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External uses of accounting

The Vice President of Operations would like to increase profitability, improve customer service, and expand the business. Even though the external accounting department spends 5 days preparing each quarter's financial statements and disclosures, she does not examine those financial statements issued to the company shareholders.

You are to attend an afternoon meeting to discuss why this is the case. You have been assigned the task of examining the pertinent information and proposing two recommendations for the Vice President. These recommendations are to take effect at the end of the quarter.

Create a word document presentation outlining your recommendations. Include all your supporting material.

Please submit your assignment.

Solution Preview

Accounting is designed primarily to assist investors and creditors in deciding where to place their scarce investment resources. It is also used to help management to know the performance of organization. Moreover financial statements are useful tools for evaluating both profitability and liquidity. Used separately, or in combination, the income statement and balance sheet help interested parties to measure a company's current financial performance, and to forecast its profit and cash flow potential.

The three main financial statements that are reviewed by managers, creditors, investors, and security analysts are the income statement (also called the statement of operations), the balance sheet and the statement of cash flows (sometimes referred to as the sources and uses of funds). All of these statements are found in a company's annual report and 10K filing with the SEC.

The statement of cash flows provides information about cash receipts and cash payments of an entity during a period. A secondary objective is to provide information about the operating investing and ...

Solution Summary

This explains the external uses of accounting