Assignment - Recording Business Transactions
Question 1. How has the business owner determined the book value of the business's short-term and long-term assets?
The business owner may determine the book value of the business' short-term and long-term assets by comparing the balance sheet depending on a given period. Some balance sheets provide weekly or monthly logs of assets in terms of cash, accounts, receivables, supplies, raw materials, and inventory, among others. Other balance sheets provide information on a yearly basis. To determine the book value of the business' short-term and long-term assets, the owner's equity must be calculated during a week or month, and then a year. The values will indicate short-term and long-term assets remaining minus liabilities.
Question 2. When and how do you categorize revenues for your business?
Revenues for business should be categorized if they come from different sources. In this way, the business owner would be able to determine what goods or services generate the most and least revenue.
Revenue may be categorized as operating or non-operating revenue. Operating revenue refers to those gained from sales of goods or services provided. Operating revenue is gained generally from business operations. Non-operating revenue is the business' passive income. Examples of passive revenue include those obtained as interest, dividends, and royalties.
Question 3. How do you calculate your Gross Margins? How do you establish cost parameters for the products or services being offered to customers?
To calculate gross margin, the business owner must subtract the cost of goods sold from the total revenue. The result of which must be divided form the revenue.
To establish cost parameters, the business owner must detail all expenses in producing products or services being offered to customers. Cost or expenses include raw materials, delivery or flow throughout the supply chain, and cost of labor. The business owner must identify all these expenses and then set cost parameters based on amount needed to earn reasonable profit and meet target revenue.
Question 4. How do you calculate the Equity for the business? Do you track the Equity monthly, quarterly, semi-annually or annually?
One can calculate the Owner's Equity by subtracting liabilities from assets.
Yes, it is important for business owners to track Owner's Equity regularly, whether it is monthly, quarterly, semi-annually or annually so that the business owner may make and adjust decisions accordingly based on the movement of assets and liabilities.
Question 5. Who insures the books and records are kept up-to-date and balanced? Who reconciles the businesses bank statements? Is the bank statement reconciled to the books?
The managerial accountant, bookkeeper, or auditor insures that the books and records are kept up-to-date and balanced. An internal auditor will be responsible for reconciling the businesses' bank statements.
The bank statement must be reconciled to the books to ensure that the business' financial records are the same as the bank's records. If the statements are not reconciled, then the business must make notations to explain the discrepancies.
Question 6. Who is responsible for entering the daily business transactions? Who audits the work being completed by this person? How often are the books often audited to insure accuracy and honesty?
The bookkeeper is responsible for entering the daily business transactions. The auditor or accountant then audits the work being completed by the bookkeeper. The books are often audited
It is recommended that auditing is conducted on a regular basis - daily, weekly, monthly, and annually.
Question 7. What are the components of the Financial Statement that contribute to decision-making?
The components of the Financial Statement include the Balance Sheets, Income Statements, and Cash Flow.
Attachment:- Controlling Accounts Receivables.rar