Preview

Task 2 Financial Analysis

Better Essays
Open Document
Open Document
1528 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Task 2 Financial Analysis
TASK TWO Task Two

1

A1. Concerns in Budget Planning: Budgetary Items. Depreciation: Depreciation is “the method that the accountants use to allocate the cost of equipment and other assets to the total cost of products and services as shown on the income statement” (Berman, Knight, & Case, 2013). Depreciation is said to be based on the same fundamentals as accruals in that a company “wants to match as closely as possible the costs of products and services with what was sold” (Berman et al., 2013). The idea is to spread the cost of the expenditure over the useful life of the item over the course of time (Berman et al., 2013). Depreciation carries too much of an increase in year 9. Year 8 totals for accumulated depreciation is at (-690,000). By year 9, depreciation is too fast and rises to a higher negative amount at (-920,000). There are ways to correct this issue. Competition Bikes could utilize new methods to determine fundamental accounting equations that would help to increase the company’s “equity in the form of retained earnings” (Berman et al., 2013). For example, leases could be re-financed and lengthened to record a smaller charge on the statement year to year (Berman et al., 2013). Other equipment could be re-financed or re-valued in order to decrease operational costs and depreciation. For example, delivery trucks could be evaluated. If Competition Bikes determined that those trucks could last six years instead of three, then “a 50 percent smaller charge on its income statement” could be recorded (Berman et al., 2013). Liabilities: Liabilities are “what a company owes to other entities” (Berman et al., 2013). Liabilities can also describe how a company obtains its assets because they show up in different explanations on the balance sheet (Berman et al., 2013). For example, long-term liabilities are “those that come due

TASK TWO over a longer time frame” and short-term liabilities are due over a short time frame (Berman et al., 2013). For



References: Berman, K., Knight, J., and Case, J. (2013). Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean. Boston, MA: Harvard Press. Bragg, S. (2013). What is a Flexible Budget? Accounting Tools. Retrieved 10 June 2013 from http://www.accountingtools.com/questions-and-answers/what-is-a-flexible-budget.html. Bragg, S. (2013). What is Management by Exception? Accounting Tools. Retrieved 10 June 6 2013 from http://www.accountingtools.com/questions-and-answers/what-is-managementby-exception.html. Bragg, S. (2013). What is Variance Analysis? Accounting Tools. Retrieved 10 June 2013 from http://www.accountingtools.com/questions-and-answers/what-is-variance-analysis.html.

You May Also Find These Documents Helpful

  • Powerful Essays

    The following is a summary report to recommend whether Competition Bikes should change its traditional costing method to activity based costing, and an analysis of the breakeven point with regards to sales units and dollars for both CarbonLite and Titanium bikes. It also discusses the impacts to the breakeven point. The cost-volume-profit evaluation and the traditional vs activity based costing method overhead analysis were used for the review and analysis.…

    • 1900 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Operating Expenses. The increase in utilities and other general and admin expenses should not fluctuate as they are fixed expenses. This should be reviewed to determine if the increase was due to faulty equipment, temporary increase in market costs, or permanent increases. The compensation parts, administration salaries as we as…

    • 1596 Words
    • 6 Pages
    Good Essays
  • Better Essays

    Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Chapter 13 and Appendix A. Accounting: Tools for business decision making (3rd ed.). Hoboken, NJ: John Wiley & Sons.…

    • 1342 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    acc/291 team paper

    • 523 Words
    • 3 Pages

    Citations: Kimmel, P. D., Wetgandt, J. L., & Kieso, D. E. (2009). Financial Accounting 5 Tools for Business Decision Making. Retrieved from https://portal.phoenix.edu/classroom/coursematerials/acc_290/20131106/OSIRIS:44348065.…

    • 523 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Tootsie Roll

    • 1147 Words
    • 5 Pages

    Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Accounting: Tools for business decision making. Hoboken: John Wiley & Sons, Inc.…

    • 1147 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Financial Analysis Task 2

    • 2376 Words
    • 10 Pages

    There are a couple of concerns with Competition Bikes Inc., ProForma for year 9. The first concern is the amount of money that is allocated to research and development. For the previous three years, they have been all over the board with their budgets. The sixth year was $71,460, the seventh year was $98,280, and the eight year was $82,284. This is concerning that the budget has fluctuated so much. In the ninth year they have allocated $85,861. This budget line item should be analyzed so there is not so much variance in the budget between year to year.…

    • 2376 Words
    • 10 Pages
    Good Essays
  • Better Essays

    1. Kimmel, P.D. (2007). Financial accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley & Sons.…

    • 888 Words
    • 4 Pages
    Better Essays
  • Good Essays

    Horizontal analysis allows side by side comparisons on a year to year basis to determine the performance from one year to the next. The company decides on standards to compare the results of the analysis. Standards are researched by checking competitors, internet research of general industry guidelines or standards created from past experience in the company.…

    • 2395 Words
    • 10 Pages
    Good Essays
  • Good Essays

    Weekly Reflection Acc290

    • 439 Words
    • 2 Pages

    References: Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Financial accounting: Tools for business decision making (5th ed.). Hoboken, NJ: John Wiley & Sons.…

    • 439 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Acc290 Syllabus

    • 2409 Words
    • 10 Pages

    Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Financial accounting: Tools for business decision making (5th ed.). Hoboken, NJ: John Wiley & Sons.…

    • 2409 Words
    • 10 Pages
    Powerful Essays
  • Better Essays

    Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2011). Accounting: Tools for business decision making (4th ed.). NJ: John Wiley & Sons…

    • 867 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    Vague Line Items. The budget shows many lines with broad terms and some with no description at except “other”. Other long term liabilities in the amount of $75,000, other accrued expenses $26,000, other utilities and services $54,000, and $170,000 in other general and admin expenses. A more specific budget will help the company identify where money is being spent, assist management in making better budget decisions, and minimize fraud. Smaller, individual budgets such as a selling budget that…

    • 2632 Words
    • 11 Pages
    Powerful Essays
  • Best Essays

    Financial Analysis

    • 5400 Words
    • 22 Pages

    Bibliography: Associated British Foods plc. (2010). ABF annual report. Retrieved November 2, 2011, from http://www.abf.co.uk/: http://www.abf.co.uk/uploads/abf-annual-report-2010.pdf…

    • 5400 Words
    • 22 Pages
    Best Essays
  • Satisfactory Essays

    Dedicated to the Wiley sales representatives who sell our books and service our adopters in a professional and ethical manner, and to Enid, Merlynn, and Donna…

    • 58113 Words
    • 233 Pages
    Satisfactory Essays
  • Powerful Essays

    firms

    • 1864 Words
    • 8 Pages

    The first book on the list, Accounting, Tools for Business Decision Making, is the textbook for this course. The topic outline, the end-of-chapter assignment grid, the quiz, the group project and group assignment refer to chapters in this book. Other reference materials will be added if necessary.…

    • 1864 Words
    • 8 Pages
    Powerful Essays