One of the issues you have with unearned revenue is recognition. Accrual and cash basis are one - 12851

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1.       One of the issues you have with unearned revenue is recognition. Accrual and cash basis are one of the keys to understanding recognition. What is the difference between cash and accrual basis?

 

2.       Does your organization distribute dividends? Looking at your company’s financials, can you find evidence of equity financing?

 


3.       It really depends on what the organization wants to do with the shares once they purchase them back from other stockholder's. Do you all see any treasury stock on your financial statements? Are there notes disclosed regarding stocks and repurchasing on there?

 

4.       Equity financing, as you see, is not just a numbers game. Look out on the markets (yahoo finance, msn money) and see if you can find an initial IPO. Tell me what some of the requirements were or anything interesting regarding the equity financing procedures. Also, all...tell me why the Facebook IPO was not what everyone thought it would be in the market?

 

I looked up yahoo and found an ipo for Salient Midstream Common Shares (SMM) at an offer price of $20.05. The interesting fact I found is that under the previous standards, corporations were not allowed to communicate by means other than prospectus such as road shows or telemarketing. But these rules were relaxed in 2005. The new rules allow  other methods of communication such as computers, emails, teleconferencing and financial softwares.

The facebook Ipo is not what people were expecting because the IPO price dropped in value from $38 to $28.84 causing a loss of 24.1 percent (http://finance.yahoo.com/news/factbox-facebook-ipo-legal-arguments-215352997.html).

 

 

5.       is it more beneficial to raise capital through the issuance of stock or to get a loan from the bank?

 

6.       Every company (you are correct) must evaluate what may be good for them as far as financing is concerned. Do they need to raise capital for a project? Do they need to raise capital in order to pay bills! Enter the venture capitalist. What is a venture capitalist? What are the pros and cons of working with venture capitalists?

 


7.       Which would you prefer common stock or preferred stock? Explain your reason.

 

8.       Companies that have preferred stock holders set a limit early when they decide to issue preferred stock. The benefit of preferred stock is that they do not have the right to certain privileges as common stockholders, yet they are the first ones paid. What are the advantages and disadvantages of stockholder's equity?

 

9.        I have done a series of courses for major corporations helping them understand financial statements and the impact they have on their department and on their personal lives, within their organization. We go over ethics in accounting and places that managers often cheat the company and shareholders. While reading over materials in the textbooks and during your research on the web what is the most shocking fraudulent case you have seen and what was the impact of the activity on the company and the community?

 

10.   One of the reasons that Sarbanes Oxley Act of 2002 was implemented was to make sure that management is held responsible for that pressure. Why was Sarbanes-Oxley implemented and what is the M & A Due Diligence?

 

Solution Description

1.       One of the issues you have with unearned revenue is recognition. Accrual and cash basis are one of the keys to understanding recognition. What is the difference between cash and accrual basis?

Cash basis accounting records transactions when there is an exchange of cash, i.e. when is received or paid. For instance when cash is paid for goods purchased or cash is received for goods or services sold. Accrual basis of accounting on the other hand records a transaction in the period to which it belongs regardless of when cash is received (http://www.dummies.com/how-to/content/deciding-between-cashbasis-and-accrual-accounting.html). For example let us assume that a company has sold a product on credit basis, payment to be received two months later, it will record the transaction in the period to which the payment belongs, not two months later when cash is received.

 

2.       Does your organization distribute dividends? Looking at your company’s financials, can you find evidence of equity financing?

 

My current organization does not distribute dividends since it is not a corporation. The status of my current organization in partnership. Looking at the company’s financials I can find evidence of equity in the form of partner’s capital.