Category: Accounting

 

Balance Sheet

Balance Sheet


 

QUESTION E 4-2

           

Income statement

                 

Balance sheet

   
   

Dr

Cr

   

Dr

Cr

service revenue

 

15,590

long term assets

   

accounts payable

5672

 

equipment

23,050

 

salaries expense

10840

 

short term assets

   

rent expense

760

 

accounts receivables

7,840

 

depreciation expense

641

 

prepaid rent

2,280

 

interest expense

57

 

total assets

33,170

 

net loss

   

-2400

liabilities and equity

 

totals

 

17970

17970

notes payable

 

5,700

       

accounts payable

 

5,672

       

interest payable

 

57

       

total liabilities

 

11,429

       

net worth

   
       

common stock

 

25,000

       

retained earnings

 

5,960

       

net loss

   

-2400

       

total net worth

 

28,560

       

total liabilities & net worth

33,170

               

QUESTION E 4-3

           
               

income statement

           

revenue

     

15,590

     

cost of goods sold

           

stock (accounts payable)

5692

       

cost of goods available for sale

 

-5692

     

gross profit

   

9898

     

expenses

           

salaries expense

 

10840

       

rent expense

 

760

       

depreciation expense

 

641

       

interest expense

 

57

       

total expenses

   

-12298

     

net loss

     

2400

     
               

retained earnings statement

         

for the year ending April 30th 2008

       

retained earnings balance as at April 30th 2008

5960

   

net loss for the year

     

-2400

   

dividends paid to shareholders

   

3650

   

retained earnings balance as at April; 30th 2008

7210

   
               

classified balance sheet

         

assets

             

equipment

23,050

         

accounts receivables

7,840

         

prepaid rent

2,280

         

total assets

33,170

         

liabilities and equity

         

notes payable

5,700

         

accounts payable

5,672

         

interest payable

57

         

total liabilities

11,429

         

net worth

           

common stock

25,000

         

retained earnings

5,960

         

net loss

 

-2400

         

total net worth

28,560

         

total liabilities & net worth

33,170

         

Comparing Terms In Economics And Health Care

 


Introduction

Economics involves making choices. Individuals, groups, busineses and organizations like health care organizations choose how to use resources. Economics and health care are interlinked in that heath care practitioner apply economics in their activities. This is mainly through resource allocation. A health carte organization has to plan how to use the resources it has. Economic and health care share some terms like cost, quality and resources. This paper analyzes how the terms are similar in economics and health care. Also, the paper analyzes how the terms differ in economics and health care.


 Terms

In economic a resource is considered to be any physical thing or virtual element that has limited availability. It is also considered to be anything that is used to help people earn a living. Economists use the term resources to refer to different things (Chung, 2006). In economics there are different types of resource like human resources, natural resources. Human resources in economics mean human capital or employees in an organization. Resources can also mean factors of production. Natural resources are used in production. A resource in economics has economic value (Hall & Jones, 2007). Economists view resources in economics important as they help in production. Resources in economics are limited, and people have to look for ways of allocating resources.


Resources in health care means all materials and funds used to provide health care services to people. In addition, the term resource in health care means the facilities and personnel that can be used to provide health care services (Chung, 2006).Economics and health care are interlinked as economics is used in health care. The term resource has similar meaning in health care and economics (Chung, 2006). In health care, it means all the materials and funds used to provide health care. In economics, resources are either the personnel, the funds, facilities or any other material used in production. Thus, the term is similar in health care and economics (Carroll, 2007). Another similarity is that resources in health care and economics are limited and they have value. The resources in economics are limited and health care practitioners have to plan how to allocate resources. For example, funds and personnel in health care are limited and they hinder delivery of health care services and productivity. In economics resources are also limited, and they affect productivity (Carroll, 2007).


Economic evaluation is important in health care as it helps allocate resources. It helps health care organization set priority as resources in health care are limited. Everyone prefers to get quality health care. The term quality in health care has various meanings. Quality in health care means the superiority of something. That is the best standards of something. For example, quality in health care can be determined by analyzing if the health care fits the patients, if it causes harm. Moreover, health care practitioners consider quality of health care to be the right treatment for the right illness, and delivering health care at the right time. Quality in health care means giving the best health care. Most health care practitioners’ emphasize on the quality of health care provided to patients. The practitioners use various methods used to measure the quality of health care (Carroll, 2007).In economics quality means the best. The term quality in economics has various meanings.  It can be quality in management or something else.


The term is similar in economics and health care as it is used to refer to the superiority of something and it has various meanings in health care and economics (Carroll, 2007).Cost in health care means the funds used to deliver health care to the citizens. It also means the amount of funds used to access health care (Getzen, 2007).In economics cost means an alternative that is rejected when making a choice. The term cost differs in health care and economics. Cost in health care means the funds used to access health care or deliver health care while in economics cost means an alternative that is given up when making a choice. The term cost is applied in health care in different ways. For example, health care practitioners apply economic principles like cost benefit analysis, cost effect analysis to determine if the choice is good or bad. The principles help the government to provide the best intervention in health care (Getzen, 2007).


 Conclusion

 Health care and economics are interlinked. This is because health care practitioners apply economic principles in health care. The principles help in decision making and providing the right intervention. Principles like cost benefit analysis, cost effective analysis are applied in health care. The term resource has the same meaning in health care and economics. It means materials, funds, employees and facilities used to achieve the goals set. In addition, the term cost has different meaning in health care and economics. In health care cost means the funds used to deliver health care or to access health care. While in economics, cost means an alternative that is rejected when making decisions. The term quality has similar meaning in health care, and economics. It means giving the best or superiority of something. The term has different meanings in health care and economics. Thus, economics and health care are interlinked as health care practitioners depend on economic principles to make decision.


 Reference

Carroll, R. (2007, September). The economic effects of the president’s proposal for a standard deduction for health insurance. National Tax Journal, 60(3), 419-431.

 Chung, W. (2006, April). The role of medical care in explaining the link between health and economic resources ASEAN Economic Bulletin, 23(1), 45-56. 

Getzen, T. E. (2007). Health economics and financing (3rd ed.). Hoboken NJ: John Wiley & Sons, Inc.

 Hall, R. E., & Jones, C. I. (2007, February). The value of life and the rise in health spending. Quarterly Journal of Economics, 122(1), 39-72.


Josphine Morgan is the Author of this paper. She is a senior academic writer and an editor and she offers Professional Custom Essay Writing Services. Thus, people that doubt their own writing abilities can use the best custom paper writing service and forget about their fears and lack of confidence by visiting AmericanWriting.Org

 

Financial Accounting

 


 Chapter Seven: Questions 1& 2:

(a) What are generally accepted accounting principles (GAAP)?  

             Generally acceptable principles (GAAP) refers to a standardized framework that offers guidelines on financial accounting, and it is used in any jurisdiction. GAAP consists of rules, standards and conventions that accounting professional adhere to in the summarizing and recording of transactions as well as in the computation of financial statements and records. The GAAP guidelines are alternatively, referred to as accounting standards (Weygandt, 2009).  


 (b)What bodies provide authoritative support for GAAP?

            GAAP is supported by various entities including the Governmental Accounting Standards Board. This board was set up in 1984 to foresee the setting up of financial reporting and accounting standards for all local and state government agencies. Another body that supports GAAP is American Institute of Certified Public Accountants (AICPA). AICPA represents the accounting profession nationwide is the establishment of rules and standards. AICPA also develops standards for auditing the offering of other services by CPAs. The third body that provides support for GAAP is the (FASB) the financial accounting Standards Board, which is a non-profit, private body which assists in the development and upholding of GAAP within the U.S (Weygandt, 2009).  


 What elements comprise the FASB’s conceptual frame-work?

         FASB’S conceptual framework is made up of the following eleven concepts realization, money measurement, going concern, duals aspect, entity, cost, materiality, matching, accounting period, conservation and consistency.


 Chapter 8: Exercise E8-5.

E8-5 Listed below are five procedures followed by The Beat Company.

1. Several individuals operate the cash register using the same register drawer.

2. Monthly bank reconciliation is prepared by someone who has no other cash responsibilities.

3. Ellen May writes checks and also records cash payment journal entries.


 4. One individual orders inventory, while a different individual authorizes payments.

5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.


 Instructions

          Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below.

Procedure

Internal control strength (weak or strong).

Related internal control principle.

Procedure one.

Weak internal control

The principle of establishment of responsibility

Procedure two.

Strong Internal control measure

Principle of independence (independent internal verification).

Procedure three.

Weak internal control

The principle of segregation of duties

Procedure four.

Strong Internal control

Principle of segregation of duties

Procedure five.

Strong internal control

Principle of independent internal verification


Exercise E15-1

Horizontal analysis denotes an accounting method of analyzing series of data on various items within financial statements over a period of time by assessing their respective increases or decreases in both amount and percentages.

Horizontal Analysis of Financial information from Blevins Incorporation as per a horizontal analysis for 2009 using 2008 as the base year:


 

December 31, 2009

December 31, 2008

 

Increase or decrease

Percentage change

Current assets

$125,000

$100,000

 

$25000

25%

Plant assets (net)

396,000

330,000

 

66000

20%

Current liabilities

91,000

70,000

21000

30%

Long-term liabilities

133,000

95,000

 

38000

40%

Common stock, $1 par

161,000

115,000

 

46000

40%

Retained earnings

136,000

150,000

-14000

9.3%

         

Exercise E15-2 Operating data for Gallup Corporation and a vertical analysis schedule of the financial statement. Vertical analysis is a technique that shows each financial item as a percentage of a certain base amount.

 

2009

 

2008

 
 

Amount

Percentage

Amount

Percentage

Sales

$750,000

100%

$600,000

 

100%

Cost of goods sold

465,000

62%

390,000

 

65%

Selling expenses

120,000

16%

72,000

 

12%

Administrative expenses

60,000

8%

54,000

 

9%

Income tax expense

33,000

4.4%

24,000

 

4%

Net income

72,000

9.6%

60,000

 

10%


Exercise E15-11 Scully Corporation’s comparative balance sheets:

SCULLY CORPORATION-Balance Sheets 

 

2008

2007

Cash

Accounts receivable

Inventory

Land

Building

Accumulated depreciation

Total

Accounts payable

Common stock

Retained earnings

Total

$ 4,300

21,200

10,000

20,000

70,000

(15,000)

$110,500

$ 12,370

75,000

23,130

$110,500

$ 3,700

23,400

7,000

26,000

70,000

(10,000)

$120,100

$ 31,100

69,000

20,000

$120,100

 

 

 

 

 

 

 

 


Scully’s 2008 net sales were $100,000, cost of goods sold was $60,000, and the net income was $15,000.

Computed ratios for 2008

(a)    Current ratio=Current assets/Current liabilities.

35500/35500=1 (2008)

34100/51100=0.65 (2007)

(b) Acid-test ratio= (cash+ accounts receivable + short term investment)/current liabilities

25500/35500=0.7 (2008)

27100/51100=0.5 (2007)


 (b)   Receivables turnover=net credit sales/average net receivables (2008 net receivables+2007 net

             receivables/2)

21200/ (21200+23400/2)

21200/11300=1.9

(d) Inventory turnover=cost of goods sold/average inventory

            21200/10000=2.12(2008)

            23400/7000=3.3 (2007)


 (e) Profit margin=net income/net sales

            (21200-12370)/21200=0.4 (2008)

            (23400-31100)23400=-0.3(2007)       

(f) Asset turnover=net sales/average assets

            21200/ (110500+120100)/2=0.2

(g) Return on assets=net income/average assets

            8830/115300=0.1


 (h) Return on common stockholders’ equity=Net income/average common stockholder’s equity

            (21200-12370)/75000=0.1(2008)

            (23400-31100)/69000=0.1(2007)

(i)Debt to total assets ratio=Total debts/total assets

110500/110500=1(2008)

120100/120100=1(2007)


 References

Weygandt, J.J. (2009). Financial Accounting. John Wiley and Sons Publishers.


 

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