Financial Accounting : PDF
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FINANCIAL ACCOUNTING
Table of ContentsINTRODUCTION...........................................................................................................................1PART 1............................................................................................................................................1Financial errors............................................................................................................................1PART II...........................................................................................................................................3Long-lived Assets London Business School...............................................................................3PART III.........................................................................................................................................4Tangible assets............................................................................................................................4CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
INTRODUCTIONFinancial accounting is one of the branch of accounting that contains the managementand accounting of financial transactions and events (Edwards, 2013). This report is divided inmainly three parts. In first part accounting case scenarios are given to analyse the treatment ofaccounting transactions. Second part covers the analysis of financial statements of Londonschool for the year 2011 and third part contains the valuation of intangible assets. Evaluation ofaccounting transactions were based upon accounting standards and plans. PART 1Financial errors1. In the middle of the fiscal year, on July 1st, The Bite purchased a new coffee machine for$10,000 in cash. The coffee machine has a 5-year useful life and a salvage value of $500. Theaccountant forgot to record ANY entries related to the purchase and depreciation of the coffeemachine during the year. Current Assets(U) 10000Long-term assets(O) 9100CurrentLiabilitiesNELong-term liabilitiesNECapital StockNERetained Earnings(U) 1900Explanation: There is a transaction took place in term of acquiring a new coffee machinefor 10000 in cash. It will impact upon fixed long term fixed assets, current assets and retainingearnings. Current assets will be decreased by $10000 and fixed assets will be increased by $9100(10000-1900). Depreciation will be charged upon fixed assets (10000-500)/5 = $1900 that willreduce the retain earnings by $1900.2. Microhard Inc. manufactures and sells a bundled product of software and technical support forone year to its clients. Microhard typically receives payment from its customers upfront for thisproduct. In the last month of the 2011 fiscal year, Microhard received $750,000 in cash from itscustomers for payment in full. Microhard delivered the software to its client at the time of thecash collection but it will start providing the technical support in the first month of 2012.Microhard’s management is struggling to report earnings that will meet analysts’ forecasts, and1
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