Critical Thinking: Appendix B Overview: These problems are meant to encourage deeper thinking on the material presented in the textbook. You are to answer ALL questions presented in the problem using the knowledge you have gained throughout the textbook. However, do not simply repeat what is in the book. Use that information and interpret it the best you can to apply it to the situation. Requirements: Review the information and questions below. Provide a detailed 4-5 sentence explanation on how you would solve the problem or issue, based not only on the readings in the chapter, but your own personal experience and/or any additional outside research you perform. If quoting a source directly, make sure to cite that source, but do not rely solely on quoted materials. Issue: Susan Henderson, the vice president of marketing, was told by the CEO that she needs to understand the numbers because the company's existence depends on making money. It has been a long time since Susan took a class in accounting. She recalls that companies report net income and cash flows in two separate statements. She feels pretty comfortable with the income statement, but is somewhat lost looking at the statement of cash flows. She asks you to help explain this statement. Questions to be Answered: 1) Explain the form and content of the statement of cash flows, along with a short discussion of how to analyze the statement.
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.
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