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AS and A Level: Accounting & Financial Management
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However, there are important differences between the two disciplines. Neither financial nor management accounting is a subset of the other. They each have a distinct purpose and audience (Turner, 1983). According to Abraham Seidmann (2005) harmonization in the field of financial accounting is the process of creating a similar set of procedures by establishing boundaries as to how much they can differ across the world. "As a result of globalisation, the accounting profession has become increasingly aware of the need to establish a single set of accounting standards that would valid in the international arena".
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`Accounting as a discipline has no theory`. Critically evaluate this statement and provide examples to illustrate your arguments.
Then I am going to discuss some of the main theories, which have been introduced to accounting in order to prove my arguments and to see whether accounting as a discipline has theory or no theory. Accounting has been around "at least since C16". Accounting as a profession has "been around for over 100 years". Accounting came around the time of other professions such as the medical profession and teachers, these professions were backed by "theoretical knowledge" which was used in decision making and to reduce uncertainty.
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Most banks and building socialites offer mortgages, as well as specialist's mortgage lending companies. If you change lenders but do not move business it's referred as a remortgage. This can be taken out of any bank and will be paid back with interest and will last for sometime up to 25 years or even more and the money lending will be depending on income. Your business can be repossessed if you don't keep up with repayments with your mortgage and this is in the contract and is signed for. Trade credit - is interest free in most cases.
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Demonstrate the impact of changing cost and revenue data on the breakeven point of a selected business
The Variable costs stay the same in the two sheets, but the total costs are different. In the original sheet the total cost of 2000 customers is �4200, but in this sheet the total is �4350. The revenue stays the same for both sheets but the last column (profit/loss) will change. On the original sheet the profit/ loss for 6000 customers is 7800, whereas this sheet is 7650. The break even formula is Fixed cost -------------- (Selling price- Variable costs per unit) 1350 ---------- �3.00 - �1.50 = �1.50 The breakeven point is �900 No of Customers Fixed costs Variable Costs Total Costs Revenue Profit/ Loss 0 1125 0 1125 0 (1125)
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We believe PC Depot will be a great venture for Thompson as evident by a net income of $5,054 for the companys first month of operations. We feel that our recommendations to reduce inventory costs and debt will be beneficial to PC Depot
Cost of sales for the month of September was $38,140 resulting in an ending inventory of $149,300. Another area of concern is the amount of debt PC Depot has incurred through bank loans in the amount of $100,000 and purchases from creditors in the amount of 187,440. NC Gold feels that PC Depot should focus on reducing inventory costs and reducing their short tem and long term debt. Some suggestions for reducing inventory costs include implementing the "Just In Time" or consignment method of inventory.
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Statement of financial problem. Should Northrop National Bank extend a line of credit to Butler Lumber up to a maximum amount of $465,000?
The Indirect Statement of Cash Flows method begins with net income and then details the adjustments made to arrive at cash flows from operations. III. Application of Financial Framework. Indirect Statement of Cash Flows Butler Lumber 1989 through 1st Quarter 1991 Operating Activities for 1989 1990 1st Qrt 1991 Net Income $34,000 $44,000 $9,000 Add: Increase in Accounts Payable $68,000 $64,000 Less: Increase in Accounts Receivable ($51,000) ($95,000) ($28,000) Increase in Inventory ($56,000) ($93,000) ($138,000) Decrease in Accounts Payable ($13,000)
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Discussed in this paper is the need for change to place Lawrence Sports in a more financially strong position. Lawrence Sports will notice by making some changes to the way they currently do business
Lawrence Sports had many weaknesses defined in the simulation. Those weaknesses include the following: 1. Having low cash available 2. Being unable to meet the interest payments on long and short term debt 3. Contracts that are losing money. 4. Decrease in the needed production caused by company cutbacks. When credit is granted to a customer as with Lawrence Sports credit with Mayo and Gardner they are investing in a customer. The investment, as described in Chapter 28 of Short Term Finance, is an investment tied to the sale of a product or service.
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Also, the per-hour pricing policy offered by Microsoft was superior to AOL's. With the development underway of a way to provide on-line currency collection, the World Wide Web offered huge incentives for providers to start publishing material on the internet by their own means without having to go through a middle-man such as an online provider. Both of these offerings do not bode well for AOL's future prospects due to the huge incentives for customers and content providers to switch to these alternative distribution channels. Prior to 1995, there is substantial evidence in the case (Exhibit 2 in the case)
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There is no comprehensive FASB standard on Special Purpose Entity accounting. Most of the guidelines for this accounting are found in various Emerging Issue Task Force guidelines. The EITF guidelines are not standards, but they have significant impact since auditing firms often insist that these guidelines be followed by their clients. A Special Purpose Entity allows "sponsor/originator" companies bearing as much as 90% of the Special Purpose Entity's debt risk to keep that debt off the consolidated balance sheet under U.S.
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The London Underground may at one point in the future be privatised. What we need to determine is how we can increase revenue before it floats so that potential shareholders will be attracted. We must see how prices can be adjusted in coincidence with the market segments so that revenue can be increased. Elasticity is crucial in our thinking as it can have a big impact. 1.1 DEFINITION OF ELASTICITY Elasticity is the concept in economics that measures the responsiveness of one variable in response to another variable. The best measure of this responsiveness is the proportional or percent change in the variables.
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The Internal Rate of Return, IRR, is another business tool used for capital budgeting decision. IRR is the discount rate at which the present value of a series of investments is equal to the present value of the returns on those investments (NPV = 0). It is the compound return the firm will get from the project. IRR also takes into account the time value of money by considering the cash flows over the lifetime of a project. If IRR is greater than the discount rate, the firm may undertake the project in question.
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By the month six this tends to come back to normal business. Our sales forecast for car valeting products is based on research on how much valeting product is sold through retail stores. Another factor considered in the promise by BP to buy our product at certain quantities over the first year. We have also used sales figures from luxury car valeters such as Jaguar to come up with our final sales figures. Our commission per car sold will remain at �1500.
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These questions and thoughts, in the recognition processes should be followed when determining revenue and expense recognition. This sets in place the foundation for the revenue recognition principle. Revenue The FASB defines revenues as "inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations" (FASB, 1985, para. 78). Realization means that the product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash.
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6000 (2600) (25) (656.25) 2718.75 7200 (2960) (25) (950.25) 3264.75 7200 (2960) (25) (950.25) 3264.75 7200 (2960) (25) (950.25) 3264.75 7200 (2960) (25) (1125.25) 500 3589.75 Cash flow (Investment) Total cash flow (10360) (10360) (72) 2646.75 0 3264.75 0 3264.75 0 3264.75 432 4021.75 NPV of Company ('000) Year Discount factor 14% Cash flow Present value 0 1 1.0000 0.8772 (10520) 2646.75 (10360) 2321.73 2 0.7695 3264.75 2512.23 3 0.6750 3264.75 2203.71 4 0.5921 3264.75 1933.06 5 NPV 0.5194 4021.75 2088.90 699.62 When discount factor is 18%, NPV is -343.34. IRR = A + [a * (B - A )] a - b = 14 + [699.62 * (18 - 14 )] 699.62 + 343.34 = 16.7% a).
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The Greensboro area of North Carolina is 80 miles south. First time students and those that continue to get license are the biggest moneymakers for the company. Only 3 percent of first time skydivers return and those that do tend to stay in the sport, so it is key to get more to return since they have the highest profit margin. Adrenaline Air Sports has two main competitors that are located 120 miles northeast of them that compete for the people in the Roanoke area. Although further away, they provide more open times and bigger and faster airplanes that can go to higher altitudes and thus command higher fees.
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* Working out budgets for future expenditure. * Working out sales figures for different products or areas. Most accounting packages will provide the basis for daybooks, ledger accounts, (double entry), trial balance and final accounts. * Daybooks -are used for listing sales, purchases and returned goods. Computer programs often use the batch system, which is a listing of the items with an overall total to check against computer input. It is common to find batches for sales, purches, returns, cheques received, cheques issued. * Ledgers accounts (Nominal ledger or General ledger)
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It calculates the firm's reserves, which could be invested in expansion projects or new equipment. Accountants identify when short falls are likely to happen, and surplus funds are likely to become available. From the cash flow forecast the managers will hope to for see any possible cash flow problems and overdrafts might be needed. Main findings section 2: An explanation of why a company such as Strobe needs a cash flow forecast? Strobe leisure will be able to forecast and predict when they might face a liquidity problem.
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How corporate parenting add value to its businesses units? That occur when the parent's skills and resources fit well with the needs and opportunities of the businesses. If there is not a fit, the parent is likely destroy value. A parent that does not understand the critical success factors in a business is likely to destroy vale. To add value: ICM, Restructure, Knowledge, transfer skill and sharing activities. A parent without detailed knowledge of a business' market my not be aware of the opportunity to combine sales.
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who managed properties for other companies and stayed at other properties in order to assess their competitive value. The company goal was to own/rent certain monopolies and to manage others for companies. To start the business, EPM borrowed $1500 from the local bank. This money will be used to purchase property, pay taxes and general operating expenses. These funds were acquired as a note payable at 10% interest. The starting capital was recorded in the journal on January 1, 2001 and the game began. In this scenario of game play, the four corners of the board represented the 4 quarters of the year for EPM.
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Kraft Foods International's reportable segments are Europe, Middle East and Africa; and Latin America and Asia Pacific. The CEO's, Roger Deromedi and Betsy Holden, of Kraft Foods Inc. describe the year 2001 as being different from any previous year in their report to stockholders. Kraft integrated Nabisco and Kraft with great success, building new growth opportunities and gained more than $100 million in synergy savings. Kraft completed an initial public offering (IPO) of 16.1% of Kraft's outstanding shares, raising $8.4 billion in net proceeds used to retire debt associated with the Nabisco acquisition.
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A Discussion of the depreciation, prevision for bad debt and stock valuation, and an explanation of each single point happened in them concerned with the accounting will be examined in this assignment.
The depreciation cost applied to the units of activity to determine the annual depreciation. This method is difficult to make a reasonable estimate activity. It used by large companies because its results in the best matching of expenses with revenues. Declining balance: Produce a decreasing annual depreciation expense over the useful life of the asset it's computed by multiplying the book value at the begging of the year by declining balance depreciation rate. The depreciation rate remains constant from year to year but the book value decline each year.
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They include rent and insurance. Variable costs The firm's variable costs include raw materials and wages. You need to calculate the variable costs per unit. These costs increase in direct proportion to the number of units produced. Sales output You need to establish how many units are to be produced. Sales price You need to know the selling price of the units. Once you have the above information, you can begin to calculate the breakeven point. You do this either by using a chart or an equation.
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Limitations * On their own, they do not provide information to enable managers to gauge performance or make control decisions. It is necessary to provide budgeted or targeted ratios, ratios of previous accounting periods, or ratios of other companies or divisions, as a tool for comparison. * Ambiguity arises when defining the ratios used. For example, should earnings be 'before tax' or 'after tax'? * Ratios compared over a period of time at historical cost will not be properly comparable where inflation in price has occurred during the period, unless an adjustment is made to the ratios to make allowance for price level differences.
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The program contains many mathematical, statistical and financial calculations, which can be applied to the numbers. Spreadsheets can also present the numbers in the form of graphs. Spreadsheet packages come with a library of formulae and functions as part of the program. There are formulae for financial calculations, for handling dates and times, for mathematical and statistical work and for logical expressions. The spreadsheet may contain numbers, text, dates and formulas. Each cell, or a block cells may be formatted so that the contents of the cell is displayed in different ways. When a cell is selected, the contents of the cell are shown on the editing bar but the results of any calculation are displayed in the cell.
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