Team D problems 14-5A and E3-2

Team D problems 14-5A and E3-2 - P14-5A Grania Company...

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Unformatted text preview: P14-5A Grania Company Partial Statement of Cash Flows For the Year Ending December 31, 2008 Cash flows from operating activities Net income Adjustments to reconcile net income to net to net cash provided by operating activities Depreciation Expense Loss on sale of equipment Increase in accounts receivable Increase in accounts payable Increase in income taxes payable Net cash provided by operating activities E3-2 a) Accrual-basis accounts records the transactions that change a company's financiatl stateme in the periods in which the events occur rather than in the periods in which the company rece or pays cash. Information presented on an accrual basis is useful because it reveals relation that are likely to be important in predicting future results. Conversely, under cash-basis acco revenue is recorded only when cash is received, and an expense is recognized only when ca paid. As a result, the cash basis of accounting often leads to misleading financial statement b) Politicians might desire a cash-basis accounting system over an accrual-basis accounting sy because if an accrual-basis accounting sytem is used, it could mean that billions in governm presently unrecorded would have to be reported in the federal budget. The recognition of th liabilities would make the deficit even worse. This is not what politicians would like to be held for. Dear Senator, c) I have recently become aware of the fact that the Federal Government uses a cash-basis ac instead of an accrual-basis accounting system. This is a cause of concern for me because I as to how large the governements actual deficit is. Considering the fact that the only time a accounted for is when it is paid with cash. I think that it is the duty of the government to prov with an accurate picture of what our government is doing about the deficit. Sincerely, Team D ows 1, 2008 230,000 60,000 16,000 -15,000 13,000 4,000 78,000 308,000 ge a company's financiatl statements periods in which the company receives s useful because it reveals relationships onversely, under cash-basis accounting, pense is recognized only when cash is to misleading financial statements. er an accrual-basis accounting system uld mean that billions in government liabilities eral budget. The recognition of these additional hat politicians would like to be held accountable Government uses a cash-basis accounting system ause of concern for me because I am curious ering the fact that the only time a liability is the duty of the government to provide its citizens bout the deficit. ...
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This note was uploaded on 12/19/2010 for the course ACC 281 taught by Professor Feleciawhitley during the Summer '10 term at University of Phoenix.

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