ACTG 2010 - 2013W - Week 9 (Ch.6)

ACTG 2010 - 2013W - Week 9 (Ch.6) - Intro to Financial...

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Intro. to Financial Accounting I ACTG 2010 S Winter 2013 Week 9
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Lyryx Lab Assignment #3 Was due yesterday at 11:59pm See statistics as at 7:33pm last night 32 students had 91/91 marks Lyryx Lab Assignment #4 is due next Tuesday at 11:59pm 2
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Today’s Agenda Practice case – “Robbin Inc.” from CMD Chapter 6 Time value of money Accounts receivable 3
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How to Write an Actg Case Who am I? – know your role and act like it What do I have to do? – read the “required” How will I do it? – this is the hard part 4
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“How Will I Do It?” - Typical Case 1. Understand the biz and its environment 2. Are there any constraints? 3. Who are the users? What are their objectives? Rank them. 4. What are the actg issues? Rank them. 5. Address the issues! What is the issue? What are the alternatives? Apply “CFO” to analyze issue Make a recommendation, explain its impact 5
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Resolving Accounting Issues Three-step “CFO” approach: 1. Constraints – i.e. IFRS, legal requirements, contract terms, covenants, etc. 2. Facts – the business circumstances surrounding a transaction/event; use common sense! 3. Objectives – if still have alternatives after applying constraints & facts, pick the alternative that best suits entity’s objective(s) 6
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Case Writing In-class exercise: Robbin Inc. Posted on the CMD Show of hands – who read the case before coming to class? Cases are hard to do! No effort on your part = poor grades in ACTG 7
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Case Writing – Robbin Inc. Req.(1) – impact of change in accounting? 1. Understand the company’s revenue process – OLD and NEW 2. How was it accounted for before? 3. How does the auditor suggest that they account for it now? Req.(2) – analyze options & recommend This is a “revenue recognition” issue 8
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Time Value of Money You are to receive $1,000 Would you prefer to receive it today, or a year from now?
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Time Value of Money Today is better!
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