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You have been hired as the CFO of a new company and are dete

You have been hired as the CFO of a new company and are determining the company's accounting needs.

* Explain to your staff at least 2 ways in which accounting data are used to make business decisions.
* Explain at least three related accounting terms or theories.

Solution Preview

You have been hired as the CFO of a new company and are determining the company's accounting needs.

* Explain to your staff at least 2 ways in which accounting data are used to make business decisions.
* Explain at least three related accounting terms or theories.

Solution:

Explain to your staff at least 2 ways in which accounting data are used to make business decisions.

(1) Accounting data is used to make decisions on loans or lines of credit that the company may need. Management can use an accurately prepared balance sheet to arrive at relevant financial ratios. Management and creditors can then decide based on the currently prepared ratios if the company is now able to meet their short-term and long-term obligations. The company can use a Statement of Cash Flows to see where cash in coming in from, and going out to. The two statements mentioned, along with an Income ...

Solution Summary

You have been hired as the CFO of a new company and are determining the company's accounting needs.

* Explain to your staff at least 2 ways in which accounting data are used to make business decisions.
* Explain at least three related accounting terms or theories.

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