Suppose a new management team is in charge of Wild Roses Inc., a micro-brewery. Assume Wild Roses
Question:
Stephen Federer, President:......................."I want to avoid the hassle of adjusting the books every time we need financial statements. Sooner or later we receive cash for all our revenues and we pay cash for all our expenses. I can understand cash transactions, but all these accruals confuse me. If I cannot understand our own accounting, I'm fairly certain the average person who invests in our company cannot understand it either. Let's start recording only our cash transactions. I bet it won't make any difference to anyone."
Kate McNamara, Chief Financial Officer: ....................... "Sounds good to me. This will save me lots of headaches. I'll implement the new policy immediately." Write a business memo to the company president giving your response to the new policy. Identify at least five individual items (such as specific accounts) in the financial statements that will be reported incorrectly. Will outside investors care? Use the format of a business memo given with Problem 3-2A on page 158.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Horngrens Accounting
ISBN: 978-0133855371
10th Canadian edition Volume 1
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann L. Johnston, Peter R. Norwood
Question Posted: