Accounting

Accounting is the business discipline that studies how a company's financial information can be manipulated and presented, in a meaningful way, to enhance the decision-usefulness of that financial information. We typically think of accounting as incorporating three related disciplines: financial accounting, management accounting, and auditing

Financial accounting

Financial accounting looks to present financial information that is useful to external users, such as investors and creditors, who use this information to make resource allocation decisions between businesses.
 This information is subject to IFRS or US GAAP, is prepared using double-entry bookkeeping, and is presented in four required financial statements: the balance sheet, the income statement, the cash flow statement, and the statement of owner's equity

Management accounting

Management accounting deals with information that is used by internal users, such as a business's managers, who use this information to make resource allocation decisions within the firm. These include short-run production decisions and long-run capital budgeting decisions. (At BrainMass.com, we look at capital budgeting decisions under Corporate Finance.) 

Management accounting information comes in a variety of financial reports, including budgets. This information is not subject to accounting standards, and how this information is prepared changes based on the costs of collecting financial information and the benefits that this information has for management decision-making. As a result, a variety of different management accounting techniques are used. 


Auditing

Auditing typically refers to financial auditing of public companies. Financial audits are conducted by independant external auditors, who provide an opinion about a company's financial reports. These auditors must adhere to Generally Accepted Auditing Standards (GAAS) in the United States, and their opinions give investors reasonable assurance that financial reports are true, fair, and adhere to applicable accounting standards. The auditor must also include an opinion about the effectiveness of a company's internal controls.

In addition to the financial audit, there is a range of many different types of audit and assurance services. Many financial auditing firms also provide a range of these services, giving feedback about the effectiveness of a company's processes and procedures. These services may also be provided by in-house internal auditors that work within a single company. 
 

Categories within Accounting

Financial Accounting & Bookkeeping

Postings: 10,809

Myers Co: Types of dividends on assets, liab & equity accounts

Myers Company provides you with the following condensed balance sheet information. Assets Current assets 43,600 Equity investments (ABC stock; 10,290 shares at cost) 41,160 Equipment (net) 252,900 Intangibles 60,310 Total assets397,970 Liabilities and Stockholders' Equity Current and long-term liabilities10

Quest Tech: Multiple arrangement revenue recognition

Quest Tech, Inc. manufactures and sells specialized data storage equipment and services to entertainment and media companies. The equipment is used to efficiently store large data files. Quest Tech is currently marketing its latest equipment, which includes the Company's new patented technology that significantly increases it

Compute depreciation expense on the machine

The cost of equipment purchased by Charleston, Inc., on June 1, 2012, is $137,950. It is estimated that the machine will have a $7,750 salvage value at the end of its service life. Its service life is estimated at 7 years; its total working hours are estimated at 65,100; and its total production is estimated at 813,750 units. Du

Interest revenue of Bismarck

On July 31, 2012, Bismarck Company engaged Duval Tooling Company to construct a special-purpose piece of factory machinery. Construction began immediately and was completed on November 1, 2012. To help finance construction, on July 31 Bismarck issued a $628,800, 3-year, 12% note payable at Wellington National Bank, on which inte

Nonprofit fund accounting: Restricted funds

Restricted funds for Nonprofit fund accounting: Can a nonprofit (not-for-profit) organization release restrictions on a "strike fund" and use it in the general fund for current year activity? Why or why not? If you knew that the strike fund was held for steel workers' union to pay benefits during a potential strike versus a

Activity Based Costing and Pricing

1. What is Activity Based Pricing? How can banks use it in their business? Explain. 2. How can banks link ABC to performance management? Explain. 3. How can ABC provide useful information on costs? Explain. 4. How is ABC useful in measuring customer profitability? Explain.

Business as hobby

Explain how a business can be classified as a hobby. Give examples of businesses that can be for profit-seeking or for personal pleasure.

Activity-based costing information

Jog Road Company's cost system assigns MSDA expenses to customers using a rate of 33% of sales revenue. The new CFO has discovered that Jog Roads's customers differ greatly in their ordering patterns and interaction with the company's sales force. Because the CFO believes Jog Road's cost system does not accurately assign MSDA ex

Beeline Manufacturing Activity Based Costing

Beeline Manufacturing produces two types of industrial ventilation machines: heavy-duty and standard. The assignment basis for overhead costs has always been direct labor hours. For 2013, Beeline compiled the following data for the two products: Heavy-duty Standard Sales in units 4,000 45,000 Sales price per unit

Managerial accounting question - overhead

Dear Expert I attach Word Doc. Please show me your work   Broward Manufacturing is a small textile manufacturer using machine-hours as the single, plant-wide predetermined cost driver rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the

When are gains on similar asset exchanges deferred?

On the issue of exchange (trade-in) of old asset for a new one, pre-FASB153's rule was based on exchange of similar and dissimilar assets, where gains on similar trade-ins are deferred (if cash was paid), much like how they are treated for taxes. FASB153 (implemented as a part of the harmonization effort with international stan

Tests for ceiling and floor value of inventory using the LCM rule

150 words Year end inventory cannot merely be based on a company's cost based on whatever the cost flow method the company is using. It needs to be further tested under the lower of cost or market rule for the potential need to mark it down. What are the "tests" used to determine the ceiling and the floor to which the market

Three Powerful Pricing Strategies

I need some help in answering these questions: 1. What is life-cycle costing? Under what circumstances can it be most useful? What are some potential problems with this approach? 2. What is target pricing? Under what circumstances can it be most useful? What are some potential problems with this approach? 3. What is cost-p

Statement of cash flow & balance

Review the information in the Los Lobos Ledger Data. Prepare a statement of cash flows using the direct and indirect methods. Prepare a classified balance sheet. 12-31 2007 2006 Cash $35,000 $32,000 Accounts receivable 33,000 30,000 Allowance for doubt

Tax effect of permanent timing differences

When it comes to taxes, one should always be mindful of the fact that without the IRS, there would not be tax issues to worry about. So as a follow-up question: with permanent differences, how do they affect and impact the relationship between income tax expense on the income statement and income taxes payable for the amount ow

Utilizing NOL carryforwards effectively

What happens if the company doesn't expect to turn profitable for the foreseeable future, thus calling into question whether the company will ever get to use the tax benefit of its deferred tax asset from the NOL carryforward?

Federal Exemptions for Jane and Sid

Jane O'Reilly is a staff accountant and earns $39,000 annually. She is married to Sid Metcalf, a full-time student at State University. Sid earned $1,200 from securities his grandmother had given him in 2007. Jane pays all of the expenses incurred by the family, including their six-year-old adopted daughter, Tari. The three indi

Accounting Standards: Oversight and Regulatory Issues

Accounting Standards 1) What is your opinion on the question below? Accounting standards are part of the infrastructure in our economy. Comparability and trust in published financial information are important for many different reasons. We need to examine the organizations involved, current trends and other issues affectin

Steps to prepare a reconciliation using Excel

Tarass Inc. is an accrual-method calendar-year corporation. Tarass, Inc. did not qualify for the domestic production activities deduction. The following information has been provided about the activities occurring in 2013: Life insurance proceeds from CFO's death $100,000 Revenue from sales $3,500,000 Key person

Benefits of Advanced Accounting.

After reflecting on what you have learned and how you have benefited by taking AC450 Advanced Accounting, write a minimum one page response to the questions below. Make sure to address the critical elements so you will be successful in completing this assignment. Please answer the following questions in your paper: 1. Reflect

Cost Volume Profit Analysis of Monteray Co.

I need some assistance in solving Monteray Co. break-even and margin of sales problems: (attached as well) Monteray Co. makes and sells a single product. The current selling price is $4 per unit. Variable expenses are $8.4 per unit, and fixed expenses total $33,700 a month. a. Calculate the break-even poi

Statement of Cash Flow using indirect method

Rapture Company's 2011 income statement and selected balance sheet data at December 31, 2010 and 2011, follow ($ thousands). RAPTURE COMPANY Income Statement For Year Ended December 31, 2011 Sales revenue $ 64,000 Expenses Cost of goods sold 19,000 Depreciation expense 5,000