MBA 101B – Financial Accounting
Case No. 1-1 RIBBONS AN’BOWS, INC.
Page No. 1of 2
I. VIEWPOINT
Carmen Diaz – Owner
II. STATEMENT OF THE PROBLEM
1. On Ribbons an’ Bows, Inc. finances:
a. How would the three-month operations be reported (through June 30)?
b. Was the company profitable (ignoring Income Taxes)?
c. Why did its Cash-in Bank declined (during the three-month period)?
2. How would the financial condition of the business be reported on June 30, 2010?
3. Does the three-month operation of Carmen be characterized as “successful”? Explain.
III. OBJECTIVE
To present fairly the financial operation in a 4-month operation of Ribbon an’ Bows, Inc.
To determine if the result of operation yields profit.
To determine the transactions that contributed to the decline in Cash-in Bank Balance.
To present fairly the financial condition of the company.
To determine if operation can be characterized “successful”
IV. AREAS OF CONSIDERATION
Financial Accounting information is used internally and externally, as there are parties interested to know the results of operation for a certain period of time.
Carmen’s cousins who granted her loan of $10,000.00 were asking for a four-month financial report. It can be that they want to know if it is capable of disbursing payment for loans. She needs management accounting and operating information to carry out management responsibilities like planning and control.
Case No. 1-1 RIBBONS AN’BOWS, INC.
Page No. 2 of 2
V. ALTERNATIVE COURSES OF ACTION
1. Ribbons an’ Bows, Inc. 4-month operation –
a. It’s in the preparation of Income Statement which summarizes the revenues and expenses of an accounting period. It reports the result of operations and indicates profitability or lack thereof.
b. Gaining a