a) Define accounting and discuss the users of accounting. The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit. There are two kind of groups who using accounting they are internal users and external users. The internal users include marketing managers, production supervisors, finance directors and company officers. And external users are investors and creditors. Investors those who are owners and they use accounting data to make a decisions to buy, hold or sell ownership shares of a company. And creditors are suppliers and bankers, they use the accounting data to evaluate the risks of granting credit or lending money. b) Discuss ethics is financial reporting and why ethics are a fundamental business concept. a) The president Phil McNally is the stakeholder in this situation. b) Ethics refers to the moral rights and wrongs of any decision a business makes. It is a value judgment that may differ in importance and meaning between different individuals. Businesses may adopt ethical policies because they believe in them or they believe that by showing they are ethical, they improve their sales. But they cannot hide anything from the financial statement however they succeeding in the business. c) If I had this situation I will do only ethically. If I found any misstatement that over stated the net income I should report to the head of the company also I move only with the right thing. I will not do any kind of unethical thing to the business. Part III 1) Family Department Store Income Statement For the Year Ended December 31, 2014 Net sales $735000 Cost of goods sold 548590 Gross profit 186410 Operating expenses 120000 Net income 66410 2) Family Department Store Income Statement For the Year Ended December 31, 2014 Net sales $700000 Cost of goods sold 553000 Gross profit 147000 Operating expenses 92700 Net income 54300 In my opinion, Debbie’s strategy the net income is more than Mike’s, and in Mike’s plan we can see the difference between their expenses Mike had a less expenses than Debbie’s. Therefore, implementing both strategies to their Family Department Store will surely make their profits higher and increase their net income. Family Department Store Income Statement For the Year Ended December 31, 2013 Net sales $735000 Cost of goods sold 548590 Gross profit 186410 Operating expenses 92700 Net income $9371 Part IV Chapter 10 communication Activity BYP10-5 The advantages of bonds over common stock financing are three basic advantages. Bondholders do not have voting rights; owners can raise capital with bonds and still maintain corporate control. Also, bonds are attractive to corporations because the cost of bond interest is tax-deductible. As a result of this tax treatment, which stock dividends do not offer; bonds may result in lower cost of capital than equity financing. Although bond interest expense reduces net income, earnings per share on common stock often is higher under bond financing because of no additional shares of common stock are issued. When it comes to the types of bonds that might be used one can look at the following: Secured and unsecured bonds which have specific assets of the issuer pledged as collateral for the bonds (they include mortgage bond, sinking fund bond, debenture bonds). Term and serial bonds; bonds that mature at a single specified future date are term bonds, and bonds that mature in installments are serial bonds. Registered and bearer bonds; bonds which are issued in the name of the owner are registered bonds, while those that are not registered are bearer or coupon bonds. Finally, convertible and callable bonds; while bonds that can be converted into common stock at the bondholder’s option are convertible bonds. Bonds that the issuing company can retire a at a stated dollar amount prior to maturity are callable bonds. When respect to the issuing procedures used in bond transactions one must know that in authorizing the bond issue, the board of directors must stipulate the number of bonds to be authorized, total face value, and contractual interest rate. The face value is amount of principal the issuing company must pay at the maturity date. The contractual interest or the stated rate is the rate used to determine the amount of cash interest the borrower pays and the investor receives. Also, the terms of the bond issue are indicated in a legal document called a bond indenture, which states the rights and terms of bondholders and trustees. Moreover, issuing company arranges for the printing of bond certificates. Part.V Page 51 IFRS 1-1 through 1-4 IFRS 1-1 The key players are the Securities and Exchange Commission, which is responsible for the supervision and regulation of the securities industry and has oversight responsibility for the FASB; the Financial Accounting Standards Board, an independent body that establishes and interprets U.S. GAAP; and the IASB, which is working with the FASB on the convergence of U.S. GAAP and IFRS. The AICPA has provided thought leadership to the IASB and the FASB on financial reporting topics. IFRS1-2 Page 217 IFRS 4-1 through IFRS 4-4 IFRS4-1–In IFRS requires separation of current and noncurrent assets and liabilities. And in case of GAAP it recommends separation of current and noncurrent assets and liabilities. IFRS4-2–The terms that commonly used under IFRS are Balance sheet, income statement, changes in equity, cash flow statement and footnotes. IFRS4-3-Current Asset Cash – 15400 +Short term Invsmt -6700 Accounts Receivable-12500 Prepaid Insurance -3600 Total current assets=38200 Part VI Interview Name – George Jose Company name – JK trades Job title and responsibilities- Accountant, keep recording the daily business transactions How accounting information is used by selective individual- Major in college-CPA Job satisfactio Perception of job stability- Opportunities for the growth- Student response-he is very smart and he is very confident to do his work with responsible.
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