WAG case analysis Study Example | Topics and Well Written Essays - 1250 words

WAG analysis - Case Study Example Financial Analysis of the Wag’s Judgments and Method of Calculating Net Income According to Canadian accounting standards for private enterprises (ASPE), WAG’s financial judgments and methods used have resulted to overstatement and understatement of net income in various ways. First, the method of calculating and awarding dividends and salaries has resulted in the understatement of net income. In Wiki Art Gallery (WAG) dividends are shared on 50 per cent basis on monthly basis and this was paid up to $400 until April 2012. The amount of dividend paid out to shareholders determines company’s annual net income because they determine the difference between assets and liabilities. According to the Canadian accounting standards for private enterprises (ASPE) a company is restricted from paying out dividends before passing balance sheet test whereby the declared dividends must be equal to or less than the difference between the assets and liabilities. The act of paying dividends on monthly basis instead on annual basis leads to the understatement of WAG’s annual net income as it prejudices the company’s ability to pay creditors therefore increasing the cost of liabilities. Additionally, the increased interest rates should be captured in WAGs annual income statement to reflect the true net income. Moreover, reduction of Stephen salary by $2,000 in fiscal 2012 was not included in the annual income statement and according to the ASPE principles on full disclosure of expenses such changes if effected during the fiscal year must be provided as additional information to the financial document. Therefore, if Stephen buys WAG Company based on the stated net income and decides not to change the methods of calculating dividends, he will be held liable for violating ASPE that might attract legal penalties for wrong disclosure of financial returns. Secondly, the depreciation of assets method as used by WAG leads to understatement of net income as well as overstatement of it if considered in different perspectives. The disposal of assets with zero residual value at any given cost other than zero is treated as income to a company under the ASPE. WAG disposed of computer server that had zero residual value at a price equal to the book value and this was not captured anywhere in the annual income statement. This also has an effect to the company’s net income as it understates company’s gains realized on the disposal of assets thus leading to underreporting of the net income. Note Withstanding, WAG records equipment at cost and charges depreciation on a straight-line basis on its equipment which decreases in value every year due to depreciation charged on it. The depreciation expense is captured in the income statement while the assets true value remains overstated. This implies that the net income is highly overstated because the depreciable assets are not recorded at the book value. Therefore if Stephen buys WA G Company based on the Rob’s calculation of depreciation that informs the current net income calculation, he would buy assets that are overstated and this may affect his eligibility to acquire more capital for the expansion of the company. Thirdly, the method of capitalizing intangible assets adopted by Rob leads to understatement of net income through the charging of amortization costs in the income statement. WAG capitalizes intangible assets

The ban on the advertising of convenience foods Essay

The ban on the advertising of convenience foods - Essay Example This article provides a counter response to such calls and it takes a supportive stand on behalf of the advertisers as there seems to be no clear-cut evidence to prove that such advertisements could also be a cause for the supposed epidemic of ill-health and obesity among these children. The article aims to bring out the positive effects of such advertising stating that it would actually be educative for the children. There is no compelling language used in the text. The article states that children like any others have the right to view such advertisements and thereby make their own food choices. The first two premises aim to counter the media claims by using survey reports that convenience and tasty food advertising are a reason for the supposed ill-health epidemic and obesity among children. In the third premise, there is a highlight on how food companies like the McDonalds not only promote healthy food for children but also contribute to the growth of children by sponsoring junio r level sporting activities. The next premise explains about the unproven link between health problems like diabetes due to consumption of fast foods. The fifth premise adds a note on the actual purpose of such advertising and makes a reference to the situation in the US. The final premise stresses that every child must have the right to information on food products which would help them make their own food choices and ends on a positive statement emphasizing the freedom that needs to be given to the advertising world in a democratic society.

Reflecting upon our exploration of monetary and financial history in Essay

Reflecting upon our exploration of monetary and financial history in Topic Two, what are some of the issues surrounding the crea - Essay Example These currencies resemble real money and do come with their discrete, but open retail payment system; leading to the term virtual currency scheme. There are different types of virtual currency schemes; Type 1 (closed virtual currency scheme), it is used in online games; Type 2 (unidirectional flow), this is usually an inflow, this means that they have a conversion rate for buying the virtual currency that aid not only in purchasing the virtual goods and services, but also the real goods and services; Type 3 (bidirectional flow), this gives the currency the ability to behave like any other convertible currency, that is, possess the buying and selling exchange rate, and therefore, it can be used to buy both the virtual and real goods and services. Issues Surrounding Virtual Currency Schemes (Bitcoin and Linden Dollar) The Bitcoin is a virtual currency scheme that is based on the technology of BitTorrent of sharing files over the Internet (European Central Bank, 2012). This technology i s based on peer-to-peer network. Its operation is global and has the ability to conduct both real and virtual transaction of goods and services. The exchange rate of Bitcoins which is not nailed to any real-world currency is determined by demand and supply in the market (King, 2012). Due to all these, the currency is decentralized, meaning that it has no central clearing house; it is anonymous and controlled by the partners involved, this means that there is no institution or financial house involved in the transaction (European Central Bank, 2012). By anonymous, it means that accounts are not registered, so the Bitcoins are transferred directly from one machine to another. The transactions are enabled by free and open-source software that is downloaded and installed in a machine; thereby, purchased Bitcoins are stored in the machine in a digital wallet. This turns to be the basic threat to this system, users can easily lose their money if they do not implement and secure their mach ines with back-ups and antivirus measures. Although the insecurity factor is a big concern, users still prefer to use this technology because of its fast and cheap transactions with no bank account fees involved (European Central Bank, 2012). Because this system has no rules, its economic foundation has been interfered with governments and other agencies through criticism of the current fiat money system. Users of Bitcoin generally share common ideas which help to maintain Bitcoin within operation range, these include; the scheme is inspired and promoted by former gold standards, users also think that it is a starting point to end the central bank monopoly in the issuance of money, lastly the user criticize the fractional-reserve banking system. All these ideas have led to a number of issues; first, the economists criticize the Bitcoin and argue that Bitcoins are bits stored in a computer; therefore, they have no intrinsic value like gold. The other reason is that this technology fa ils to satisfy the Misean Regression Theorem (European Central Bank, 2012). Another issue about the Bitcoins is that the system is complex and not easily understandable, creating questionable doubts on the system, considering that the transactions are sent through a network minus an intermediary to maintain and validate the connection. This can lead to double spending or coin forge even with tough measures like time stamp and mining are deployed to

The ban on the advertising of convenience foods Essay

The ban on the advertising of convenience foods - Essay Example This article provides a counter response to such calls and it takes a supportive stand on behalf of the advertisers as there seems to be no clear-cut evidence to prove that such advertisements could also be a cause for the supposed epidemic of ill-health and obesity among these children. The article aims to bring out the positive effects of such advertising stating that it would actually be educative for the children. There is no compelling language used in the text. The article states that children like any others have the right to view such advertisements and thereby make their own food choices. The first two premises aim to counter the media claims by using survey reports that convenience and tasty food advertising are a reason for the supposed ill-health epidemic and obesity among children. In the third premise, there is a highlight on how food companies like the McDonalds not only promote healthy food for children but also contribute to the growth of children by sponsoring junio r level sporting activities. The next premise explains about the unproven link between health problems like diabetes due to consumption of fast foods. The fifth premise adds a note on the actual purpose of such advertising and makes a reference to the situation in the US. The final premise stresses that every child must have the right to information on food products which would help them make their own food choices and ends on a positive statement emphasizing the freedom that needs to be given to the advertising world in a democratic society.

The essay should be presented as a Journal opinion article. The

The should be presented as a Journal opinion article. The article should be timely and address an economic issue of curren - Essay Example The short and long term implications of immigration laws are imperative for determining employment rates and productivity of the US workforce. In the short run, immigration is said to slightly decrease the employment rates or in other words, increase unemployment rates however the long run implications are positive. The matter has been the center of debate and has affected the US immigration policy greatly. While many try to make a case against reform in US immigration laws, credible sources in the available literature have established that long term impacts of immigration on the US workforce is positive as it enhances labor productivity. In their opinion article titled More Immigration Means More Jobs for Americans, John Dearie and Courtney Geduldig have given useful statistics that suggest that immigration improves employment as it creates jobs for the common people (n.pag.). It mentions how immigrants make up on a small percent of the total American population yet contribute a sig nificant percent to the economy by means of small businesses. Because most immigrants are self-employed and own several small scale sole-proprietorships and partnership businesses, they create jobs for the people thereby helping to reducing the unemployment rates. ... ed by Dearie and Geduldig is consistent with current findings which Giovanni Peri has described in his article The Impact of Immigrants in Recession and Economic Expansion. Peri’s article mentions the long run positive effects of immigration on the US economy as it increases productivity (4). Immigrants bring in new ideas and creativity along with them leading diverse distribution of organizational workforces. Although it may seem like immigrations negatively impact the US labor market as they saturate jobs and cause unemployment in the short run, the long run implications are promising. However, it seems to long before the long run positive impacts become observable. Even though short run effects of immigration may reduce employment, it increases average income in the long run (Peri, 4). So, the long effects of immigration are positive on employment, productivity, and income. However, it is also important to note that the immigration must adapt to economic changes in order fo r it to improve variables such as employment, productivity, and average income. The current US immigration laws do not allow the immigrants to adjust to economic changes because it makes them unresponsive to the economic conditions. In order for legal immigration to improve organizational productivity, average income, and employment rates, immigration must adjust to economic cycles thereby leading to improvements in the US economy. These adjustments are the hardest to carry during prolonged periods of economic downturns and therefore amendments in the US immigration policy is required to allow the inflows to be responsive to economic changes thereby helping to boost economic activity and hence result in greater jobs for the people. Thus, a reform in the current US immigration laws may provide a

The responsibilites of the assessor Essay Example for Free

The responsibilites of the assessor Essay The assessor is responsible for the implantation of the awarding body’s standards into the working process of the student. The assessor should have a strong understanding of the course content and the methods needed to deliver this content to their students while ensuring that they adhere the assessment criteria, course programme or job specification. At all times, the assessor must conduct themselves in a fair and professional manner and maintain an understanding of the assessment criteria of the students. Assessment takes place in a variety of scenarios; this enables the students to display knowledge, understanding and competency in a variety of areas to show a broad scope of evidence gathering. It is the responsibility of the assessor to plan assessments according to the best method of evidence gathering for the unit. Supporting and encouragement throughout the assessment, the assessor needs to use their judgement to judge the competency of the students’ work and ascertain whether or not they are ready for assessment. The assessor must keep accurate and up to date records to ensure there is a track record of students progress and achievement. It will include and not limited to assessment plans, feedback records, review of progress and overall tracking sheets. The records are also maintained to satisfy organisational and regulatory requirements such as Health Safety if assessing in the workplace they there will be a need to ensure the students have the right training for the job. The assessment practice and process is continuously scrutinised in the form of meetings, these meetings allow the assessor to voice any concerns, discuss assessment practice and to improve the assessment process as a whole. The assessor must ensure that they further their own development through CPD. This will ens ure that the assessor is keeping up to date with not only the assessment criteria of the subject but that they are maintaining their knowledge of the ever changing occupational standards within the workplace. In summary the responsibilities of the Assessor involves planning, managing and delivering assessment, maintaining the integrity of the qualification, and always keeping a learner-centred approach to the assessment. The occupational standards of the assessor demand integrity and maintenance of a level of quality that can be internally verified (IV) and externally verified (EV) moderated to show the same result. The responsibility of the  assessor to the students is to be organised, efficient, clear, and to provide a professional example to which they can aspire to. If assessing within the workplace employers are demanding high quality assessment feedback as this is the cornerstone of the students and, therefore, the organisations progress.

Expenditure Cycle

Expenditure Cycle Learning Outcomes Describe and discuss the business activities that related to data processing operations that performed in the expenditure cycle and identify the information needed to make those decisions. Spot and dealing with the major threats and estimate the adequacy of various control procedures in the expenditure cycle. Understand and familiar with a data model (REA diagram) of the expenditure cycle. Introduction What Should You Know!! The Expenditure Cycle The expenditure cycle involves interactions with your suppliers. You buy goods or services and pay cash. The primary objective of the expenditure cycle is to minimize the total cost of acquiring and maintaining inventory, supplies, and services. Also to ensure that all goods and services are ordered as needed, receive and verify that they are in good condition as were ordered. Accounting for expenditures is an answer for all questions related to activity in any organization. Accounting entities have increased requirements due to budgetary reporting needs and the variety of different fund types related to the expenditure cycle. The recording of expenditure related transactions must be carefully monitored and controlled to meet these requirements. Objectives of the Expenditure Cycle The primary objective of the expenditure cycle is to minimize the total cost of acquiring and maintaining inventory, supplies, and services. Other objectives related to expenditure cycle: To ensure that all goods and services are ordered as needed To receive all ordered goods and verify that they are in good condition To safeguard goods until needed To ensure that invoices pertaining to goods and services are valid and correct To record and classify the expenditures promptly and accurately To post obligations and cash disbursements to proper suppliers’ accounts in the accounts payable ledger To ensure that all cash disbursements are related to authorized expenditures To record and classify cash disbursements promptly and accurately Figure 3.1: Context Diagram of the Expenditure Cycle Figure 3.2: Level of Expenditure Cycle Basic Activities for Expenditure Cycle There are three basic activities performed in the expenditure cycle are: 1. Ordering goods, supplies, and services the Key decisions in this process involve identifying what, when, and how much to purchase from whom to purchase. Weaknesses in inventory control can create significant problems on inaccurate records cause shortages and one of the key factors affecting this process is the inventory control method to be used. We will consider three alternate approaches to inventory control: Economic Order Quantity (EOQ)-traditional approach to managing inventory just in Time Inventory (JIT)*-seeks to reduce inventory levels by improving the accuracy of forecasting techniques Materials Requirements Planning (MRP)*-to minimize or eliminate inventory by purchasing or producing only in response to actual sales The order processing typically begins with a purchase request followed by the generation of a purchase order for inventory control system. The demanding to purchase goods or supplies is triggered by the inventory control function or an employee noticing a shortage. For advanced inventory control systems, initiate purchase were automatically requests when quantity falls below the reorder point. The need to purchase goods typically results in the creation of a purchase requisition. The purchase requisition is a paper document or electronic form that identifies: Who is requesting the goods Where they should be delivered When they’re needed Item numbers, descriptions, quantities, and prices Possibly a suggested supplier Department number and account number to be charged The purchase requisition is received by a purchasing buyer (Agent) in the purchasing department that typically performs the purchasing activity and the detail on the suppliers and the items purchased can be pulled from the supplier and inventory master files. A crucial decision is the selection of supplier and basic considerations are price, quality and dependability. Based on this three criteria’s, the supplier has should selected and identify a product so its can become part of the product inventory master file so the supplier does not have to be carried out and repeated every time for every purchasing for products that are seldom ordered. It’s also important to track and periodically evaluate supplier performance including data on purchase prices, rework and scrap costs and supplier delivery performance to make sure the process it’s done on time. Purchase Order A purchase order is a document or electronic form that formally requests a supplier to sell and deliver specified products at specified prices. The PO is both a contract and a promise to pay. It includes: Names of supplier and purchasing agent Order and requested delivery dates Delivery location Shipping method Details of the items ordered Multiple purchase orders may be completed for one purchase requisition if multiple vendors will fill the request. The ordered quantity may also differ from the requested quantity to take advantage of quantity discounts. Blanket Order A blanket order is a commitment to buy specified items at specified prices from a particular supplier for a set time period. Reduces buyer’s uncertainty about reliable material sources Helps supplier plan capacity and operations Information Technology on ordering In AIS, Information technology also can help and improve for efficiency and effectiveness of purchasing function based on time and cost using: Electronic Data Interchange(EDI) to transmit purchase orders vendor-managed inventory systems reverse auctions pre-award audits procurement cards for small purchases 2. Receiving and storing these items The receiving department is responsible to accepts deliveries from vendor or suppliers and reports it to warehouse manager that who reports to Vice President (VP) of Manufacturing. Inventory stores department typically stores the goods and also reports to warehouse manager. The receipt of goods must be communicated to the inventory control function to update inventory records. The two major responsibilities of the receiving department are deciding whether to accept delivery and verifying the quantity and quality of delivered goods.The first decision is based on whether there is a valid purchase order is accepting an unordered goods wastes time, handling and storage. Verifying the quantity of delivered goods is really important so the company only pays for goods received and inventory records are updated accurately Companies must an effectively and clearly communicate with their staff especially receiving clerk so that all deliveries counting accurately. The receiving clerk need to sign receiving report, record the quantity received and also carefully examine each delivery for signs of obvious damage before routing the inventory to the warehouse. The receiving report is the primary document used in this process: It documents the date goods received, shipper, supplier, and Purchase Order (PO) number Shows item number, description, unit of measure, and quantity for each item Provides space for signature and comments by the person who received and inspected Receipt of services is typically documented by supervisory approval of the supplier’s invoice. When goods arrive; a receiving clerk compares the PO number on the packing slip with the open PO file to verify the goods were ordered. Then counts the goods Examines for damage before routing to warehouse or factory Three possible exceptions in this process: The quantity of goods is different from the amount ordered The goods are damaged The goods are of inferior quality If one of these exceptions occurs, the purchasing agent resolves the situation with the supplier and typically allows adjustment to the invoice for quantity discrepancies. If goods are damaged or inferior, a debit memo is prepared after the supplier agrees to accept a return or grant a discount. One copy goes to supplier, who returns a credit memo in acknowledgment and other copy to accounts payable to adjust the account payable and other one go to shipping to be returned to supplier with the actual goods. IT can help improve the efficiency and effectiveness of the receiving activity: Bar-coding RFID EDI and satellite technology Audits 3. Paying for these items There are two basic sub-processes involved in the payment process: Approval of vendor invoices-by the accounts payable department, which reports to the controller. The legal obligation to pay arises when goods are received and the basic approach for processing vendor invoices are non-voucher system and voucher system Actual payment of the invoices-Payment of the invoices is done by the cashier, who reports to the treasurer.The cashier receives a voucher package, which consists of the vendor invoice and supporting documentation, such as purchase order and receiving report. Internal Control for Expenditure Cycle Before we move on to discuss internal controls in the expenditure cycle, let’s do a brief review of the organization chart, including: Who does what in the expenditure cycle To whom they typically report Purchasing: selects suitable suppliers and issues purchase orders. Receiving: decides whether to accept deliveries and counts and inspects deliveries. Inventory Stores: stores goods that have been delivered and accepted. Account Payable: approves invoices for payment Cashier: Issues payment to vendors. Figure 3.3: Partial organization chart for units involved in expenditure cycle In the expenditure cycle, Accounting Information System (AIS) should provide internal and external controls to ensure that the following objectives are met: All transactions are properly authorized All recorded transactions are valid All valid and authorized transactions are recorded All transactions are recorded accurately Assets are safeguarded from loss or theft Business activities are performed efficiently and effectively The company is in compliance with all applicable laws and regulations All disclosures are full and fair Threat and Control There are several actions a company can take with respect to any cycle to reduce threats of errors or irregularities. These include: Using simple, easy to complete documents with clear instructions Using appropriate application controls, such as validity checks and field checks Providing space on forms to record who completed and who reviewed the form Pre-numbering documents to encourages recording of valid and only valid transactions. Restricting access to blank documents (reduces risk of unauthorized transaction). The threats that may arise in the three major steps of the expenditure cycle, as well as general threats, Electronic Data Interchange (EDI) related threats, and threats related to purchases of services. Before we discuss specific threats, it may be helpful to have some background on a form of occupational fraud and abuse which is broadly referred to as corruption. Corruption cases often involve arrangements between a company’s purchasing agent and a sales representative for one of the company’s vendors. The vendor’s representative may try to induce the purchasing agent to buy goods that are over-priced, inferior quality. Aren’t even needed and also aren’t even delivered. In exchange, the vendor’s rep typically offers the purchasing agent something of value. That â€Å"something† might be money, payment of a debt, a job offer, an expensive vacation, or anything the purchasing agent might value. According to the Fraud Examiner’s Manual published by the Association of Certified Fraud Examiners, these schemes usually take four forms: Bribery Conflict of interest Economic extortion Illegal gratuities Information Needs for Expenditure Cycle: Information is needed for the following operational tasks in the expenditure cycle, including Deciding when and how much inventory to order Deciding on appropriate suppliers Determining if vendor invoices are accurate Deciding whether to take purchase discounts Determining whether adequate cash is available to meet current obligations Information is also needed for the following strategic decisions based on setting prices for products/services, establishing policies on returns and warranties, deciding on credit terms, determining short-term borrowing needs and planning new marketing campaigns. The AIS needs to provide information to evaluate purchasing efficiency and effectiveness, supplier performance, time taken to move goods from receiving to production and percent of purchase discounts taken. Both financial and operating information are needed to manage and evaluate these activities. Both external and internal information are needed when the AIS integrate information from the various cycles, sources, and types, the reports that can be generated are unlimited. They include reports on: Supplier performance Outstanding invoices Performance of expenditure cycle employees Number of POs processed by purchasing agent Number of invoices processed by A/P clerk Number of deliveries handled by receiving clerk Number of inventory moves by warehouse worker Inventory turnover Classification of inventory based on contribution to profitability We also know that an accountant should continually refine and improve these performance reports Summary In this subtopic, we really learned about the basic business activities and data processing operations that are performed in the expenditure cycle on: Ordering goods, supplies, and services Receiving and storing them Approving invoices and paying for them We also learned how IT can improve the efficiency and effectiveness of these processes and learned about decisions that need to be made in the expenditure cycle and what information is required to make these decisions. This subtopic also discuss about the major threats that present themselves in the expenditure cycle and the controls that can mitigate those threats