The information illustrated from the journal, to the income statement, to the balance sheet discloses the original expenditures of the Lemonade stand's fixed assets and the accumulated financial loss transcribed over Season One, which includes six days of revenues and expenses, which shows the standard practices of accounting methods appearing on the journal, income statements, and balance sheet attached for the Lemonade stand. The accounting data format sets up a proportion of financial statements at any time the company wants to know how things stand in fiscal matters for the lemonade stand. For just about every company, a financial statement is prepared at some point in time of each calendar month, quarter, and annually reporting periods. For the purpose of the Lemonade stand, the financial statements will be prepared on the 6th day of the Season, which is the ending period and the close of business of the last day of the profit reporting period. So for all purposes of the Lemonade stand, the company's balance sheet should be in alignment with their income statement.
There are a couple formal practices for accounting systems or methods for keeping track of the Lemonade stand's financial state of affairs, which is called a cash and accrual basis accounting system. Cash basis accounting acknowledges transactions when the hard cash exchanges hands. A small business like the Lemonade stand with relatively few transactions each month can uses this system as well. For the purposes of the paper, the accrual basis accounting method was used to demonstrate the Lemonade stand position. Accrual basis accounting realizes income when it is earned and expenditures when they are incurred. Under the accrual method, a bill like the store ac...
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...method to have more than one pitcher. The pitchers were an unnecessary purchase from the standpoint of purchasing excessive amounts of equipment. From the perspective of revenues versus expenses, the Lemonade stance was profitable leaving a net income and profit from the beginning to the end of the reporting period. The accounts payable uses half of the owner's capital, which was useful because the money was cash invested to start the business, which decrease the amount of liabilities presented on the balance sheet. Overall, the Lemonade stand was successful. From day one to day three the ending store balances and cash balances continues to increase. On day four, the stand paid the store account dropping revenues for that day. On day five and six, the cash sales for those days picked up and the expenses decrease by 3 cents, which was minor but helpful with revenues.
In analyzing the common-size balance sheet for Applebee’s, it is noted that the total current assets has jumped from 11% to 14% of the total assets. The total assets for Applebee’s has jumped 6% from 2000 to 2001 driven by increased in the total current assets of 28%. Of those 28% increase, they consisted of 88% increase in the Cash & Equivalents (increased of $10.6 millions) caused by the decreased in the Capital Stock repurchasing in 2001 by Applebee’s. The repurchase of capital stock has decreased by 31% as noted from the year-to-year percentage changes of the Statement of Cash Flow which equivalent to about $11 million dollars. The other current assets increased was from the other Current Assets category; there was an increase of 92% from 2000 to 2001. Due to the higher earnings for Applebee’s, there was an increase in income tax due. A significant component of the increase of other Current Assets was from increased in prepaid income taxes with net deferred income tax asset of $6.7 millions dollars.
The operational column in the store-by-store analysis were the debits received by the franchisor that were not profit, but were reimbursement for items purchased for franchisees. It was somewhat difficult to determine how this should be recorded on the income statement to get accurate numbers. The final decision was to create a reimbursement line on the income statement that took the amount for 2013 ($134,221) out of both revenue and expenses. This left the net profit unchanged but gave a more accurate number for both revenue and expenses.
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
U.S. GAAP and International Financial Reporting Standards (IFRS), formerly known as iGAAP, are two accounting standards used in today’s world of financial reporting. These standards have differences as well as similarities in reporting requirements. Organizations in the United States are required to follow GAAP principles in preparing financial statements and other financial reports. Whereas, organizations outside of the United States may follow IFRS. Balance sheet reporting and formatting is an area in which GAAP and IFRS may differ, yet be similar in many respects. The balance sheet is a financial statement of what a company owns and what it owes at a given date and time (Spiceland, Sepe, & Nelson, 2013). This paper will address differences and similarities in respect to balance sheet reporting and formatting as it relates to fixed assets and liabilities, inventory, and goodwill.
The balance sheet displays the status of an entity at a specific time. Contrary to the balance sheet, income statements and statements of cash flows cover periods over time. These two forms provide the information on why the balance sheet has changed. To receive the information that contributes to the changes related to a change in retained income, the income statement will provide a detailed summary. To receive an explanation of the events that lead to modifications in cash, received and paid, the statement of cash flows will be utilized to provide that information (Horngren, 2014, p.
The Accrual basis of accounting is used for Peyton Approved. The Accrual basis of accounting records each transaction as it occurs. Revenues are recorded when earned and expenses are recorded when incurred. When using the Accrual basis of accounting a business is able to see a clear picture of its revenues and expenses. It is important that Peyton Approved keeps track of revenue and expenses, especially only when revenue is earned and expenses only when they have been incurred. When transactions are made, such as for baking supplies it is recorded in our ledgers. In an accounting cycle each step is important, if you were to miss a step then each step after will need to be adjusted. For a successful business each step needs to be completed with accuracy. If a
Financial statement users around the globe use financial statements to evaluate the performance of companies (Fundamentals of Financial Accounting, 2006). In order to locate a company’s reported assets, liabilities, expenses and revenues, statement users rely on four types of financial statements. The four financial statements include: Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Cash Flows (Fundamentals of Financial Accounting, 2006, p. 6). Each of these reports provides different information to the financial statement user. The Balance Sheet reports at a point in time: a company’s assets (what it owns), liabilities (what it owes) and stockholder’s equity (what is left over for the owners) (Fundamentals of Financial Accounting, 2006, p.7). The Income Statement shows whether a business made a profit (net income) during a specific period of time (Fundamentals of Financial Accounting, 2006, p. 10). The Statement of Retained Earnings illustrates what portions of the company’s earnings was paid to stockholders and retained by the company for future operations (Fundamentals of Financial Accounting, 2006, p.12). Finally, the Statement of Cash Flows reports summarizes how a business’ “operating, investing, and financial activities caused its cash balance to change over a particular range of time” (Fundamentals of Financial Accounting, 2006, p.13).
Operating profit is described as, “the total revenues from operations minus cost of goods sold and operating costs (excluding interest expenses and income taxes)”. (Horngren, Datar and Rajan, 2015. p.54). Generally speaking, the higher the figure a company produces on operating profit, the better off the business will turn out to be. This is all about strategy and is primarily because a business will have less financial risk if it had a higher operating profit than one who produces less. (Horngren, Datar and Rajan, 2015. p.657). Out of all the scenarios, the best option for Crooked Creek Wines to consider is option (b) where the operating profit totalled to the highest figure out of all, which was $105 750. This was as a result from increasing their average daily revenue to $800 compared to $750 making it a
Joanne uses an accounts receivable subsidiary ledger to see the customers who have bought on credit from Joanne’s Party Supplies. This allows her to keep track of customer payments and concentrate on getting payments from debtors with overdue payments. By having details of the accounts receivable activity in a subsidiary ledger, Joanne is able to better control her business’ financial information. It includes a separate account for each customer who makes credit purchases, and the combined balance of every account in this subsidiary ledger equals the balance of accounts receivable in the general ledger. This is essential to Joanne’s Party Supplies because it provides Joanne quick access to each customer’s balance and account activity. At the end of each
Business Analysis: Starbucks After evaluating (Exhibit A), Starbucks should invest $40 million per year to increase labor hours per store in order to solve the problem with the quality of service. Starbucks should also set up an internal strategic marketing team. This will allow Starbucks to have a proactive feedback of customer satisfaction and hence faster improvement. Labor cost is high for Starbucks' North American operations. To keep labor cost at reasonable level, Starbucks should reduce waste in making drinks, keep consistency in drinks, and improving productivity. The company needs to invest more money in automated espresso machines. Currently, sales of coffee beverages account for most of total sales, and therefore, Starbucks should increase its sales on food items and whole-bean coffees, and develop non-retail sale channels, which do not require as much special training as making coffee beverages.
This research analysis has also show expenditure and revenue referred to as profit and loss in a statement for a period of three (3) years after:
This accounting principle requires companies to use the accrual basis of accounting. The accounting method under which revenues are recognized on the income statement when they are earned (rather than when the cash is received). The balance sheet is also affected at the time of the revenues by either an increase in Cash (if the service or sale was for cash), an increase in Accounts Receivable (if the service was performed on credit), or a decrease in Unearned Revenues (if the service was performed after the customer had paid in advance for the service).
When evaluating financial statement data for a specific period of time we use a technique call horizontal analysis. This method will show if there has been an increase or decrease in the financial status of PepsiCo, Inc. and Coca-Cola. In comparing both of these companies I have evaluated the net revenue and net income for the period of 2003 to 2005, with 2003 being the base year and 2005 being the current year. The formula I have used will show the change in the net revenue and net income for this span of time. The formula to calculate the change since the base period is the current year amount minus the base year amount divided by the base year amount.
Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.
...le payment for the loan is made $9,000 while owner has drawn almost $45,000 during the year. The business is attaining breakeven in the sixth month of its operations. (Please see Annex II for details).