Assume that you work for a Fortune 500 level company at corporate headquarters. Due to your excellent performance and the fact that the CEO of your firm noticed that you had listed on your resume' that you had taken a graduate-level Management Accounting course from a reputable institution, the CEO has sent you an email containing a request that you respond to two very important questions. The CEO needs your answers within a relatively short time frame of making the request. The questions are
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Assume that you work for a Fortune 500 level company at corporate headquarters. Due to your excellent performance and the fact that the CEO of your firm noticed that you had listed on your resume' that you had taken a graduate-level
The questions are:
#1. What criteria should the operating units (i.e. producing segments of the firm) use when deciding whether to use
#2. For costs that cannot be traced, what tests should a cost allocation basis (not the cost allocation method) meet before that cost allocation basis (direct labor hours, machine hours, direct labor cost, etc.) can be used to allocate costs in the organization?
1. Using job costing or process costing method depends upon the various parameters which helps in deciding the method to select / choose
The major or most important ones are :
Size and uniqueness of the job . If the products are unique and require unique process , the job order costing would be used. If the small no. of products are manufactured, then the job order costing method should be chosen . In this all the costs incurred in manufacturing the product would be kept in a record like labour costs incurred, materials used for that product . In case of non - unique and high quantity of products , the process costing should be used. In that method , the unit cost calculated by dividing the net cost by no. of units .
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
