Financial Accounting and Reporting

In: Business and Management

Submitted By yaitza24
Words 482
Pages 2
Accounting in Action 3-5
Financial Accounting and Reporting
AC501-01NA
July 20, 2010

Accounting in Action 3-5 a) Name at least two advantages to Chieftain from having no long-term debt. Can you think of disadvantages? a. One advantage is that the company is more solvent. When a company carries a high level of long-term debt relative to assets, it has a lower solvency than a similar company with a low level of long-term debt. Companies with higher debt are relatively more risky, because they will need more of their assets to meet these fixed obligations. Another advantage is that the company has a short-term liquidity ratio. This ratio indicates whether the company will have the resources to pay its current and maturing obligations. Since the company has no long-term debt, it has more resources to pay obligations.
A disadvantage is that if the company has no long-term debt, it does not have any long-term investments. When a company invests in securities, such as bonds, common stock, or long-term notes, the company is anticipating its long-term life. For example, bonds are a long term debt that are cashable at a certain point in time; if a company has bonds, the company will have expected cash in the future. b) What are some advantages to Chieftain from having this large cash balance? What is the disadvantage? b. One of the advantages is that the company has a high liquidity, and does not necessarily need to pay on account when pursuing transactions. Having a large cash balance indicates that the company has the ability to handle more cash transactions than a company that does not. It also indicates that the company is financially flexible, since it has the ability to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities. A disadvantage of having a big cash…...

Similar Documents

Corporate Financial Accounting and Reporting

...Corporate Financial Accounting and Reporting Tim Sutton second edition Corporate Financial Accounting and Reporting We work with leading authors to develop the strongest educational materials in business and finance, bringing cutting-edge thinking and best learning practice to a global market. Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work. To find out more about the complete range of our publishing please visit us on the World Wide Web at: www.pearsoned.co.uk Corporate Financial Accounting and Reporting Second Edition Tim Sutton Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published 2000 Second edition published 2004 © Financial Times Management 2000 © Pearson Education Limited 2004 The right of Timothy G. Sutton to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs, and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the......

Words: 163377 - Pages: 654

Brazilian Accounting System: Inflation, Taxation, and the Adoption of International Financial Reporting Standards

...Brazilian Accounting System: Inflation, Taxation, and the Adoption of International Financial Reporting Standards Introduction As the business world evolves to a higher level of integration with the increased ability to conduct business globally, international accounting is a subject that is becoming more relevant and increasingly more important to understand. Doupnik and Perera (2012) define International accounting on three levels through the standards and guidelines of supranational organizations, at the company level, and third through the standards, rules, and guidelines that exist within each country. Brazil is one of the top five countries to be considered an emerging market (Top 30 Emerging Markets 2012-2017). It is estimated that Brazil’s GDP will grow by roughly 22.3% between the years 2013 to 2017 making the country attractive to investors (The Top 20 Emerging Markets, 2013) . Brazil ranks as one of the top 4 countries for growth in the manufacturing and industrial industries, telecommunications, technology and media, professional and business services, financial services, consumer products, pharmaceuticals and healthcare, energy and resources, automotive, chemicals, and transportation industries (Top 30 Emerging Markets 2012-2017). In addition Brazil will be a destination for world class events such as the 2014 World Cup and 2016 Olympic Games that will bring thousands of visitors to the country. As Brazil continues to grow in popularity as a location for......

Words: 2294 - Pages: 10

Accounting and Financial Reporting for Business

... Auditing and accounting principles in the United States of America are considered strong and sophisticated. Transparency and disclosure are really emphasized in American companies, and because of this the downfall of Andersen and Enron still raises questions. This has since become a case of reference in review of issues concerning financial reporting and auditing. It has also been used to explain about regulations on auditing and accounting inside and outside America. This case has brought about huge implications on corporate governance to other countries. Enron Corporation declared its bankruptcy in the year 2001. Afterwards, Anderson’s downfall occurred in 2002. It has been a big question, outside America, on what brought about this failure. The General Accepted Accounts Principles, in the US, are very well developed. These principles require clear disclosures of financial statements that are audited. They also require an established federal agency and a commission to monitor financial reporting. Cases have been written, from the failures of Enron and Andersen, for the exploration of accounting, auditing and financial reporting issues in the US. The head of auditing of Enron Corporation was fired during the company’s downfall for destroying important documents, upon realizing that the company’s accounting methods were being investigated by the commission of Securities and Exchange. The destruction of the accounting documents compromised with accounting standard......

Words: 1202 - Pages: 5

Financial Reporting, Bsc Accounting and Financial Management, Hull University

...Goodwill Principles: 3 possible measurement methods 1. The impairment loss is an expense in the income statement (unless it relates to a revalued asset where the value changes are recognised directly in equity). [IAS 36.60] 2. The reversal of an impairment loss on intangible assets and goodwill should be recognised in the current period if, certain conditions are met. (HM Revenue and Customs) 3. Restoration of a previously recognized impairment loss is prohibited. (FASB-US) 3. Purpose: Where an asset is not held for the purpose of generating cash flows, value in use is assumed to equal the cost of replacing the service potential provided by the asset, unless there has been a reduction in service potential. (Government Financial Reporting Manual 8.2.4) Abstract Conceptualization Assumptions/Reasons: •it is not permitted to recognise reversals in impairment losses in other circumstances is that these will generally be as a result of internally generated goodwill, which a company is not allowed to capitalise. •The reversal of the impairment loss should be recognised to the extent that it increases the carrying amount of the goodwill or intangible asset up to the amount that it would have been had the original impairment not occurred. •The recognition of an increase in the recoverable amount of an intangible asset, above the amount that its carrying amount would have been had the original impairment not occurred, is regarded as a......

Words: 1359 - Pages: 6

Case Project for Advanced Financial Accounting and Reporting

...consolidation perspective, what would be the likely overall effect of adopting IFRS on the company’s financial statements? From the consolidation perspective, the likely overall effect of adopting IFRS on the company’s financial statements would preserve and strengthen the company’s global financial competitiveness. Moreover, it will simplify the accounting and consolidation process significantly and reduce financial reporting costs. 2) What potential effect would arise if Klugen were to select the option under IFRS 3 to value non-controlling interest at the proportionate share of its subsidiaries’ net identifiable assets? For business combination, the buyer can control without buying all of the equity, the remaining , so-called the non-controlling, equity interests are measure either at fair value or at the non-controlling interests’ proportionate share of its subsidiaries’ net identifiable assets. Under IFRS 3, the potential effect would arise is that it will result in benefits for users by improving comparability and will increase the relevance of information provided. Moreover, it identifies and evaluates the main costs and benefits for users. 3) Do you believe that an impairment of goodwill would be more likely under IFRS or under U.S. GAAP? Why or why not? There is a difference in goodwill impairment measurement. Under U.S GAAP, two-step approach is used. It looks to the reporting unit. However, under IFRS, one-step approach is used. It is based on the......

Words: 1806 - Pages: 8

Financial Reporting

...Financial Reporting Problem Part 1 Matt Johnson XACC/290 August 10, 2014 Joan Gapp Financial Reporting Problem Part 1 After looking at many companies on the internet and looking at their financial statements, I choose Walgreens. Walgreens is the nation’s largest drugstore chain. When you look at the financial statements you will see why they are the largest drugstore chain in the nation. The amounts that will be in this report will be in millions of dollars, except for shares and per share amounts. The company’s total assets at the end of the most recent annual reporting period were $35,481 million and the total assets at the end of the previous annual reporting period were $33,462 million. The total assets are important to a variety of people, including the CEO, finance department, investors, potential investors, and board of directors. The information shows what the company is worth, whether those assets are long term or short term, cash or property. It is important to be able to account for what the company has in terms of assets because that is really what the company can base its worth on. The amount of cash and cash equivalents a company holds is very important and is a large component of a company’s overall operating strategy. Walgreens and the end of the most recent annual reporting period had $2,106 million. Companies with high amounts of cash and cash equivalents are better able to get through hard times when sales are low or expenses are......

Words: 784 - Pages: 4

“Why Governmental Accounting and Financial Reporting Is—and Should Be—Different”

...“Why Governmental Accounting and Financial Reporting is—And Should Be—Different” The paper “Why Governmental Accounting and Financial Reporting is—And Should Be—Different” compares governmental accounting and financial reporting to that of the approach used in for-profit business enterprises. It also states specific reasons why governments should be different. There are environmental differences between governments and businesses that call for a different approach. First, governments have different purposes for their operations. For-profit entities strive to create wealth and to meet return on investment goals. While governments on the other hand are actually trying to enhance or maintain quality of life with services that are dictated by public policy goals. They also must consider efficiency, effectiveness, and economy when they evaluate public policy. Secondly, governments and for-profit business entities differ in the way they generate revenue. Governments generate income through involuntary taxes. Customers of for-profit business entities have a choice of what services they purchase and where they buy. The same does not apply for the governmental customer. The users of their reports also differ. Citizens and their elected representatives are users of government reports. They are as interested in the “why” as they are the “how much” when they read a financial report. They use governmental financial reporting to support their discussions of public policy such as......

Words: 383 - Pages: 2

Financial Reporting

...Sarbanes-Oxley In Week 1 we studied the general importance of the "rules of the game" (property rights and the rule of law) to a well-functioning economy. This week, we focused in more closely on the "rules of the game" regarding corporate governance and financial reporting. The Week 6 topic of fraudulent financial reporting relates to corporate top management that enriches itself and abandons its obligations to shareholders, employees, creditors, government, and the general public. The Agency Problem Economists call this failure of duty the problem of "agency." Top management is supposed to be the fiduciary (faithful agent) of the shareholders that own the enterprise. But a corrupt agent neglects fiduciary duty to the principal in favor of his/her own selfish interest. Lawyers refer to this same problem as a failure to perform “fiduciary duty” and a "conflict of interest." Ethicists see the problem as deviation from moral conduct. But, whatever terminology is used, the problem remains the same: how can the management agency be kept faithful to its fiduciary duty to the owners, and to the other stakeholders (employees, creditors, government, and the general public)? This is a fundamental and difficult problem. The founders of the United States confronted it in attempting to create a federal government that would be powerful enough to perform its functions, but not so powerful that it would become as oppressive to Americans as the English government the American......

Words: 3160 - Pages: 13

Financial Accounting & Reporting

...BKAF3063: FINANCIAL ACCOUNTING AND REPORTING III (A132) TUTORIAL 1: ACCOUNTING FOR LEASES DUE DATE: 2/3/2013 BEFORE 12.00PM QUESTION 1: On 1 January 2013 Ayman Bhd. entered into a lease agreement to lease machine from Harry Bhd. The terms of the agreement included: (i) non-cancellable lease term of nine years, with an option to buy the machine at the end of lease term for RM7,000; (ii) lease rental of RM34,000 per year to be paid semiannually by Ayman Bhd. on 1 July and 1 January each year of the nine years; and (iii) the lease rental was calculated and mutually agreed upon based on 8% rate of return to Harry Bhd. The machine is expected to have an estimated useful life of 10 ten years. Both companies use the straight line method to depreciate all of their fixed assets. REQUIRED: (Round up the figures to the nearest RM) (a) Compute the minimum lease payments and the present value of the minimum lease payments for Ayman Bhd. (3 Marks) (b) Show relevant journal entries for Ayman Bhd and Harry Bhd on 1 January 2013 and 31 December 2013. (7 Marks) Table 2: Periods (n) | Present value of 1 | Present value of an ordinary annuity of 1 | Present value of an annuity due of 1 | | 4% | 8% | 4% | 8% | 4% | 8% | 5 | 0.82193 | 0.68058 | 4.45182 | 3.99271 |......

Words: 821 - Pages: 4

Solution Manual for Financial Accounting and Reporting 14th Edition by Barry Elliott

...Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/d...

Words: 1276 - Pages: 6

Solution Manual for Financial Accounting and Reporting 14th Edition by Barry Elliott

...Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/d...

Words: 1012 - Pages: 5

Solution Manual for Financial Accounting and Reporting 14th Edition by Barry Elliott

...Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/downloads/solution-manual-financial-accounting-reporting-14th-edition-barry-elliott/ Description: Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Solution Manual for Financial Accounting and Reporting 14th edition by Barry Elliott Follow Link Below To Get Tutorial http://homeworklance.com/d...

Words: 352 - Pages: 2

Financial Reporting

...Week 1 Financial reporting and its analysis has an important role in the information intermediaries (auditors, press, financial analysts) and financial intermediaries (banks, insurance companies, mutual funds) functioning. Information intermediaries and financial intermediaries use the information from the financial reports to investigate the investment opportunities and find the “good” ones (Palepu, Healy & Peek, 2013). The “lemons” problem explains the problem in identifying the “good” and “bad” ideas being offered in the market (Holod & Peek, n.d.). The “bad” ideas are valued by investors at an average level, as they know that in the market there are both types of ideas. This approach, unfortunately, leads to less attractive conditions of financing to the owners of “good” ideas; the proportion of “bad” ideas increases. The identification of “good” investments can be performed by following the four steps (Palepu, Healy & Peek, 2013): * Business strategy analysis * Accounting analysis * Financial analysis * Prospective analysis All the above analysis get the information from the financial statements, publically data available, from business application context that consists of credit analysis, debt analysis, general business analysis and other details on corporate business (Palepu, Healy & Peek, 2013). The business strategy analysis is a tool to form the performance expectations using industry data and competitive strategy data. Accounting analysis......

Words: 745 - Pages: 3

Financial Accounting and Reporting

...Financial Accounting and Reporting March 2015 Maldives Business School Cover Page ASSIGNMENT BRIEF BTEC HND/Associate Degree in Business (Management/HR/Marketing) The student must fill the relevant parts of the following table. Student Date Student First Name Student Last Name ID Task No. submitted Date issued Mohamed 1 8th March 2015 Statement of authenticity I, the above named student, hereby confirm that this assignment is my own work and not copied or plagiarized. It has not previously been submitted as part of any assessment. All the sources, from which information has been obtained for this assignment, have been referenced in the Harvard format. I further confirm that I have read and understood the Maldives Business School rules and regulations about plagiarism and copying and agree to be bound by them. Assignment summary information Unit 10 Financial Accounting & Reporting Unit Assignment reference 1 Assignment type This is an individual assignment. Task Submit on Do on Task 1: LO1, LO3, LO4, M1, M2, D1, D2, D3: Report 11 April 2015 NA Task 2: LO2, M3: Class assessment NA 23 March 2015 An extension must be applied for in writing by individual students and will only be granted Extensions for valid reasons. Late submissions Late submissions will be marked for all grades but will incur a fine of MVR 500. Assessor(s): Internal verifier: Assessor(s) please fill the table below AFTER the......

Words: 4124 - Pages: 17

Financial Accounting & Reporting

...FINANCIAL ACCOUNTING & REPORTING LECTURE 1: Link Between Business and Accounting Dr. Namasivayam Lecture 1 1 LEARNING OBJECTIVES 1. Define accounting & explain why accounting information is important. 2. Identify users of accounting information. 3. Explain the contents of the 3 basic financial statements. 3. Explain the relationship between accounting equation and the balance sheet. 5. Analyse business transactions using the accounting equation. Lecture 1 2 WHAT IS ACCOUNTING? It is the way business people set goals, measure results, evaluate performance, and communicate results to various users. Lecture 1 3 ACCOUNTING LINKS … Lecture 1 4 USERS OF ACCOUNTING INFORMATION • Managers • Potential buyers • Trade creditors • Employees • Customers • Tax inspectors • Business owners • Potential partners • Bank institutions • Competitors • Auditors • Society Lecture 1 5 SHORT EXERCISES You as user of accounting information: i. Identify several ways in which you currently use accounting information in your life as a student or individual. ii. Identify several situations in which you might be required to supply financial information about yourself to others. Lecture 1 6 FINANCIAL STATEMENTS A quantitative report which describes the financial health of a business. This includes: An Income Statement; A Balance Sheet; A Cash Flow Statement. Lecture......

Words: 415 - Pages: 2