EMBA 600: Financial & Management Accounting Instructor Name: Dr. Alexandros Pananis
Question 1 )
ACCESS SOLUTIONS INC Suppose you have been recently hired as a consultant to Access Solutions Inc (ASI) a consulting firm offering accounting and financial solutions for small and medium sized companies. ASI has asked you to prepare material for a seminar in accounting for nonaccountants to be delivered to selected members of the middle management in one of its clients. Your supervisor advised your presentation to have a clear and meaningful structure which will provide answers to the following questions. List the three financial statements. Briefly describe the purpose each one serves and explain the connection between these three statements. The Financial Statements are the official records of businesses or personal financial activities which have to be prepared based on an International standards to be approved by external certified authorities or auditors and finally it should be published on a Quarter and Annual bases. There are 3 main types of Financial Statements : 1- Income Statement ( Profit and Loss Statement ) It’s a flow statement reports summarizing company's income, expenses, and profits ( revenue ) over a period of time. 2- Balance Sheet (Statement of Financial Position ) It’s a Status report summarizing company's Assets, liabilities and Equities which it include the statement of Retained Earnings at a specific point in time. The Balance Sheet Formula is : Assets = Liabilities + Equities 3- Cash Flows Statement ( The statement of changes in financial position ) The statement of cash flow is independent accounting method and its complement and integrate the information on the balance sheet and income statement. It’s a company’s liquid assets Statement which is summarizing company's cash flow activities ( inflows and outflows ) such as cash, cash equivalents, operating, investing and financing activities over a period of time.
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Question 2 )
Classify the following items according to the financial statement on which each belongs, either the income statement (IS) or the balance sheet (BS). Also indicate whether each is revenue (R), expense (E), asset (A), liability (L), or stockholders' equity (OE) item. Then explain in brief what is meant by generally accepted accounting principles?
Appears on Which Statement? 1. Retained earnings 2. Buildings 3. Common stock 4. Accounts payable 5. Football ticket sales 6. Salaries expense Balance Sheet (BS) Balance Sheet (BS) Balance Sheet (BS ) Balance Sheet (BS ) Income Statement (IS) Income Statement ( IS)
Type of Account Stockholders' Equity (OE) Assets (A) Stockholders' Equity (OE) Liability (L) Revenue (R) Expense (E) Assets (A)
7. Accounts receivable Balance Sheet (BS )
Generally accepted accounting principles (GAAP) are a set of accounting principles, guidelines and rules (set by policy boards) used to prepare, present, and report financial statements and reporting accounting information for a wide range of entities , Authorities , governments and Companies to compile their financial statements. GAAP was created to standardize the preparation of financial statements.
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Question 3 )
Adelphia Cable Company Several accounts from the financial statements of Adelphia Cable Company are listed below. In the two columns provided for answers, indicate the type of account and the normal account balance. Use the following identification codes for your answers: Accounts Normal Balance A = Asset DR = Debit L = Liability CR = Credit OE = Stockholders' Equity R = Revenue E = Expense Account Assets (A) Assets (A) Liability (L) Expense (E) Stockholders' Equity (OE) Liability (L) Expense (E) Revenue (R) Assets (A) Liability (L) Normal Balance Debit (DR) Debit (DR) Credit (CR) Debit (DR) Credit (CR) Credit (CR) Debit (DR) Credit (CR) Debit (DR)...