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Business Accounting FINANCIAL ACCOUNTING

a. Concept Introduction: Financial statements: The statements that are in form of written records showing all the business activities of the company are termed as financial statements. These statements also show the overall financial performance of a company, and these include balance sheets , income statements and cash flow statements. To determine: The amount of revenue, expense, and income for both years. The amount of revenue, expense, and income for the year 2019 is $125 million, $100 million and $25 million respectively. The amount of revenue, expense, and income for the year 2020 is $375 million, $300 million and $75 million respectively. Assume that the performance obligation is fulfilled over time and the costs that are incurred are a reflection of the value conveyed to Company E. The calculation of revenue, expense and income for both years is as explained below: Year Costs incurred Percentage of total expected costs Revenue recognized Income 2019 $100 million $ 100 $ 400 × 100 =25% $125 million $25 million 2020 $300 million $ 300 $ 400 × 100 =75% $375 million $75 million Total $400 million $500 million $100 million Table (1) b. Concept Introduction: Financial statements: The statements that are in form of written records showing all the business activities of the company are termed as financial statements. These statements also show the overall financial performance of a company, and these include balance sheets, income statements and cash flow statements. To determine: The amount of revenue, expense, and income for both years. The amount of revenue, expense, and income for the year 2019 is $125 million, $100 million and $25 million respectively. The amount of revenue, expense, and income for the year 2020 is $375 million, $300 million and $75 million respectively. Assume that the performance obligation is fulfilled at a point of time. The calculation of revenue, expense and income for both years is as explained below: Year Costs incurred Percentage of total expected costs Revenue recognized Income 2019 $100 million $ 100 $ 400 × 100 =25% $125 million $25 million 2020 $300 million $ 300 $ 400 × 100 =75% $375 million $75 million Total $400 million $500 million $100 million Table (2) c. Concept Introduction: Performance ratios: The financial ratios used to assess that whether the resources are fully utilized and to measure the overall business performance for a given period are termed performance ratios. These ratios are in form of profitability ratios, liquidity ratios, leverage and efficiency. To determine: The performance ratios can be affected by different contract terms. The performance ratios that can be affected due to different terms of the contract are the profitability ratios. According to the contract term in part (a), the performance obligation is fulfilled over time and the costs that are incurred are a reflection of the value conveyed to Company E and as per the contract term in part (b), the performance obligation is fulfilled at a point of time. In this case, the recognition of revenue can differ. Hence, the profit margin and operating profit margin can also differ.

a. Concept Introduction: Financial statements: The statements that are in form of written records showing all the business activities of the company are termed as financial statements. These statements also show the overall financial performance of a company, and these include balance sheets , income statements and cash flow statements. To determine: The amount of revenue, expense, and income for both years. The amount of revenue, expense, and income for the year 2019 is $125 million, $100 million and $25 million respectively. The amount of revenue, expense, and income for the year 2020 is $375 million, $300 million and $75 million respectively. Assume that the performance obligation is fulfilled over time and the costs that are incurred are a reflection of the value conveyed to Company E. The calculation of revenue, expense and income for both years is as explained below: Year Costs incurred Percentage of total expected costs Revenue recognized Income 2019 $100 million $ 100 $ 400 × 100 =25% $125 million $25 million 2020 $300 million $ 300 $ 400 × 100 =75% $375 million $75 million Total $400 million $500 million $100 million Table (1) b. Concept Introduction: Financial statements: The statements that are in form of written records showing all the business activities of the company are termed as financial statements. These statements also show the overall financial performance of a company, and these include balance sheets, income statements and cash flow statements. To determine: The amount of revenue, expense, and income for both years. The amount of revenue, expense, and income for the year 2019 is $125 million, $100 million and $25 million respectively. The amount of revenue, expense, and income for the year 2020 is $375 million, $300 million and $75 million respectively. Assume that the performance obligation is fulfilled at a point of time. The calculation of revenue, expense and income for both years is as explained below: Year Costs incurred Percentage of total expected costs Revenue recognized Income 2019 $100 million $ 100 $ 400 × 100 =25% $125 million $25 million 2020 $300 million $ 300 $ 400 × 100 =75% $375 million $75 million Total $400 million $500 million $100 million Table (2) c. Concept Introduction: Performance ratios: The financial ratios used to assess that whether the resources are fully utilized and to measure the overall business performance for a given period are termed performance ratios. These ratios are in form of profitability ratios, liquidity ratios, leverage and efficiency. To determine: The performance ratios can be affected by different contract terms. The performance ratios that can be affected due to different terms of the contract are the profitability ratios. According to the contract term in part (a), the performance obligation is fulfilled over time and the costs that are incurred are a reflection of the value conveyed to Company E and as per the contract term in part (b), the performance obligation is fulfilled at a point of time. In this case, the recognition of revenue can differ. Hence, the profit margin and operating profit margin can also differ.

Solution Summary: The author explains that financial statements show the overall financial performance of a company, including balance sheets, income statements, and cash flow statements.

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

6th Edition

ISBN: 9781618533111

Author: DYCKMAN

Publisher: Cambridge Business Publishers

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required…

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Chapter 6, Problem 28E

Chapter 6, Problem 30E

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Brun Company produces its product through two processing departments: Mixing and Baking. Information for the Mixing department follows. Direct Materials Conversion Unit Percent Complete Percent Complete Beginning work in process inventory 7.500 Units started this period 104,500 Units completed and transferred out 100.000 Ending work in process inventory 12.000 100% 25% Beginning work in process inventory Direct materials Conversion $6.800 14.500 $21.300 Costs added this period Drect materials 116,400 Conversion Total costs to account for 1.067,000 1.183.400 $1.204.700 Required 1. Prepare the Mixing department's production cost report for November using the weighted average method Check (1) C$1.000 2. Prepare the November 30 journal entry to transfer the cost of completed units from Mixing to Baking

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FINANCIAL ACCOUNTING

Ch. 6 - Prob. 13ME Ch. 6 - Prob. 29E Ch. 6 - Prob. 47P

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