Accounting 20Cycle 20Memo 20Guidelines 4 1 
Accounting Cycle Problem: Written Analysis (Memo) Guidelines
Purpose: The purpose of the written component of the accounting cycle problem is to apply the accounting knowledge you have gained this semester by analyzing Success System’s financial statements. In addition, this memo gives you practice on your business writing skills. Task: Prepare a business memo from yourself (as the accountant for Success Systems) to A. Lopez, the owner analyzing the financial statements you prepared earlier in the semester. Throughout, you are required to use correct accounting terminology in your analysis as though you, the knowledgeable accountant for Success Systems, are presenting this information to A. Lopez, an owner who does not have a financial background.
Guidelines: Your written analysis must include the following:
1. Computation of the current ratio for the three months ended December 31.
2. At least one paragraph analyzing the current ratio calculated above. In this analysis, you should define the current ratio (in your own words) and explain why the current ratio is an important indicator of a company’s liquidity.
3. Explanation of the prepared financial statements. Write at least a paragraph on each of the three financial statements you have prepared. Define the purpose of each financial statement and explain the information they uniquely provide to assist in decision making.
4. Explanation of the key accounting principles and assumptions behind the preparation of the financial statements. That is, explain (in your own words) to A. Lopez the general principles that determine:
i. At what value information is recorded in the financial statements (i.e. the measurement principle). ii. When and under what conditions revenue can be recognized in the financial statements. iii. When and under what conditions expenses can be recognized in the financial statements. iv. What the dates mean for each financial statement presented (i.e. the time period
Purpose: The purpose of the written component of the accounting cycle problem is to apply the accounting knowledge you have gained this semester by analyzing Success System’s financial statements. In addition, this memo gives you practice on your business writing skills. Task: Prepare a business memo from yourself (as the accountant for Success Systems) to A. Lopez, the owner analyzing the financial statements you prepared earlier in the semester. Throughout, you are required to use correct accounting terminology in your analysis as though you, the knowledgeable accountant for Success Systems, are presenting this information to A. Lopez, an owner who does not have a financial background.
Guidelines: Your written analysis must include the following:
1. Computation of the current ratio for the three months ended December 31.
2. At least one paragraph analyzing the current ratio calculated above. In this analysis, you should define the current ratio (in your own words) and explain why the current ratio is an important indicator of a company’s liquidity.
3. Explanation of the prepared financial statements. Write at least a paragraph on each of the three financial statements you have prepared. Define the purpose of each financial statement and explain the information they uniquely provide to assist in decision making.
4. Explanation of the key accounting principles and assumptions behind the preparation of the financial statements. That is, explain (in your own words) to A. Lopez the general principles that determine:
i. At what value information is recorded in the financial statements (i.e. the measurement principle). ii. When and under what conditions revenue can be recognized in the financial statements. iii. When and under what conditions expenses can be recognized in the financial statements. iv. What the dates mean for each financial statement presented (i.e. the time period