Name Some Users Of Accounting Information And Their Roles

Name Some Users Of Accounting Informationwhat Is The Role Of Accounti

Name some users of accounting information. What is the role of accounting in business? Why are most large companies like Microsoft, PepsiCo, Caterpillar, and AutoZone organized as corporations? Josh Reilly is the owner of Dispatch Delivery Service. Recently, Josh paid interest of $4,500 on a personal loan of $75,000 that he used to begin the business.

Should Dispatch Delivery Service record the interest payment? Explain. On July 12, Reliable Repair Service extended an offer of $150,000 for land that had been priced for sale at $185,000. On September 3, Reliable Repair accepted the seller's counteroffer of $167,500. Describe how Reliable Repair Service should record the land.

Land with an assessed value of $750,000 for property tax purposes is acquired by a business for $900,000. Ten years later, the plot of land has an assessed value of $1,200,000 and the business receives an offer of $2,000,000 for it. Should the monetary amount assigned to the land in the business records now be increased? Assuming that the land acquired in (A) was sold for $2,125,000, how would the various elements of the accounting equation be affected? Describe the difference between an account receivable and an account payable.

A business had revenues of $679,000 and operating expenses of $588,000. What was the amount of (A) net loss or (B) net income? A business had revenues of $640,000 and operating expenses of $715,000. What was the amount of (A) net loss or (B) net income? The financial statements are interrelated. (A) What item of financial or operating data appears on both the income statement and the retained earnings statement? (B) What item appears on both the balance sheet and the retained earnings statement? (C) What item appears on both the balance sheet and the statement of cash flows?

Paper For Above instruction

Accounting plays a vital role in providing crucial financial information to a diverse array of users, including business owners, investors, creditors, regulators, and management. These stakeholders rely on accurate and timely accounting data to make informed decisions regarding investments, credit extended, regulatory compliance, and strategic planning. For instance, investors use financial statements to assess the profitability and stability of companies like Microsoft or PepsiCo, guiding their investment choices. Creditors examine a company's financial health to decide whether to lend money or extend credit, while regulators ensure compliance with financial reporting standards. Managers utilize internal accounting information to plan operations, control costs, and develop strategies to enhance company performance.

Most large corporations such as Microsoft, PepsiCo, Caterpillar, and AutoZone are organized as corporations due to the advantages this structure offers. Corporations can raise substantial capital by issuing stocks and bonds, limit the liability of owners, and perpetuate beyond the lives of founders. Additionally, the corporate structure provides a framework that allows for efficient management, ownership transferability, and the ability to attract investors who seek a legal entity that offers limited liability.

Regarding Josh Reilly’s interest payment on a personal loan used to fund Dispatch Delivery Service, the company should not record this interest expense as a business expense because it is a personal expense of the owner. The interest paid on a personal loan does not directly relate to the business operations and, therefore, should be excluded from the business’s financial statements. Instead, such transactions are recorded in the owner’s personal financial statements or disclosures.

Reliable Repair Service's offer and acceptance for land should be recorded at the negotiated price—$167,500—since that is the agreed-upon purchase price. The company should record the land as an asset on its books at its purchase cost of $167,500, reflecting the actual price paid. Any difference between the initial asking price and the final purchase price is an important consideration but does not change the recorded value once the transaction is completed.

The value assigned to land in the business’s records should not be increased solely based on its assessed value for property taxes or market value unless it is being revalued under specific accounting standards or in preparation for sale. Generally, land is recorded at historical cost, and subsequent increases in value are not recognized unless the company opts for revaluation models or impaired considerations. If the land’s market value rises significantly, it might require disclosure but not an increase in recorded value unless a revaluation policy is in place.

If the land acquired for $900,000 is sold for $2,125,000, the sale would result in a gain that affects the accounting equation. Specifically, the sale increases assets (cash or receivables) and increases equity via retained earnings due to the recognized gain. The change involves an increase in assets and an increase in stockholders’ equity by the amount of the gain, exemplifying how real estate transactions impact financial statements.

The difference between accounts receivable and accounts payable is fundamental in accounting. Accounts receivable represents amounts owed to the business by customers for goods or services provided on credit, embodying an asset. Conversely, accounts payable are obligations the business owes to suppliers or vendors for goods or services received but not yet paid, representing a liability.

For the business with revenues of $679,000 and operating expenses of $588,000, the net income is calculated as revenue minus expenses: $679,000 – $588,000 = $91,000, indicating a net income of $91,000. Conversely, a business with revenues of $640,000 and expenses of $715,000 incurs a net loss of $75,000, computed similarly: $640,000 – $715,000 = -$75,000.

The interrelation of financial statements ensures that certain data appears across multiple documents. The item that appears on both the income statement and the retained earnings statement is net income or net loss, reflecting the company's profitability for the period. The retained earnings statement and the balance sheet both feature retained earnings, showing the accumulated earnings after dividends. The statement of cash flows and the balance sheet are connected through cash and cash equivalents, which appear on the balance sheet and are explained in the cash flows report.

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