetrate their fraud. At the company, they were aware that many of their activities were either outright illegal or at least ethically questionable. Enron management actively obfuscated data and ignored warnings from internal whistleblowers. This made more difficult the already complicated analysis of Enron profitability data by its auditors. Ultimately, though the auditors, Arthur Andersen, joined in the obfuscation (Thomas, 2002). The result was that Enron was able to hide billions of dollars of debts from investors. When the debt was uncovered, Enron eventually went out of business and its executives faced criminal prosecution, many landing in jail (Houston Chronicle, 2001-2009).

The Enron case illustrates the limitations of data. The ability of outsiders to analyze Enron data was limited by the data that they received. Outsiders felt that the…… [read more]


Bookkeepers Are the Ones That Work Term Paper

Term Paper  |  1 pages (315 words)
Bibliography Sources: 0

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¶ … bookkeepers are the ones that work with T-accounts and journal entries. This information, therefore, is already complete when the accountant takes over and works with the numbers. However, it is very important for accountants to have a strong understanding of both the journal entries and the T-accounts. If they do not have this knowledge they will not be able to catch mistakes that might have been made by the bookkeeper. Accountants often prepare complicated documents and provide a great deal of financial information for companies. These companies use that information in many areas such as taxes, payroll, insurance payments, bonuses, paying bills, and others. Because of this, the information provided to them by the accountant needs to be accurate. This information, though, is only as accurate as the figures that the accountant was provided with.

If the accountant does not understand how journal entries and T-accounts work and are supposed to be calculated and presented,…… [read more]


Success in MBA Program Term Paper

Term Paper  |  2 pages (660 words)
Bibliography Sources: 0

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¶ … worked as an accountant. Those thirteen years have taught me more than how to work with numbers. They have also taught me that behind every tax form is a human face, and the individual nature of every client and every organization's financial needs. Of course, most people who come to an accountant's office wishes to maximize his or her organization's profits, or minimize his or her contribution to the IRS, or at the very least deploy his or her financial profile in the most creative and fruitful fashion possible. All clients, for the most part, have rational economic goals, which it is the accountant's professional responsibility to facilitate in the most ethical and efficient fashion possible. But these goals vary from organization to organization, and individual to individual, and an accountant must be cognizant of these differences, in the service of his or her client, as well as to be versed in the protocols of the profession.

Thus, my work has not simply sharpened within me the weighty responsibilities of working in the real world, and the need to maintain a strong code of ethics and commitment to my clients, who depend upon my basis of expertise as a fount of professional advice and expertise. It has taught be about my profession in general, namely that accountancy is partly psychology, partly about a talent working with numbers, and also requires the accountant to learn from the business world and to keep an eye on the development of the larger economic environment. One must be in a constant state of learning, to be a good accountant. One learns as well as aids every client that walks through the door.

I wish to gain my MBA to enhance my own educational experience, of course, and to expand my professional credentials, ultimately with the aim of taking my CPA exam after graduation. But I see getting an MBA not simply as adding another bullet point to the list of educational attributes…… [read more]