Financial Statements

Debits go on the left hand side of a T account

Cost accounting is usually involved with management accounting. Financial accounting tends to deal with the past and presents information like statements for public and private use. Management... accounting methods and techniques used by managers to operate their firms. Examples include raw materials, labor and manufacturing overhead management. On the other hand.

Total revenue minus total expensives

Consolidation 23. Foxx Corporation purchases all of the outstanding stock of Greenburg Company on January 1, 2005, for $600,000. Greenburg had net assets on that date of $470,000, although equipment with a 10-year life was undervalued on the records by $90,000. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2005 of $90,000 and $100,000 in 2006. Dividends of $20,000 are paid by the subsidiary in each of these two years. Financial figures for the year ending December 31, 2007, follow. Credit balances are indicated by parentheses. Foxx Greenburg Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (800,000) $ (600,000) Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 150,000 Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000 Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,000) -0- Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (420,000) $ (100,000) Retained earnings, 1/1/07 . . . . . . . . . . . . . . . . . . . . . . $(1,100,000) $ (320,000) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (420,000) (100,000) Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 20,000 Retained earnings, 12/31/07 . . . . . . . . . . . . . . . . . . . . $(1,400,000) $ (400,000) Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000 $ 100,000 Investment in subsidiary . . . . . . . . . . . . . . . . . . . . . . . 600,000 -0- Equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 600,000 Buildings (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 400,000 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 100,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,200,000 $ 1,200,000 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (900,000) $ (500,000) Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (900,000) (300,000) Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,400,000) (400,000) Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . $(3,200,000) $(1,200,000) a. Determine the December 31, 2007, consolidated balance for each of the following accounts: Depreciation Expense Buildings Dividends Paid Goodwill Revenues Common Stock Equipment b. How does the parent's choice of an accounting method for its investment affect the balances computed in requirement (a)? Consolidation 23. Foxx Corporation purchases all of the outstanding stock of Greenburg Company on January 1, 2005, for $600,000. Greenburg had net assets on that date of $470,000, although equipment with a 10-year life was undervalued on the records by $90,000. Any recognized goodwill is considered to have an indefinite life. Greenburg reports net income in 2005 of $90,000 and $100,000 in 2006. Dividends of $20,000 are paid by the subsidiary in each of these two years. Financial figures for the year ending December 31, 2007, follow. Credit balances are indicated by parentheses. Foxx GreenburgRevenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (800,000) $ (600,000) Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 150,000 Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000 Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,000) -0- Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (420,000) $ (100,000) Retained earnings, 1/1/07 . . . . . . . . . . . . . . . . . . . . . . $(1,100,000) $ (320,000) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (420,000) (100,000) Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 20,000 Retained earnings, 12/31/07 . . . . . . . . . . . . . . . . . . . . $(1,400,000) $ (400,000) Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000 $ 100,000 Investment in subsidiary . . . . . . . . . . . . . . . . . . . . . . . 600,000 -0- Equipment (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 600,000 Buildings (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 400,000 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 100,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,200,000 $ 1,200,000 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (900,000) $ (500,000) Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (900,000) (300,000) Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,400,000) (400,000) Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . $(3,200,000) $(1,200,000) a. Determine the December 31, 2007, consolidated balance for each of the following accounts: Depreciation Expense Buildings Dividends Paid Goodwill Revenues Common Stock Equipment b. How does the parent's choice of an accounting method for its investment affect the balances computed in requirement (a)?

Accounting Standards facilitate uniform preparation and repoting of general purpose financial statements published annually for the benefit of shareholders, creditors, employees and the public at large.The standards issued should be consistent with the provisions of law.Thus, they are very useful to the investors and other external groups in assessing the progress and prospects of alternative investments in different companies in different countries.Standards will help public accountant to deal with their clients by providing rules of authority to which the acoountants can appeal, in their task of preparing financial on a true and a fair basis.Accounting standards will rise the standards of audit itself in its task of reporting on the financial statements.

Unfortunately you have to record it as a loss to the parent company. Or it will at least show as a loss on the financial statements.

A selling expense budget is a financial plan that outlines the expected costs associated with selling a company's products or services over a specific period. It typically includes expenses such as salaries and commissions for sales staff, advertising and promotional costs, travel expenses, and any other costs directly related to sales activities. This budget helps businesses manage their selling expenses effectively, forecast profitability, and allocate resources efficiently to support sales strategies. By analyzing this budget, companies can make informed decisions to optimize their sales operations.

Its a liability, an amount your company owe to that customer.

expenses

Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.

i am in my course work question so pls help me

Capital maintenance: Accounting concept that a profit can be realized only after capital of the firm has either been restored to its original level (called 'capital recovery') or is maintained at a predetermined level. It is necessary, therefore, to determine the value of capital before the amount of profit can be computed. Capital maintenance (paid from the capital funds budget) is the work performed using a systematic management process to plan and budget for known cyclical repair and replacement requirements that extend the life and retain the usable condition of facilities and systems. This includes what is commonly known as “deferred maintenance”: work that has been deferred on a planned or unplanned basis to a future budget cycle or postponed until funds are available; when the work is performed the deferred maintenance backlog is reduced. Physical maintenance: Physical Asset Management defines a "best way" of managing corporate physical assets to gain greatest return. It blends the best processes, practice and technology used effectively by industry leaders to assure highest effectiveness in your specific business, operating, organizational and material conditions. The purpose of Physical Asset Management is to ensure that the means of production/operation are available to meet mission, availability, yield, schedule, quality, and cost commitments effectively at optimum return. Physical Asset Management consists of a mix of processes, systems, practices, and technologies strategically implemented to achieve a specific mission and/or objectives. It considers market, business, and operating conditions; related opportunities; and site-specific conditions and requirements.

As you may know that variance analysis is intrinsically connected with planned and actual results and effects of the difference between those two on the performance of the entity or company.

This variance analysis can lead to the identification of certain types of task that frequently overrun their budget whilst other tasks may be seen to regularly come in under their budget. Occurrences such as these require further investigation in order to identify potential efficiency gains. The major problem with a variance analysis approach to project monitoring is the amount of time it takes to establish actual costs. On the majority of large projects, supported by a typical accounts department, there will be a time lag of around 6 weeks before spend information can be accurately reported.

The shortcomings and disadvantages of VA can be addressed below:

The monitoring cycle can be so long that it renders the application of control impossible. Typically, by the time a problem has been identified through variance analysis it is too late to take corrective action. This is a major shortcoming of variance analysis and highlights the need for a monitoring system that depicts the current status of the project more effectively.

a) Cash flows from Operations. It also provides information on cash flows from investing activities and finance activities.

The disadvantages are:- 1. It is time-consuming. 2. Specialist knowledge is needed to perform double-entry 3. A businesses administration costs will increase due to the need to recruit a book keeper.

The normal operating cycle of a service company includes the following steps :

1. Perform services. 2. Accounts Recievable 3. Get cash

There are no goods involved. Only a service has to be performed, thus no dependencies from suppliers etc.

The operating cycle of a merchandising company has some additional steps

1.Buy inventory 2. Sell inventory 3. Accounts recievable 4. Get cash

The goods have to be ordered from suppliers of wholesalers and stored. Then goods from inventory are sold.

conventional method:according to the conventional method,cash inflows and outflows are matched with each other.

operating cycle method:the duration of time required to complete the following sequehces of events,in case of manufacturing firms is called the operating cycle

The format of the Balance Sheet is Assets = Liabilities + Equity

* Current Assets * Fixed Assets * -------------------- * Total Assets * Current Liabilities * Long Term Liabilities * -------------------------- * Total Liabilities * Equity * Net Income * ---------------------------- * Total Equity * -------------------------- * Total Liabilities and Equity

RESPONSIBILITY ACCOUNTING

Responsibility accounting is a management control system based on the principles of delegating

and locating responsibility.The authority is delegated on responsibility centre and accounting for

the responsibility centre. Responsibility accounting is a system under which managers are given

decisions making authority and responsibility for each activity occurring within a specific area of

the company. Under this system, managers are made responsible for the activities of segments.

These segments may be called departments, branches or divisions etc., one of the uses of

management accounting is managerial control. Among the control techniques "responsibility

accounting" has assumed considerable significance. While the other control devices are

applicable to the organization as a whole, responsibility accounting represents a method of

measuring the performance of various divisions of an organization. The term 'division' with

reference to responsibility accounting is used in general sense toinclude any logical segment,

component, sub-component of an organization. Defined in this way, it includes a decision, a

department, a

branch office, a service centre, a product line, a channel of distribution, for the operating

performance it is separately identifiable and measurable is some what of practical significance to

management.

Robert Anthony defines responsibility accounting as that type of management accounting which

collects and reports both planned andactual accounting information in terms of responsibility

centers.

According to Charles T. Horongrent, Responsibility Accounting or profitability accounting or

activity accounting which means the same thing, is a system that recognizes various decision or

responsibility centers throughout the organization and traces costs (and revenue, assets and

liabilities) to the individual managers who are primarily responsibility for making decisions

about the costs in question.

Significance of Responsibility Accounting

The significance of responsibility accounting for management can be explained in the following

way:

Easy Identification:

It enables the identification of individual managers responsible for satisfactory or unsatisfactory

performance.

Motivational Benefits :

If a system of responsibility accounting is implemented, consider-able motivational benefits are

assured.

Data Availability :

A mechanism for presenting performance data is provided. A framework of managerial

performance appraisal system can be established on that basis, besides motivating managers to

act in the best interests of the enterprise.Ready-hand Information:

Relevant and up to the minutes information is made available which can be used to estimate

future costs and or revenues and to fix up standards for departmental budgets.

Planning and Decision Making:

Responsibility accounting helps not only in control but in planning and decision making too.

Delegation and Control:

The twin objectives of management are delegating responsibility while retaining control are

achieved by adoption of responsibility accounting system.

Principles of responsibility Accounting

The main features of responsibility accounting are that it collects and reports planned and actual

accounting information about the inputs and outputs of responsibility accounting.

Inputs and outputs :

Responsibility accounting is based on information relating to inputs and outputs. The resources

used are called inputs. The resources used by an organization are essentially physical in nature

such as quantity of materials consumed, hours of labour, and so on. For managerial control, these

heterogeneous physical resources are expressed in monetary terms they are called cost. Thus,

inputs are expressed as cost. Similarly, outputs are measured in monetary terms as "revenues". In

other words, responsibility accounting is based on cost and revenue data or financial information

Objectives of Responsibility Accounting :

Responsibility accounting is a method of dividing the organizational structure into various

responsibility centers to measure their performance. In other words responsibility accounting is a

device to measure divisional performance measurement may be stated as under:

1. To determine the contribution that a division as a sub-unit makes to the total

organization.

2. To provide a basis for evaluating the quality of the divisional managers performance.

Responsibility accounting is used to measure the performance of managers and it

therefore, influence the way the managers behave.

3. To motivate the divisional manager to operate his division in a manner consistent with

the basic goals of the organization as a whole.

Responsibility Centre :

For control purposes, responsibility centers are generally categorized into:

1. Cost centres

2. Profit centers

3. Investment centers.

1. Cost Centre or Expense Centre:

An expense centre is a responsibility centre in which inputs, but not outputs, are measured in

monetary terms. Responsibility accounting is based on financial information relating to inputs(costs) and outputs (revenues). In an expense centre of responsibility, the accounting system

records only the cost incurred by the centre but the revenues earned (outputs) are excluded. An

expense centre measures financial performance in terms of cost incurred by it. In other words,

the performance measured in an expense centre is efficiency of operation in that centre in terms

of the quantity of inputs used in producing some given output. The modus operandi is to

compare actual inputs to some predetermined level that represents efficient utilization. The

variance between the actual and budget standard would be indicative of the efficiency of the

division.

2. Profit Centre:

A centre in which both the inputs and outputs are measured in monetary terms is called a profit

centre. In other words both costs and revenues of the centre are accounted for. Since the

difference of revenues and costs is termed as profit, this centre is called profit centre. In a centre,

there are financial measures of the outputs as well as of the input, it is possible to measure the

effectiveness and efficiency of performance in financial terms. Profit analysis can be used as a

basis for evaluating the performance of divisional manager. A profit centre as well as additional

data regarding revenues. Therefore, management can determine whether the division was

effective in attaining its objectives. This objective is presumably to earn a "satisfactory profit".

Profit directly traceable to the division and voidable if the division were closed down. The

concept of divisional profit is referred to as 'profit contribution' as it is amount of profit

contribution directly by the division.

The performance of the managers is measured by profit. In other words managers can be

expected to behave as if they were running their own business. For this reason, the profit centre

is good training for general management responsibility .

Measurement of Expenses :

Another problem with profit centers may relate to the measure of certain type of expenses which

have to be involved in the computation of profit centres. There is a scope for difference of

opinion relating to the treatment of those type of expenses which are not traceable or attributable

should be ignored in working out the profit of the division as a profit centre.

Transfer of Prices :

A transfer price is a price used to measure the value of goods and services furnished by a profit

centre to other responsibility centers within a company. In other words, when internal exchange

of goods and services takes place between the different divisions of a firm, they have to be

expressed in monetary terms. The monetary amount for these interdivisional exchange transfers

is called the transfer prices. The measurement of profit in a profit centre type or responsibility

accounting is also complicated by the problem of transfer prices. The implication of the transfer

price is that for the selling division it will be a source of revenue, where as for the buying

division (the division which is receiving, acquiring the goods and services) it is an element of

cost. It will therefore, have a significant bearing on the revenues, costs therefore, have a

significant bearing on the revenues, costs and profits of responsibility centres. Hence, there is a

need for correct determination of transfer prices. The determination is, however, complicated

because of wide variety of alternative methods are available. They are explained as under :

Types of Transfer Price :

There are two general approaches to the determination of a transfer price :

1. Cost based and2. Market based, Based on these,

there are five basic methods of transfer price :

a) Cost

b) Cost plus a normal mark-up

c) Incremental cost

d) Market price, and

e) Negotiated price

3. Investment Centers

A centre in which assets employed are also measured besides the measurement of inputs and

outputs is called an investment centre. Inputs are accounted for in terms of costs, outputs are

calculated on investment centre. Inputs are accounted for in terms of costs, outputs are accounted

for in terms of revenues and assets employed in terms of values. It is the broadest measurement,

in the sense that the performance is measured not only in terms of profits but also in terms of

assets employed to generate profits.

An investment centre differs from a profit centre in that as investment centre is evaluated on the

basis of the rate of return earned on the assets invested in the segment while a profit centre is

evaluated on the basis of excess revenue over expenses for the period.

Controllability :

As is evident from the above description, the notion controllability is prime in a system of

responsibility accounting. A responsibility centre is accountable for controllable factors only. It

is but natural also, since how can one be held responsible for factors beyond one's control.

Therefore, it is essential to identify which costs are controllable and which costs are not

controllable.

A cost is treated as controllable only when the person responsible for incurring it can exercise his

influence over it. Costs which cannot be so influenced are termed as uncontrollable costs.

Problems in Responsibility Accounting

While implementing the system of responsibility accounting, the following difficulties are likely to be faced by the

management:

1. Classification of costs: For responsibility accounting system to be effective a proper

classification between controllable and non controllable costs is a prime requisite. But practical

difficulties arise while doing so on account of the complex nature and variety of costs.

2. Inter-departmental Conflicts: Separate departmental persuits may lead to inter-departmental

rivalry and it may be prejudicial to the interest of the enterprise as a whole. Managers may act in

the best interests of their own, but not in the best interests of the enterprise.

3. Delay in Reporting: Responsibility reports may be delayed. Each responsibility centre can

take its own time in preparing reports.

4. Overloading of Information: Responsibility accounting reports may be overloading with all

available information. This danger is inherent in the system but with clear instructions by

management as to the functioning of the system and preparation of reports, etc., only relevant

information flow in.

5. Complete Reliance will be deceptive: Responsibility accounting can't be relied upon

completely as a tool of management control. It is a system just to direct the attention of

management to those areas of performance which required further investigation.

Cash flow statements just as the Income Statement and Balance Sheet are prepared using historical information which is in the past. It therefore does not provide complete information to assess the future cash flows of an entity. Cash flow statements just as the Income Statement and Balance Sheet are prepared using historical information which is in the past. It therefore does not provide complete information to assess the future cash flows of an entity.

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Fund accounting is the accounting system emphasizing on accountability rather than profitability

yes, for a bonus issue