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As a manager, you feel it is important for the new hires to understand the reasons for the development of IFRS. Your new hires have been discussing the legal systems contribution to the accounting rules of different countries. To illustrate your point, do the following:

Explain at least 2 causes or reasons for international differences in accounting.
Compare the accounting systems in 2 countries with differing legal systems. Explain why each country s system is the way it is.
Highlight the similarities and differences between the 2 countries sets of accounting systems.

What purpose do the income statement and balance sheet serve, and who is the target audience for these financial statements? In relation to each of these financial statements, distinguish between flows and stocks, using an example of each term.

What are some items that appear on an organization s balance sheet? How does an organization calculate net income? What statements are useful in explaining how much cash an organization uses or generates during an accounting period? Why?

Explain how external stakeholders use financial information such as company income statements and balance sheets to make decisions about the company in such cases as advancing credit or offering leasing vehicles. Discuss how common financial ratios and investment analysis is used to conduct due diligence by external parties and how factors such as accounts receivables, accounts payables, earnings returns, returns on inventory, etc. are applied to evaluate a firm s financial and business health.

Prepare a conventional income statement for the year ended, Prepare a contribution margin income statement for the year ended, AND Which of the two statements would be used by management for decision making and why?

The Music Box Company manufactures compact discs. Each disc sells for $3.50 with unit variable manufacturing expenses of $1.50. For the year ended December 31, 20X6, total fixed manufacturing expenses were $325,000 and 500,000 discs were produced and sold. Marketing expenses amounted to 8% of sale price plus $40,000 in fixed expenses. Administrative expenses included $17,500 in fixed expenses and variable expenses equal to 5% of sale price.

a) Prepare a conventional income statement for the year ended December 31, 20X6.
b) Prepare a contribution margin income statement for the year ended December 31, 20X6.
c) Which of the two statements would be used by management for decision making and why?