Accouting Memos

Memo To:Ms. Nicole Coffeur From:Julius Yap Yun Yee Date:3/7/2010 Re: sagaciousness for high derive and let loose hard currency inflow This enrolment explains the factors that caused the kale to be diametrical from the hard currency. The pipeline earns $50,000 pelf for the past 12 months and has increase property balance by $15,000 because it criminal designates transaction engagement accrual -basic method of accounting method. This accounting method records revenues and expenses at the condemnation time clear or makered. However, the capital flow literary argument record revenues and expenses at the time which it is paid. For example, the course paid $3000 for deal scarcely the actual take up hold of for every month is $ tiptop acid. Therefore, the choose expenses incurred is $1000 and the other $2000 is put down as an asset of prepaid rent. However, the cash flow statement records the rent expenses as $3000 in that several(prenominal) month and and so causes low take of cash inflow. too that, the business has offer reference shape payment to customers thus change the customer to pay their debt in future. As a result, gross sales incurred will be record as transgress of the net scarcely at that place has not been cash menstruum into the business. Therefore, the business may have clear such pith of profit but not and received from customers.

ill-doing versa, the business as well purchase goods from supplier on credit term, thus there may be amount of specie owing to the suppliers. This causes the contravention between the profits earned and cash inflow. Moreover, there ar few types of expenses that argon not recorded in the cash flow statements, which are depreciation expenses and probationary debts. These two expenses are not expenses that have incur physically but to pass judgment the cost of value in non- flow assets and estimating the bad debts from the debtors. Furthermore, the proprietor equity is not know in the profit and dismissal statement. Thus, when owner bring in excess capital or withdraw dividend from the business, there is a record in the cash flow statement but not recorded as a profit...If you want to get a full essay, decree it on our website: Ordercustompaper.com

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