Acc 556 Week 3

The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise.

According to an article in the CPA Journal, the auditor considers reliability of audit evidence collected and the reliability of that evidence to reduce the risk of financial statements containing undetected material errors. Compare and contrast at least two (2) types of evidence, and make a recommendation as to which you believe is the most reliable in reducing risk. Support your position.

Now one must ascertain that such regulations would only be applied under certain governance systems- a good government; a government that is liable to the people. In such cases, there should be funds available for social programs. I will classify social programs as two types, based on how they should prioritizes allocation of funds:

The holding period of the partnership interest includes the partner’s holding period for the 1232 assets contributed. The

Head Usher: While the church may not be currently experiencing anything wrong with the usher selection and volunteer system at the church, some improvements might be considered. The church might consider making the head usher a year-long term, elected by church members to create continuity, but also impose term limits – possibly every 3-4 years a head usher must take a sabbatical. Additionally, because the head usher role is so pivotal in the collection process, and it is a place where mistakes or malfeasance can easily take place; it would be helpful for the ushers and the financial secretary to be present in the collection counts, the day of, so someone outside the usher department can verify tithe counts.

Since the majority of US thrive on the use of credit cards, the accounts receivables for a company may no longer be on a cash-to-cash basis. A company may need to sell these accounts to other companies who specialize in handling accounts receivables if they need cash more quickly or if it would be too costly to perform the necessary billing to collect on the account.

There is a five step process to recognize revenue to depict transfers of goods or services to customers in amounts that reflect the consideration to which entity expects to be entitled in exchange for those goods and services: Identify contracts with customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price with the performance obligation in the contract and recognize revenue when or as the entity satisfies the performance obligation.

Larson Inc. must consider the alternative economic futures for their industry. In any market, economic conditions will change over time. The company must be able to adapt and change with the economy to remain successful. The company needs to find solutions for the changing economy to keep increasing their revenue and decreasing their costs. The economy may go through a recession, expansion and peaks over their years in business. Larson, Inc. needs to analyze the difference scenarios and determine the best course of action for each type of economic future. Also, the company must consider the economy’s stage in the business cycle to make well-informed decisions.

2. On the basis of the response to Question 1, discuss the revenue recognition accounting literature

The functions of working capital are to ensure an entity has enough working capital by turning long-term assets in services and revenue. This is done by obtaining cash from different resources (such as supplies and labor), arranging working cost, provision for credit sales and provision of a safety margin.

Because revenue is important to every company and there’re a going concern with issues of the new revenue recognition. The Boards had revised the proposals for public comment before issuing standard in 2008, 2010 and 2011. In 2008, a Discussion Paper was issued by the Boards as their initial proposal on how to identify separate performance obligations on the basis of the timing of transfer of the good/service to the customer only. Internal control of this transaction was also proposed in this paper also. In 2010, the Boards issued an Exposure Draft based on all the feedback received. This is when the core principle was established that entities should recognize revenue to depict the transfer of promised goods or services to a customer in an

1. Revenue From Contracts With Customers: Narrow-Scope Improvements and Practical Expedients. (2016). Retrieved September 09, 2016, from http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176168130444&acceptedDisclaimer=true

In section 5, the author hypothesizes that the accounts receivable accruals map into the cash flow realizations to a lesser extent than those under SOP 91-1. The author points out that the earlier the recognition, the more likely the customer is to not pay. Circumstances such as acceptance, commitment to pay and/or needs for customization may change prior to or upon delivery of the software or rendering of the service that may not be foreseen at the time of contract signing or earlier than as specified in SOP 91-1.

recognition policy have on its financial statements? Ignore any potential tax effects. FRS 18: Revenue Question 1 2 3 4 5 6 • Sales of Goods – The seller of the goods has transferred to the buyer the significant risks and rewards of ownership – The seller retains neither continuing managerial involvement nor effective control over the goods sold – The amount of revenue can be measure reliably – It is probable that the economic benefit associated with the transaction will flow to the seller – The costs incurred or to be incurred in respect of the transaction can be measured reliably Microsoft’s Revenue Recognition Policy Question 1 2 3 4 5 6 • Prior to 1996, revenue was recognised • Distributors and resellers: when shipped • Corporate license programs: when product is installed • Original Equipment Manufacturers: OEM shipped products Microsoft’s Revenue Recognition Policy Question 1 2 3 4 5 6 • After 1996, revenue was recognised: • 80% of revenue was recognised according to above • 20% over the product life cycles, estimated at 2 years (Unearned revenue) Effects on Financial Statements Question 1 2 3 4 5 6 • Income statement: Reduction of revenue recognised --> Reduced net income • Balance Sheet: Increase in liability (Unearned Revenue) Q3a.

The following accounting and communication changes are recommended to the Oracle Board of Directors to accurately recognize revenue in accordance to actual business performance and common industry practice: