Acc 201 Final Project Part 1 Accounting Cycle

Accounting is a business discipline that allows companies to record, analyze, and retrieve critical financial information that can be used to determine a company 's financial status. Its purpose is to help people understand what is going on financially within an organization provide reports and insights needed to make sound financial decisions.

Payton Approved, a new dog bakery opened in July 2014. To measure the businesses success the first six months are reviewed. The first topic will discover the steps of the accounting cycle with descriptions of each process. Next, one will learn and analyze a report of the importance of each step for the accounting process to measure success. The last analyzed step will discuss how the omission of one step can impact the success of the company.

The purpose of accounting cycle report is to keep the best accounting records up to date. It also assist in producing the best possible financial statement that shows the true pictures of the business or organization and help making a good call whether business is profitable or not.

INCLUDES SOLUTIONS INCLUDES MARKERS’ REPORTS This is a three (3) hour paper. You have ten (10) minutes reading time. There are seven (7) questions. There are eight (8) pages, including this one. You must answer all parts of all questions. The questions are not of equal value. All answers must be written in blue or black ink. Show all relevant working.

A balance sheet will allow one to map out their assets and liabilities for a given period. These periods should be no longer than a year apart. In understanding this data, one can make informed decisions regarding what they can borrow, how much money will need to be saved, and what can be invested. An income statement will present gains and losses in a given period.

Users are likely interested in information that will assess the company's liquidity, solvency, risk and return, etc. Therefore, they can know more about how is the company financed and the availability of cash to pay debt from the balance sheet. They can know exactly about allocation of the use of cash for different activities from the statement of cash flows. Income statement will provide the information about the revenues and expenses of the company. They can also access information associated with dividend paid and retained earnings.

This financial statement is also used to keep records of the business, those records could also be used to compare the business development and to find out whether the business is making profit or not.

Accounting is the study of how businesses track their income and assets over time. Accountants engage in a wide variety of activities besides preparing financial statements and recording business transactions. These activities include computing costs and efficiency gains from new technologies, participating in strategies for mergers and acquisitions, quality management, developing and using information systems to track financial

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

It is considered as one of many main objectives of a business to assess its performance and formulate strategies for its growth and development. In this regards, the financial statements prepared by different businesses play an important role. Every business, be it small scale organisation or a large company like, J. Sainsbury plc prepares its financial statements. The financial statements behave as meters that help the management and other stakeholders to understand the performance of an organisation in a certain financial year (Fraser and Ormiston, 2001). You can find mainly four main financial statements which can be prepared by an organisation, those statements are explained below: Statement of financial position: this financial statement can be known as the balance sheet and it is prepared by having an objective to assess the financial position of the assets and liabilities of an organisation.

The income statement is one of three financial statements that stock investors need to become familiar with (the other two are balance sheet and cash flow statement) (Loth, 2017). The income statement is created of four sections: sales or revenue, cost of goods or services sold, expenses, and net profit/loses. “Sales/revenues is how much revenue the company brought in by selling its products or services. Cost of goods/services sold is how much the company spent to purchase or produce the products or services it sold. Expenses is how much the company spent to keep the doors of the business open. Essentially, this includes all expenses except those spent specifically on the cost of goods or services sold. Net Profit or Loss: the "bottom line" that tells whether the company made a profit or operated at a loss” (Epstein,2014). This might lead you to the question of what the purpose of the income statement is? Once you understand the income statement you will understand how well a company is doing or not doing. In this paper, it will analyze the income statement of Ford Motor company from December 2010-2012.

investors, auditors, executives of the business, etc.) an overview of the financial results and condition of the company. The major financial statements that come out of the accounting cycle are income statements, balance sheets, Statement of cash flows and Statement of retained earnings. Income statements are considered the most important of all the financial statements since it presents the operating results of an entity , e.g. revenues, expenses, and profits/losses generated during the reporting period (Bragg, 2017). Balance sheets provide reports of assets, liabilities, and equity of the entity as of the reporting date and can be considered the second most important statement because it provides information/figures about the liquidity, as well as the capitalization of a company (Bragg, 2017). Statement of cash flows exhibits the cash inflows and outflows that occur during a reporting period, which provides a useful comparison to the income statement, particularly when the amount of profit or loss reported does not reflect cash flows encountered by the businesses (Bragg, 2017). Statement of retained earnings is the least used financial statement that provides information regarding changes in equity during the reporting period and can include information such as: sale or repurchase of stock, dividend payments, and changes caused by reported profits or losses. Statements of retained earnings are often

The “financial statements are formal reports providing information on a company's financial position, cash inflows and outflows, and the results of operations” (Hermanson, p.22). There are four main components that make up a financial statement. The four parts are, balance sheet, income statements, cash flow and, statement of owner’s equity. The balance sheets role is to define the company’s assets liabilities and revenue of the business. The income statement shows the income within the company. Cash flow reviews the position of the company by cash payments and receipts. Lastly, the statement of owner’s equity shows the amount of earnings, stock and other capitals of people in the company. (Hermanson, p.34-35).

Accounting is the art of measuring and communicating financial information. To maintain uniformity and consistency in preparing and maintaining books of accounts, certain rules or principles have been evolved. These rules or principles are classified as concepts and conventions. One of the important concept in accounting is “Measurement” (Mattessich, 1977)

Financial statements provide a view on the company’s financial changes within a specific reporting period and confirm its overall state. They give information such that they provide shareholders with a picture of how well the company is doing. These enable them to evaluate a stock’s worth and aid them in making stock-related decisions such as buying/selling/retaining which provide them further on the status of their return on investment. Additionally, they reflect how the shareholders’ money are invested, its outcome and effect to the company.