ACC 291 Week 5 Learning Team Reflection
ACC 291 Week 5 Learning Team Reflection fin571
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Date Created: 11/10/15
Running head LEARNING TEAM B WEEK FOUR AND FIVE OBJECTIVE Learning Team Objective ACC 29 1 University of Phoenix LEARNING TEAM B WEEK FOUR AND FIVE OBJECTIVE 2 Learning Team In weeks four and five we learned about ways that a business can get a picture of their overall financial standings Some of the topics covered include using a statement of cash ows to monitor the coming in and going out of cash analyzing financial statements how to record the issuance of the different types of stock and dividend payments and the SarbanesOxley Act impact A statement of cash ows shows the receipt and payment of cash for the company The direct method is preferred by the FASB although both methods are acceptable and shows cash receipts and payments in operations while the indirect method adjusts net income that do not affect cash In order to get started with a statement of cash ows the company has to convert its net income from an accrual basis to a cash basis In the end a company can determine their free cash ow to determine how much money is left over after adjustments for capital expenditures and dividends have been done The three tools of analysis are the horizontal vertical and ratio analysis Horizontal evaluates the financial statement data over a period of time This determines the increase or decrease which has taken place Vertical analysis expresses each item as a percent of base amount This determines how much of the total assets are current assets or how much of the net sales are selling expenses Ratio analysis expresses the relationship amongst the selected items of the statements This determines liquidity of assets profitability of the company and the solvency ratio tells if the company is going to survive over a long period of time Investors can use the cash ow statement to determine if the company has enough cash to expand operations and pay dividends The company can use the information in the cash ow LEARNING TEAM B WEEK FOUR AND FIVE OBJECTIVE 3 statement to measure the efficiency of operations Cash ow from financing activities re ects any changes in debt loans or dividends Issuing stock or increasing longterm borrowing is a cash in ow Paying dividends or reducing debt is a cash out ow Additionally cash ow from operating activities measures the changes in cash ows from operations requiring a computation of the changes in account balances in the balance sheet between accounting periods Situations can happen that lead to unethical accounting practices due to lacking in the financial controls set down and followed by upper management personnel These six procedures not only need to be in place but they need to be followed and enforced as well through evaluation and followup If even one of the controls is not in place then the opportunity can become open for unethical behavior For example if you do not establish responsibility by only having one person responsible then it leads to a lack of accountability if something is wrong The SarbanesOxley Act was put into action in 2002 due to the great number of unethical and fraudulent situations abounding within corporations This Act states that all publicly traded companies must have documented internal financial controls within the company Companies are required to submit an evaluation of the efficiency and value of their internal controls with their end of year financial package Periodic outside audits are conducted to ensure compliance by the company s with this Act If violations are found at any time fines and penalties can be enacted upon upper management level personnel to include imprisonment In conclusion over weeks four and five we have learned about the methods of preparing cash ow statements how to apply the three different ratios when determining how well or poor the company is doing financially how to record journal entries of the issuance of stock and common stock and how to declare and enter payments from dividends and finally how to remain LEARNING TEAM B WEEK FOUR AND FIVE OBJECTIVE ethical in accounting and be in compliance With SOX Reference Weygandt J Kimmel P Kieso D University of Phoenix 2009 Financial Accounting 7th Edition Retrieved from University of Phoenix ACC291 website ACC 291
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