Memo for ABC Complete Kitchens Inc

Topics: Balance sheet, Asset, Generally Accepted Accounting Principles Pages: 11 (2181 words) Published: May 27, 2014


Finance and Accounting Memo focusing on Managements Role and Responsibilities within ABC Complete Kitchens, INC
SKS5000-8 Comprehension Strategic Knowledge Studies
February 9th, 2014
Professor Nick Harkiolakis

Memorandum

To: The Board of Directors of ABC Complete Kitchens, Inc. From: Alexandra Kent
Date: February 9th, 2014
Subject: Managements responsibilities regarding finances and accounting

“Great organizations demand a high level of commitment by the people involved”- Bill Gates. Introduction
Having the right man for the right job is imperative for corporate success. The person that installs the cabinetry for ABC Inc. is probably not the same person you want managing the financial responsibilities and obligations. Employees of ABC Complete Kitchens Inc. encompass a similar work ethic, professionalism and accountability however; their skills vary and need to be accommodated suitably within the company. Maintaining this level of expectation is imperative to achieve organizational success. Maturity, health, financial stability and the ability to compensate accordingly to current and long term fiscal challenges is the responsibility of the financial manager and within this organization or for ABC Inc. the Chief Financial Officer (CFO). The CFO assesses, directs, monitors, controls, develops strategies, plans for current and long term financial goals and most importantly determines the organizations investment decisions. The CFO and/or financial manager must “weigh the costs and benefits of all investments and projects and decide which of them qualify as good uses of the money” (Northcentral University, 2011. 7; 709). This is money invested by others as well as yourselves within this company. There are three main tasks financial managers are responsible for beyond applying management standards to financial capital or income of this conglomerate. These consist of; making (preferably good) investment decisions, financial decisions and managing the company’s cash flow on a day to day and a long term basis. In order to stand behind these investment decisions, it is imperative to understand the terminology and processes within the financial systems development. Assets

Assets are items of ownership that can be converted into cash or have an exchange value. They are investments this company has made. From an accounting point of view, assets can be divided further into two categories, current and long-term assets. Current assets are cash or other liquid items that can be turned into cash within one year. Marketable securities are short term, low risk investments such as, the current stock you hold and what it is worth or can be sold at. Accounts receivable are debts owed to this company by consumers for products and services provided already on credit. Inventories are assets comprised of raw materials such as cabinetry, sinks, and appliances including kitchens being currently installed that ABC Inc. still owns. There are other current assets that we will view on our balance sheet later on and they are mostly prepaid expenses and deferred assets as well as expenditures for future costs such as insurance, rent and interest. Intangible assets have no physical existence. These can include intellectual property or employees who attain knowledge and skill (NCU, 2011. 7:13). If the employee leaves to go to another organization, this is considered an intangible asset. Perception of the company within the community is important. Take for example the communities perception of the company. Wal-Mart and most recently Target with their credit card theft issue experienced intangible assets. Copyrights, patents and goodwill are also intangible assets. “Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?”-Thomas...

References: Averkamp, H. (2013). What is owners equity? Accounting Coach, LLC. Fort Atkinson, WI
Retrieved from: http://www.accountingcoach.com/privacy-policy
(2011). SKS 5000- Business strategies for organizational effectiveness within the global
perspective
(2013). List of key accounting terms and definitions. InvestorGuide Staff.
Retrieved from: http://www.investorguide.com/article/13789/list-of-key-accounting-
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