Discussion Question 1:

Based on what you know about accounting, what role do you see it playing in business operations? How dependent do you think a business is on its accounting department? Why?

Accounting plays many important roles especially when it comes to business operations. Accounting is mainly responsible for almost all of the financial needs of the business. It keeps track of all spending, profit and loss that the company inquires. The business is very dependent on it accounting department. Accounting department is responsible for monitoring more than the cash flow, it also works closely with IRS, government to make sure that everything is being done correctly (payroll, taxes, etc). The accounting side of the business can be considered to be the lungs of the company next to the heart.

Financial Statements

Today, I will be describing a balance sheet, income statement, retained earnings statement, and statement of cash flows and how a company uses these financial statements as a tool to make future decisions for the company.

Balance Sheet

A balance sheet a statement sheet that reports the company’s financial balances of the business. This sheet includes the company’s total of assets and liabilities. It is used for all three types of business sole proprietorship, business partnership and corporate business company’s. Creditors rely on this financial sheet to determine if the company will be able to repay.

Income Statement

An Income Statement is a financial statement that shows the company’s profit and losses. It basically shows all the company’s gains and losses that were made during a period of time. After the company deducts the expenses from the revenue then you will get a total net income. This is a great statement to use especially because this will show investors how much net income is the company bringing in, or how financially stable the company truly is.

Compare and contrast sole proprietorships, partnerships, and corporations. Sole proprietorships means that a business that owned by one person. That includes and not limited to all profits and losses, debts and unlimited liability, all will come from the solely one owner and not a group or in this case a partner or co-owner etc. Partnerships are seen much differently than sole proprietorships. Partnerships is a business that owned by more that one person/s. This is the number one difference from being a sole proprietorship or sole owner. Basically, two or more people come together and split the cost, debts, and liability. Corporations is an business that has separate entity owned by stockholders. The huge difference between corporations and the other two is that they are owned by stockholders. Stockholders make decisions that is first best for their company, secondly the company that they have together.

Current assetsWhen it comes to a company's classified balance sheets you will find current assets sheet. Current assets is cash or cash equilivants that the company will use. What you will find on a current asset sheet is Cash and equilvants, Short term investments, Accounts receivables, and other assets.Long-term investmentsLong-term investments when it comes to balance sheet are investments that the company intends to hold onto. The investments that are listed are as follows, bonds, stocks and cash. You will also find short-term investments in the company.

For Discussion Question 1: Post your response to the following:

         When reviewing a financial report, why should information be reliable, relevant, consistent, and comparable?

         In other words, why are these accounting characteristics important?          What kinds of problems could be created if a financial report is not reliable, relevant,

consistent, or comparable?

It is extremely vital that the company has accurate financial reporting.  This information determines whether or not to invest in your company's stock. This information will help them decide if it is profitable to invest or not to invest in your company based what is in your financial history.  The information must be relevant because it will help the company, investors and lenders make

decisions.  It helps answer questions like, "how stable is your company", or "what future does this company have".

Internal Cash Control

Accounting 220

Internal Cash Control

The accounting department receives from sales invoices once a month. Most of

the information is missing on the invoices.

The accounting department relies on each department within the company and all the information has to be submitted completely and in a timely matter. In this scenario most of the information that has been turned in has information that is missing on the invoices. I would say

that the internal controls that are not being followed are Documentation procedures. Company documentation is very important and must be turned in complete. These documents show proof of delivery or proof of services to the customer. Any incomplete documents can be very costly and can cause a delay in the company being paid for any services rendered.

MaterialAppendix B

Cash Management Matrix

Directions: Using the matrix, list how each of the principles of internal control works, and give an example for each. Next, list how each of the principles of cash management works, and give an example for each. 

Principles of Internal Control How it Works Example

Establishment of responsibility Happens when the company assigns one person to be in control of a specific job or have authority to make decisions.

My job, Our Sales department is the only one that can waive a restocking fee. It allows the Sales team to be in control of the customers returns

Segregation of duties This is when the company has more than one person to control a task or job

A church- You have people who count the offering and then you have someone who writes down and logs in what was received

Documentation procedures Evidence or proof of all company transactions

My job we deliver ship shingles to our customers, and we make the driver sign prior to leaving and we make the customer sign a “Proof Of Delivery” form

Income statement is a financial statement that shows how much money is coming from product sales and services prior to any expenses being taken out. Both internal and external users such as managers and investors are able to access this. For example, if a investor wanted to see if the company made money or lost money they would use this financial statement report.Balance sheet shows what condition the company is currently in. whereas the other financial statements only came monthly or annually. For example, what if the management planning team wanted to see the company's current assets, ownership equity and liabilities? All they have to do is run the balance sheet report.

Discussion Question 1: Post your response to the following:

         How would you describe the difference between financial and managerial accounting? What are the distinguishing features of managerial accounting?

There are many differences between financial and managerial accounting. The financial accounting statements are available to external users such as employees, stockholders, creditors, investors, etc. This is available to them so that they can monitor the company's performances quarterly or annually. Managerial accounting provides financial information for managers and other internal people or department.

Cost, Volume, and Profit Formulas

Explain the components of cost-volume-profit analysis.

The components of cost volume-profit analysis consist of Level or volume of activity, Unit Selling Price, Variable Cost per unit, total fixed costs, and Sales mix.

What does each of the components mean?

Level or volume of activity is the activity that causes change or behavior when it comes to the cost. Unit selling Price is the cost for the product basically how much each unit is selling for. The Variable Cost per unit is something that can change depending on the activity. The total fixed cost does stay the same as activities change but differ per unit. The Sales mix is basically what the name says. It’s a mixture of sale items when more than one product sold the sales will remain the consistent.

Based on the formulas you have reviewed, what happens to contribution margin per unit when unit selling prices increase?

Contribution margin is the amount of revenue left over after subtracting the variable cost. So basically Unit sales price subtracting or minus variable cost.

Discussion Question 1: Post your response to the following:

         You know how important it is to create budgets for your household. How does budgeting help management make good business decisions?

Budgeting is a very important skill that can be applied to everyday life and also when it comes to making good business decisions. I really like the way our class resources says about Budgeting. Budgeting is used as a planning tool used by management to make good decision for the company. If a company is successful than more than likely that means that the management team is very good at managing the company finances. Budgeting helps management plan ahead, defines what is most important, shows warning signs, reach a company target without over or under budgeting and etc.