In the early fall of 2010, Kim Fuller was employed as a district sales engineer for a large chemical firm. During a routine discussion with plant chemists. Fuller learned that the company had developed a use for the recycled material, in pulverized form, made from plastic soft drink bottles. Because the state had mandatory deposits on all beverage bottles, Fuller realized that a ready supply of this material was available. All that was needed was an organization to tap that bottle supply, grind the bottles, and deliver the pulverized plastic to the chemical company. It was an opportunity Fuller had long awaited-a chance to start a business.
1. What information will Fuller need to manage the business? Classify this information in two categories: accounting information and nonaccounting information.
2. See what you can do to draw up a beginning-of-business list of the assets and liabilities of Fuller's company making any assumptions you consider useful. How should Fuller go about putting a value on the company's assets? Using your values, what is the company's opening owners' equity?
3. Now that Fuller has started to make sales, what information is needed to determine "profit and loss"? What should be the general construction of a profit and loss analysis for Fuller's business? How frequently should Fuller do such an analysis'?
4. What other kinds of changes in assets, liabilities, and owners' claims will need careful recording and reporting if Fuller is to keep in control of the business?