finance student‚ because net income forecasts future cash flow and is informative. a. Net income forecasts future cash flow better than current cash flow‚ and does so by recording transactions associated with cash consequences when the transactions occur‚ rather than when the cash is received or paid. To compute net income‚ the effects of economic transactions are recorded on the basis of expected‚ not necessarily actual‚ cash receipts and payments. b. Net income is informative when corporate
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limitations of Financial Accounting? Explain with the help of Examples. What are the alternatives to overcome these limitations? Financial accounting can be defined as reporting of the financial position and performance of a firm through financial statements issued to the external users on a periodic basis. It is a field of finance that treats money as a means of measuring economic performance instead of treating it as a factor of production. It encompasses the entire system of monitoring and control
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Manufacturing’s 2010 income statements and balance sheets‚ shown in Exhibit 1‚ Crutchfield computed Morgan Manufacturing’s gross margin percentage (44.5%)‚ pre-tax return on sales (14.5%)‚ and pre-tax return on assets (13.4%). Crutchfield was especially interested in comparing his firm’s performance against that of its competitor‚ Westwood‚ Inc. Crutchfield felt that Morgan had recently made significant productivity improvements over Westwood that would be reflected in the financial statement. When he looked
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called ‘Maturing or Aging Process’ involves maturing or aging for a minimum of four years under controlled temperature and humidity conditions. Because of the increase in cost of production in 1988‚ which will generate revenues only in 1991‚ the income statement of Daniel Dobbins Inc showed a net loss of $814000 which was a significant change from net profit of $1504000 in 1987. In order to get loan of $3 million from Ridgeview National Bank of Nashville‚ the point of consideration for COO of Daniel
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ACCOUNTANCY MEMORANDUM SUBJECT: Blockbuster/Netflix Case Analysis Introduction In this memorandum‚ I will analyze the competitive environment that Blockbuster and Netflix faced‚ state the key income statement and balance sheet accounts for each firm and use ratios (including DuPont model) to draw comparisons between the two firms in 2008. Competitive Environment Blockbuster is an American-based chain of VHS‚ DVD‚ Blu-Ray‚ and video game rental store
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difference between fair values of net identifiable assets acquired and related cost. With vague useful life‚ goodwill is systematically tested for impairment at annually balance sheet date. Negative goodwill emerging on an acquisition is recognised in income statement. 2.3 Property‚ Plant and Equipment (AASB 116) Accounting
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decision makers. Key Product - Financial Statements IDENTIFYING This is the recognition and non-recognition of business activities as “accountable events”. An accountable/quantifiable event when it has an effect on ALE. Transactions involve 3rd parties while Events does not involve 3rd parties. Economic activities are referred to as transactions which may be classified as external or internal. • Production • Exchange • Income distribution • Consumption • Investment
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amortized using a unit-of-production method based on volumes produced and remaining proved reserves. The net unamortized capitalized costs of oil and gas properties less related deferred income tax MAY NOT exceed a ceiling consisting primarily of a computed present value of projected future cash flows‚ after income taxes‚ from the proved reserves. Under this method‚ the Company capitalizes all acquisition‚ exploration and development costs for the purpose of finding oil and gas reserves‚ including
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guide the company’s strategic production and marketing effort as well as highlight value adding and non-value adding activities performed by the company. At the end of the first quarter of 20x6‚ the following information was available: Income Statement For The Quarter Using Absorption Costing $’000 $’000 $’000 Sales 40‚000 Less Cost of goods sold Materials 8‚000 Labour 7‚500 Production overheads 10‚000 Total 25‚500 Gross margin 14‚500 Less Marketing
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financial statements Reading Assignment Please read chapters 1 and 2 of your textbook. Recommended Problem Assignment Chapter 1. Please complete MC questions plus Exercises 1-1‚ 1-3‚ 1-7‚ 1-8‚ 1-9 and 1-11 Chapter 2. Please complete MC questions plus Exercises 2-5‚ 2-7‚ 2-9‚ 2-12 and 2-13 Answers to these assignments are available in the folder “Answers to Assigned Multiple Choice and Exercises.” Outline of Readings: Chapter 1 Reviews the information conveyed in Financial Statements and
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