What are Accounting Methods?, accounting homework help

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Question Description

Accounting Methods

Purpose of Assignment

This week's activity illustrates the role a company's accounting method plays in financial statement reporting. In this assignment, students evaluate the events occuring in a business setting and determine how to properly analyze those events to identify the impact on both cash and accrual accounting methods.

Assignment Steps

Resources: Generally Accepted Accounting Principles (GAAP), U.S. Securities and Exchange Commission (SEC)

Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.

Scenario: BizCon, a consulting firm, has just completed its first year of operations. The company's sales growth was explosive. Additional decisions and events impacted BizCon:

1. To encourage clients to hire its services, BizCon offered 180-day financing - meaning its largest customers do not pay for nearly 6 months.

2. Because BizCon is a new company, its equipment suppliers insist on being paid cash on delivery.

3. Also, it had to pay up front for 2 years of insurance.

4. At the end of the year, BizCon owed employees for one full month of salaries, but due to a cash shortfall, it promised to pay them the first week of next year.

As the senior accountant, the Chief Financial Officer has asked you to prepare a memo to be sent to management notifying them of the delayed wage payments.

Prepare the memo in a maximum 700 words including the following information to better outline the situation:

  • Explain how cash and accrual accounting differs for each of the decisons/events listed in the above scenario and describe the proper accrual accounting for each.
  • Assess how at the end of the year, BizCon reported a favorable net income, yet the company's management is concerned because the company is very short of cash. Explain to management how BizCon could have positive net income and yet run out of cash.
Format your assignment consistent with APA guidelines

Unformatted Attachment Preview

BizCon Case--Cash Versus Accrual Accounting Week 2 Criterion Unsatisfactory Satisfactory Knowledge of Course Concepts (80%) Explanation of cash versus accrual differences for Scenario 1. Explanation of cash versus accrual differences for Scenario 2. Demonstrates a level of Demonstrates a level knowledge that is below the of knowledge that requirement meets the requirement Demonstrates a level of Demonstrates a level knowledge that is below the of knowledge that requirement meets the requirement Exceptional Demonstrates a level of knowledge that meets or exceeds the requirement and is well supported Demonstrates a level of knowledge that meets or exceeds the requirement and is well supported Poss. 1 1 Explanation of cash versus accrual differences for Scenario 3. 1 Explanation of cash versus accrual differences for Scenario 4. 1 Assess how at year end BizCon reported net Demonstrates a level of income yet has a cash flow issue. Explain to knowledge that is below the requirement management how the company could have net income and yet run out of cash. Demonstrates a level of knowledge that meets the requirement Demonstrates a level of knowledge that meets or exceeds the requirement and is well supported 1,1 Written Communication (10%) Demonstrate Quality and Effectiveness in Written Communication Written communication is Written ineffective, with numerous communication is spelling and grammatical effective errors or poorly constructed sentences In addition to meeting the requirements of satisfactory, the paper is engaging to the reader with concise and clear communication 0,6 Format, Style & Citation Standards (5%) Adhere to University of Phoenix Writing Style Numerous errors in format, Few errors in format, Virtually no errors in format, style, or reference citation style, or reference style, or reference citation (APA) Requirements for a Title Page, In-text citation Citations, and a Reference Page Only 0,3 Final Score==> 6 ...
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Tutor Answer

PhDjack
School: UIUC

Attached is the memo. please review. if you need edits do not hesitate to notify. thank you

Running head: MEMO

1

Accounting Methods
Student Name:
Professor’s Name:
School Affiliation:
Date:

MEMO

2

According to Melo & Leone (2015), remaining competitive and unique must be
instigated by incorporation of strategies. This is the path BizCon undertook over the last one
year, with the aim of growing its customer base. For the trading period ending, BizCon enjoyed
explosive profits as a result of increased sales of company products and services. However, these
high profits emanated from taking financial risks by offering 180-day financing to most of its
clients. This meant that the company was offering consulting services to its customer without
expecting payments for the first six months of the year. The decision to offer 180-day financing
to our customers was a strategy that was prospected to have two benefits. Fi...

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