1. The accountants’ estimates in Exhibit 2 use the “most likely” sales projection in Exhibit 1 for each year. Is this appropriate? Explain.
In Exhibit 1, there are three probability of annual sales; 1,350,000lbs whose probability is 0.1, 1,650,000lbs whose probability is 0.6 and 2,250,000lbs whose probability is 0.3. Among three cases, the accountants use 1,650,000lbs, which is the “mo
receivables as ordinary receivables. Since they are incorrectly acknowledging more account receivables than the actual amount ofaccount receivables that they should, their shareholder’s equity became higher (due to an increase in net income), and thus the debt-to-equity ratio as well as the liquidity ratios of the company improved. These, in consequence, provide inaccurate information to the
information to that provided by the income statement or the balance sheet?
General characteristics of CFS : Complementing the balance sheet and income statement, the Cash Flow Statements allow investors to understand how a company's operations are running, where its money is coming from, and how it is being spent.
Due to the accrual accounting, the income statements released each quarter ma
of diamonds and fine jewelry may not choose to shop online because online distribution channel has a lot of inconvenience itself. For example, consumers want to physically handle and examine products, especially when they buy luxury products such as diamonds. Also, they concern about the security of online transactions and the privacy of personal information. They have to wait until the product i
of each order, and discovered that the number 2 order was unprofitable. But Midwest’s previous cost system ignored it and assumed number 2 order as a profitable order like the other ordinary ones.
These kinds of careless accounting method will lead company into the bigger loss in the near future,because company will not be able to recognize the serious problem in cost analysis. For company’s