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Unformatted text preview: The Lion King and I I dont know whether or not you got the chance to see the movie, The Lion King. As a fan of animation and perpetual child, I had to see it! In the movie Elton John sings a song called, The Circle of Life. In it he sings of a pattern of living the animals in the story go through. Each is born, enjoys a childhood of learning, mates, raises kids, ages and dies. As each animal goes through the cycle its replaced by its offspring tracing, The Circle of Life. The perfection of the circle and the reality of life give proof that the story is fiction. But the idea of a circle tracing a pattern of behavior is attractive to me. Indeed in Accounting we have our own circle. It might be really far-fetched to draw a direct parallel between the Lion Kings circle of life and ours. Generally we dont wait around for a business to die to record transactions or do accounting work. We do have a circle of behaviors we follow. It is called the Accounting cycle. If you will turn to page 152 in your text, you will see it. We follow a nine step series of behaviors for each turn of our Accounting Cycle. You will notice that we will have already accomplished in our first week the first four steps. In this week we will complete the cycle. We will journalize and post adjusting entries; prepare an adjusted trial balance and financial statements. Finally we are going to give credit to the owners for the results of operations and prepare for a new cycle. Accounting As a Management Tool Last week we discussed the value of Accounting as a decision making tool. We also discussed several Accounting principles. Crucial to its value as a decision making tool is that we apply Accounting to compare apples to apples and not oranges. In this I mean that when we develop our system we will apply our principles and procedures consistently over time. Also we are going to make every report as much like others against which it will be compared as we can. To this end we are going to make a number of assumptions. One of these assumptions is that we can break the life of a business into regular time period s. Businesses regularly report operations in monthly, quarterly (every three months), and yearly increments. So once we get Maximus Movies up and running we will be preparing Income Statements every month. As we do this we want to be careful that we consistently apply the Accounting principles we built into our system. This is so that we can compare one months results against another. Sometimes even more importantly we want to be able to compare the results of June 2001 with that of June 2002. Every business has a bit of seasonal affect in its business cycle. For example summer and the fall holidays are big times in the movie industry....
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This note was uploaded on 04/07/2011 for the course ACCT 490 taught by Professor Richard during the Spring '11 term at DeVry Long Beach.
- Spring '11