Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Problem 1: The draft accounts for Commentary Ltd for the year ended 31st December 2005 are shown below:

Draft Balance Sheet as at 31 December 2005

797_Draft balance sheet.jpg

Draft Profit and Loss Account for the year ended 31 December 2005

1279_Draft balance sheet 2.jpg

Required:

When the draft accounts were presented to the board of directors (none of whom has had any training in accounting, except you) the following points were raised by board members. Reply to each of these points in clear and simple terms, avoiding the use of undescribeed accounting ‘jargon’. Where appropriate, support your replies with calculations, which account up to.

problem1. ‘It does not seem to do us much good to make profits; our cash position seems to go from worse to worse.’ Does it imply that we may face liquidity problems?

problem2. ‘What is our gearing level and is it worthwhile to take further loans to expand the business?

problem3. ‘We seem to have let control over our debtors and stocks slip such that the amount we have tied up in these items has increased alarmingly. Is there any simple way of measuring how seriously we have strayed from our previous patterns? What is our current cash operating cycle?

problem4. ‘What is our rate of return on capital employed? Does it make sense to compare that figure with those of other companies as a test of our performance?’

problem5. ‘I am told that financial analysts judge a company on its earnings per share. What is this figure for Commentary and what does it mean?’

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M96015

Have any Question? 


Related Questions in Accounting Basics

What are the effects on equitiesfinancial statement effect

What are the effects on equities? Financial Statement Effect of Equity Securities Presented below is a situation involving equity securities: An equity security, whose fair value is currently less than cost, is classifie ...

Accountinguse the internet to research an annual report of

Accounting Use the Internet to research an annual report of a retail company. • Then, imagine you are an investor or creditor; suggest the ratios that you believe would provide an investor or creditor with the most impor ...

Audit report modificationsthe final paper will be based on

Audit Report Modifications The final paper will be based on Appendix 6C Illustrative Audit Case: Keystone Computers at pages 237-244 in your text. Write, in outline format but in complete sentences, a 6 to 10 page audit ...

Del gato clinic deposits all cash receipts on the day when

Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2015, its Cash account shows a(n) $14,287 debit balance. Del Gato ...

1you have been hired by the cfo of strayer university to

1.You have been hired by the CFO of Strayer University to develop a plan to protect its accounting and financial systems at a reasonable cost. Suggest a high-level plan for the CFO. Provide support for your suggestion. B ...

Part 1true false questionsselect the correct answer1 a

Part 1: True / False Questions Select the correct answer 1. A single plant-wide overhead rate generally provides more accurate product costs than multiple departmental overhead rates. True False 2. The use of a predeterm ...

Accounting questionin germany and china separate

Accounting Question: In Germany and China separate institutions established by law carry out the roles of public accounting and auditing. What is the impact of this professional practice on the usefulness of internationa ...

Standard prices for medicineread the article magic pill

Standard Prices for Medicine Read the article, "Magic Pill, Magical Accounting." Based on the content presented in the article, describe some of the issues with not having an industry-wide standard price for a medicine. ...

Course project portfolio of international accounting

Course Project: Portfolio of International Accounting Findings Throughout your course work, you explored topics such as cost and revaluation models of accounting, revenue recognition, assets and liabilities, translation ...

Assignment descriptiona manufacturing company is thinking

Assignment Description A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro