Accounting Principles Guías de estudio, Notas de estudios & Resúmenes

Accounting Principles II: Capital Budgeting Complete Study Guide Capital Budgeting Techniques Capital budgeting is the process most companies use to authorize capital spending on long‐term projects and on other projects requiring significant investments of capital. Because capital is usually limited in its availability, capital projects are individually evaluated using both quantitative analysis and qualitative information. Most capital budgeting analysis uses cash inflows and cash outflo...

Accounting Principles II: Incremental Analysis Complete Study Guide Introduction to Incremental Analysis Managerial decisions are choices made based on financial and nonfinancial information. Typically, financial information serves as the first hurdle in identifying a possible course of action as an alternative. If the financial hurdle is met, then management must consider the impact of the alternative on the environment, the company's employees, its image, the community, its partners or ...

Accounting Principles II: Flexible Budgets and Standard Costs Complete Study Guide Flexible Budgets A budget report is prepared to show how actual results compare to the budgeted numbers. It has columns for the actual and budgeted amounts and the differences, or variances, between these amounts. A variance may be favorable or unfavorable. On an income statement budget report, think of how the variance affects net income, and you will know if it is a favorable or unfavorable variance. If the ...

Accounting Principles II: Budgets Complete Study Guide Introduction to Budgets Budgets are part of a company's long‐range planning system. While some portions of a long‐range plan are concerned with the organization in five to ten years, the budget is the short‐range portion of the plan. Most budgets are prepared for a twelve‐month period, sometimes on a rolling basis. A rolling budget is updated quarterly (or as often as management requires the data) by dropping the three months...

Accounting Principles II: Cost-Volume-Profit Relationships Complete Study Guide Cost Behavior The way a specific cost reacts to changes in activity levels is called cost behavior. Costs may stay the same or may change proportionately in response to a change in activity. Knowing how a cost reacts to a change in the level of activity makes it easier to create a budget, prepare a forecast, determine how much profit a new product will generate, and determine which of two alternatives should b...

Accounting Principles II: Activity-Based Costing Complete Study Guide Activity-Based Costing Activities Traditionally, in a job order cost system and process cost system, overhead is allocated to a job or function based on direct labor hours, machine hours, or direct labor dollars. However, in some companies, new technologies have changed the manufacturing environment such that the number of hours worked or dollars earned by employees are no longer good indicators of how much overhead will ...

Accounting Principles II: Traditional Cost Systems Concepts Complete Study Guide Job Order Cost System The two basic types of manufacturing processes are the job order approach, where each order is customized, and mass production, where the product is always the same. To accompany these procedures are the two traditional types of cost accounting systems: job order cost system and process cost system. The information captured by these cost accounting systems aids managers in determining tota...

Accounting Principles II: Managerial and Cost Accounting Concepts Complete Study Guide Managerial versus Financial Accounting Financial statements are used by both external users and internal management and provide general information about the entire company. For example, the balance sheet reports total inventories and the income statement reports cost of goods sold, but the costs of individual products are not disclosed to the public. Internal management needs detailed information to make d...

Accounting Principles II: Financial Statement Analysis Complete Study Guide Need for Financial Statement Analysis Financial statement analysis is used to identify the trends and relationships between financial statement items. Both internal management and external users (such as analysts, creditors, and investors) of the financial statements need to evaluate a company's profitability, liquidity, and solvency. The most common methods used for financial statement analysis are trend analysis,...

Accounting Principles II: Statement of Cash Flows Complete Study Guide Statement Sections Cash management is an important function for every business. Knowing what cash is expected to be received and what cash is required for payments is critical information in determining whether a company has excess cash for investment or will need additional cash to meet operating needs such as paying its employees or its suppliers. The financial statement that reports activity in cash and cash equival...