Purpose of Assignment
This week's activity illustrates the role a company's accounting
method plays in financial statement reporting. In this assignment,
students evaluate the events occuring in a business setting and
determine how to properly analyze those events to identify the impact on
both cash and accrual accounting methods.
Assignment Steps
Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC)
Tutorial help on Excel® and Word functions can be found on the
Microsoft® Office website. There are also additional tutorials via the
web offering support for Office products.
Scenario: BizCon, a consulting firm, has just completed its
first year of operations. The company's sales growth was explosive. To
encourage clients to hire its services, BizCon offered 180-day financing
- meaning its largest customers do not pay for nearly 6 months. Because
BizCon is a new company, its equipment suppliers insist on being paid
cash on delivery. Also, it had to pay up front for 2 years of insurance.
At the end of the year, BizCon owed employees for one full month of
salaries, but due to a cash shortfall, it promised to pay them the first
week of next year.
As the senior accountant, the Chief Financial Officer has asked
you to prepare a memo to be sent to management notifying them of the
delayed wage payments.
Prepare the memo in a maximum 700 words including the following information to better outline the situation:
Explain how cash and accrual accounting differs for each of the
events listed in the above scenario and describe the proper accrual
accounting.
Assess how at the end of the year, BizCon reported a favorable
net income, yet the company's management is concerned because the
company is very short of cash. Explain to management how BizCon could
have positive net income and yet run out of cash.
Format your assignment consistent with APA guidelines.
Click Here to Get this or a similar Assignment done for you by an Expert at EssayCradle.com
No comments:
Post a Comment