Accounting – Page 4 – Best Essay Writers

Applying the IRS Code Rules

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Applying the IRS Code Rules

Complete 6 problems that require you to apply research and knowledge of the rules and laws associated with at-risk or passive activity losses, as well as the individual alternative minimum tax (AMT).

Note: The assessments in this course are presented in sequence and must be completed in order. Do not complete Assessment 6 until you have submitted and received faculty feedback for Assessment 5.

Tax regulations are in a state of constant change. Being able to locate and correctly interpret and apply the information to a problem is a highly valued skill.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

Competency 1: Analyze the background of the federal income tax system.
- Correctly explain the tax effect in a specified scenario for the last year and the current year.
Competency 2: Analyze the basics of individual income tax return preparation.
- Correctly calculate the initial basis, allowed losses, and ending at-risk amounts.
- Correctly explain how to treat a loss on a federal income tax return.
- Correctly calculate what can be deducted on a final income tax return.
- Correctly calculate the loss disallowed by at-risk rules and how much of the loss is disallowed by the passive loss rules.
- Correctly calculate itemized deductions for AMT purposes and identify the amount of the AMT adjustment.

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Context

There is a separate tax system from the one you have been studying. The goal of this second system is to identify individual and corporate taxpayers who might escape paying taxes by using the Internal Revenue Code’s advanced tax incentives and programs. This alternative minimum tax (AMT) system employs rules based on a taxpayer’s AMT income. As you will learn, little income escapes the IRS.

Over the coming decade, a growing number of taxpayers will become liable for the AMT. Rather than affecting only high-income taxpayers who would otherwise pay no tax, the AMT has extended its reach to many upper-middle-income households. As more taxpayers incur the AMT, there will likely be increased pressure to reduce or eliminate the tax (CBO, 2010).

Questions to Consider

epen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.

What are some advantageous rules individual taxpayers can employ to avoid the AMT?
How far in advance should a taxpayer develop a tax strategy?
Is developing a tax strategy something only high-income people should do?

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Resources

Required Resources

The following resources are required to complete the assessment.

Assessment 6 Problems: Applying the IRS Code In a Word document, provide complete answers with explanations to the problems below.

Problem 1

In 2014, Matthew contributes equipment with an adjusted basis of $40,000 and a FMV of $36,000 to Construction Limited Partnership (CLP) in return for a 3% limited partnership interest. Matthew’s share of CLP income and losses for the year were as follows:

Interest $ 1,000

Dividends 600

Capital gains 1,800

Ordinary loss (8,650)

CLP had no liabilities. What are Matthew’s initial basis, allowed losses, and ending at-risk amount?

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Problem 2

During the current year, Ben worked 1,500 hours as a tax consultant and 500 hours as a real estate agent. His one other employee (his wife) worked 350 hours in the real estate business. Ben earned $60,000 as a tax consultant, and together the couple lost $18,000 in the real estate business. How should Ben treat the loss on his federal income tax return?

Problem 3

Chrystal died owning an interest in a passive activity property. The property had an adjusted basis of $270,000, a fair market value of $284,000, and suspended losses of $25,000. What can be deducted on her final income tax return?

Problem 4

Howard has a $76,000 loss from an investment in a partnership in which he does not participate. His basis in the interest is $70,000.

a. How much of the loss is disallowed by the at-risk rules?

b. How much of the loss is disallowed by the passive loss rules?

Problem 5

Roberta gave her daughter a passive activity last year that had an adjusted basis of $37,500. The activity had suspended losses of $17,500 and a fair market value of $60,000. In the current year, her daughter realized income of $9,000 from the passive activity. What is the tax effect on Roberta and her daughter last year and in the current year?

Problems are continued on the next page

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Problem 6

Create a table for the answer to this problem. Include these categories: AMT; Regular Tax: Adjustment.

Charles had the following itemized deductions in 2014:

State income taxes $3,000

Charitable contributions 4,900

Mortgage interest (personal residence) 14,000

Medical expenses [$8,000-(7.5% ×$75,000)] 2,375

Miscellaneous [$3,200-(2%×$75,000)] 1,700

What are Charles’ itemized deductions for AMT purposes?
What is the amount of the AMT adjustment?

Internet Resources

IRS.gov is the homepage for the federal IRS Web site. Use the tabs at the top of the page to navigate the site. The Interactive Tax Assistant and Tax Trails are tools that walk you through a series of questions to find answers to tax questions.

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IRS.gov. (n.d.). Retrieved from http://www.irs.gov/
IRS. (n.d.). Interactive tax assistant. Retrieved from http://www.irs.gov/uac/Interactive-Tax-Assistant-(ITA)-1
IRS. (n.d.). Tax trails. Retrieved from www.irs.gov/Individuals/Tax-Trails%2d%2d%2dMain-Menu

Wiley. (2012). Wiley registered tax return preparer exam review. Hoboken, NJ: Author.
Halperin, D. I., & Warren, A. C., Jr. (2014). Understanding income tax deferral. New York University Tax Law Review, 67 Tax L. Rev. 317.
Dungan, A., & Parisi, M. (2014). Individual income tax rates and shares, 2011: Statistics of income. SOI Bulletin, 33(4), 5–50.
Flynn, K. E., Belak, P., & Soltis, G. (2014). Understanding individual tax compliance: Advanced deductions and related issues. Journal of Business Case Studies, 10(4), 425–440.

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Internet Resources

lynda.com. (n.d.). Income tax fundamentals: Accounting tutorials. Retrieved from http://www.lynda.com/Business-Accounting-tutorials/Income-Tax-Fundamentals/188210-2.html
IRS. (n.d.). IRS videos. https://www.youtube.com/user/irsvideos.
- The IRS has a channel on YouTube devoted to income tax information in a video format. There are numerous videos available to help you with the course assessments. Videos are available with closed captions and in ASL and multilingual versions. You can search this channel by topic.

Cruz, A., Deschamps, M., Niswander, F., Prendergast, D., Schisler, D., & Trone, J. (2016). Fundamentals of taxation 2016 [with taxation software] (9th ed.). New York, NY: McGraw-Hill.

Chapter 13, “At-Risk/Passive Activity Loss Rules and the Individual Alternative Minimum Tax.”

Assessment Instructions

For this assessment, complete the following:

Download the Assessment 6 Problems document, linked in the Resources under the Required Resources heading.
Using the primary source of IRS.gov and the IRS Interactive Tax Assistant and Tax Trails (linked in the Resources under the Required Resources heading), locate and interpret regulations and publications that relate to each problem.
Record your answers to the problems in a Word document.
Provide an explanation for each answer.
Submit the Word document containing your answers to the problems and the explanations for your answers.

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Inclusions, Exclusions, and AGI Assessment 3

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Inclusions, Exclusions, and AGI Assessment 3

Overview

Apply the rules associated with inclusions and exclusions to an individual’s gross income and apply another set of code rules to determine a taxpayer’s AGI.Note: Completing a tax form requires specific steps that need to be executed in a sequence. The assessments in this course are presented in sequence and must be completed in order. Incorrect entries in previous assessments will result in incorrect entries in future assessments. Do not complete Assessment 3 until you have submitted and received faculty feedback for Assessment 2.

Understanding the ever-changing rules for including and excluding income in the calculation of a taxpayer’s adjusted gross income (AGI) for income tax purposes is a skill that is developed through practice.By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

• Competency 2: Analyze the basics of individual income tax return preparation.o Analyze official rules and instructions to correctly calculate deductible self-employment taxes.o Interpret official rules and instructions to record correct entries on tax forms.o Apply rules and instructions to correctly compute AGI for the year.

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Context

I don’t know what to do or where to turn in this taxation matter. Somewhere there must be a book that tells all about it, where I could go to straighten it out in my mind. But I don’t know where the book is, and maybe I couldn’t read it if I found it.” — Warren G. Harding, the 29th President of the United States, 1921–1923.

About now, you may be nodding your head in agreement with President Harding’s quote about the complexity of the tax code, with its many inclusions and exclusions. What started out as a simple document, designed to raise capital to make the new nation independent from the British Empire, has evolved over the centuries and decades into a complex maze of rules and regulations.Nowhere is that more pronounced than in the rules for including and excluding income in the calculation of a taxpayer’s adjusted gross income (AGI) for income tax purposes.

Gross income is commonly defined as the amount of a company’s or a person’s income before all reductions, except that which is specifically excluded by the Internal Revenue Code, before taking deductions or taxes into account. Since not all of an individual’s personal income is subject to taxation, one must crack open the voluminous tax codebook to discover exclusions from the tax collector’s grasp.

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Question to Consider

To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.The primary purpose of the Internal Revenue Service is to raise revenue for the government. However, the U.S. Congress has chosen to exempt certain income from taxation, such as scholarships, gifts, life insurance proceeds, municipal bond interest, and employee fringe benefits.

• Why you believe Congress has provided these exemptions to taxpayers?

• Which of the additional exemptions would you challenge?

• Which of the additional exemptions do you agree with?

Resources

Required Resources

The following resources are required to complete the assessment.

Internet Resources

Access the following resources by clicking the links provided. Please note that URLs change frequently. Permissions for the following links have been either granted or deemed appropriate for educational use at the time of course publication.
RS.gov is the homepage for the federal IRS Web site. Use the tabs at the top of the page to navigate the site. The Interactive Tax Assistant and Tax Trails are tools that walk you through a series of questions to find answers to tax questions

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Download the appropriate forms and publications from the IRS Web site to complete this assessment.•IRS.gov. (n.d.). Retrieved from http://www.irs.gov/• IRS. (n.d.). Interactive tax assistant. Retrieved from http://www.irs.gov/uac/Interactive-Tax-Assistant-(ITA)-1• IRS. (n.d.). Tax trails. Retrieved from www.irs.gov/Individuals/Tax-Trails%2d%2d%2dMain-Menu

FORM 1040: INCOME

This section of the Form 1040 encompasses the major components of total income and many types of nontaxable income for the filing taxpayer(s). Major components of this section include interest income, dividend income, unemployment compensation, social security benefits, and other types of income received by the taxpayer(s).
Licensed under a Creative Commons Attribution 3.0 License.

FORM 1040: ADJUSTED GROSS INCOME

Filing taxpayers can deduct additional items from total income for purposes of computing AGI. These items are termed “for AGI deductions”, or “above the line” deductions. The line refers to the AGI line on Form 1040.
The major items covered in this section of the Form 1040 are student loan interest, health savings accounts, moving expenses, self-employment taxes, early withdrawals from savings, and deductions for alimony paid.
Licensed under a Creative Commons Attribution 3.0 License.

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Resources

J. K. Lasser Institute. (2015). Your income tax 2015: For preparing your 2014 tax return.

Hoboken, NJ: Wiley.J. K. Lasser Institute. (2014). Your income tax 2014: For preparing your 2013 tax return.

Hoboken, NJ: Wiley.Drake, A. E. (2015, January 5). Reducing your taxes before the end of the year. Mondaq Business Briefing.Vento, J. J. (2014, March).

Beating the tax man. USA Today, 142(2826), 58–59.

Ashton, M. (2015, March 5). The forgotten tax deductions.

Mondaq Business Briefing.

Halperin, D. I., & Warren, A. C., Jr. (2014). Understanding income tax deferral.

New York University Tax Law Review, 67 Tax L. Rev. 317.

Internet Resources

Access the following resources by clicking the links provided.

Please note that URLs change frequently. Permissions for the following links have been either granted or deemed appropriate for educational use at the time of course publication.
lynda.com. (n.d.). Income tax fundamentals: Accounting tutorials. Retrieved from http://www.lynda.com/Business-Accounting-tutorials/Income-Tax-Fundamentals/188210-2.htmlIRS. (n.d.). IRS videos. https://www.youtube.com/user/irsvideos.The IRS has a channel on YouTube devoted to income tax information in a video format. There are numerous videos available to help you with the course assessments. Videos are available with closed captions and in ASL and multilingual versions.

You can search this channel by topic.
Cruz, A., Deschamps, M., Niswander, F., Prendergast, D., Schisler, D., & Trone, J. (2016). Fundamentals of taxation 2016 [with taxation software] (9th ed.). New York, NY: McGraw-Hill.Chapter 3,

“Gross Income: Inclusions and Exclusions.”Chapter 4, “Adjustments for Adjusted Gross Income.”

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Assessment Instructions

Note: The assessments in this course are presented in sequence and must be completed in order. In Assessments 2–5, you will work step-by-step toward completing a 1040 tax return and all the necessary related forms, based on a provided scenario. Do not complete Assessment 3 until you have submitted and received faculty feedback for Assessment 2.

Incorrect entries in Assessment 2 affect the entries in Assessment 3.
For this assessment, use information and publications from IRS.gov and the other IRS resources linked in the Resources under the Required Resources heading to determine the adjusted gross income (AGI) for Jacob and Taylor Weaver, based on the provided scenario.

Complete the following:

Read the information in the scenario below.Download the appropriate forms and publications from IRS.gov.Enter information from Assessment 2, Schedules C and SE, into the 1040 form.Apply the rules for adjustments to adjusted gross income.Enter applicable information from the scenario into the 1040 form.Interpret official rules and instructions to record correct entries on the tax form.Calculate the AGI for the Weavers.Submit the tax form.

Scenario

Jacob and Taylor Weaver, ages 45 and 42 respectively, are married and are filing jointly in2016. They have three children, Ashley, age 9; Patrick, age 6; and John, age 18.Social Security numbers are: Jacob, 222-33-4444; Taylor, 555-66-7777; Ashley, 888-99-1234; Patrick, 789-56-4321; John, 123-45-6789. Taylor works part-time as a paralegal.She earned $26,000 in 2016.Taxes withheld: $4,200 withheld.Estimated tax payments: $25,000.$350 paid with their 2015 state tax return.Jacob and Taylor bought their first house in 2016.

Home mortgage interest: $7,246.Property tax: $2,230.Federal income withholding: $2,350.Charities: $4,500.$435 to rent a moving truck.$8,000 to put new siding on the house.$11,600 for child care expenses ($5,800 for each child).It was paid to Lil Tigers Daycare, 1115 S. Garrison St., Muncie, IN 47305 (EIN 98-7654321).Taylor is a part-time student at Ball State University in Muncie.She received a 1098-T indicating tuition and fees for 2016 in the amount of $6,011.Health insurance for the family, through Taylor’s job, cost $6000 for all 12 months of 2016.They paid deductibles and co-payments of $550.

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Activity Based Costing

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Activity Based Costing

Introduction

Activity based costing (ABC) is one of the accounting concepts where costs relating to operation processes are traced back to their causes. Costs are not directly assigned to the products instead they are assigned to activities that relates to their production in the company. The product costs are calculated from its usage of the activities involved (Jurek et al, 2012). ABC costing requires thorough knowledge of the business process that involves the ABC costing in order to calculate and determine the distribution of the costs (Garrison et al, 2009).

The ABC costing concept traces all the resources that have been channeled to the activities and later to the cost objects for accurate calculation of cost distribution. Each cost object represents a process or product while the individual activities are actions that must be executed to enable the creation of the cost objects. The resources in ABC are typically the objects that consumed in the manufacturing activities and ultimately results in such costs as labor, materials or equipment.

The concept of ABC in cost accounting is such that the cost objects in the manufacturing process consume activities that also consume the resources and later the consumption of the resources ends in costs (Weil and Maher, 2005).

ABC accounting provides the true costs of the finished products while also providing a detailed insight on the reasons of the current product costs. These details provide various aspects and opportunities to improve the products while also exploring ways of cost reductions.

The drivers in ABC cost accounting are applied in tracing the resources to particular activities while the activities are utilized to trace the resources to the cost objects. The resource drivers trace all the actual resources to the process activities while the activity drivers extend the trace to the cost objects. The drivers basically represent the actual causes of consumption hence permit accurate distribution of cost down the ABC chain. The drivers shown below in figure 1 represent some resources in ABC accounting and the activity drivers. The drivers must however be accurately correlated with the causes of production consumptions.

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ABC accounting is directly associated with values mostly in monetary terms, however in ABC costing the values can be modified to include additional measurements like environmental factors. ABC costing facilitates the dual calculations as it measures quantities of resources that have been consumed by the manufactured products. From the quantities calculated one can apply specific costs or the results of the environmental impact provided to calculate the required total cost. For example, in automobile production plant, a product can consume up to 4MWH of electricity amounting to $200 per MWH.

ABC Cost Calculations

		Monetary
Resource	Resource Amount	Specific Cost	Total Cost
Electricity	4 (MWh)	200 ($/MWh)	$800

The specific impact to the environment may be 20 kg CO2 for every MWH. Hence the products total cost both in monetary and environmental terms would amount to $800 and 80kg of CO2. The expansion of the ABC costing aspect is materially applied in the processing industry to analyze Life Cycle Assessments or analysis of the plant’s manufacturing processes.

ABC Environmental Calculations

		Environmental
Resource	Resource Amount	Specific Cost	Total Cost
Electricity	4 (MWh)	20 ($/MWh)	80 (Kg CO2)

The Paint Shop in Automotive Industry

The manufacturing processes in an automobile plant are divided into three important departments:

The Paint Shop
The General Assembly
Body Shop

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The body shop utilizes and transforms the basic raw materials that make up a vehicle into the initial structure of a vehicle. The protective coating is applied in the paint shop while in the final assembly plant of the factory other components are fitted before the vehicle finally rolls over to the show room. These components are like wheels, engines, gear boxes, headlights among other components. Each of the above departments has also different departments. For example, the paint shop has the following departments;

Application of ELPO
Sealing Application
Paint Booth
Post paint repairs that also include cavity waxing.
Pretreatment of the product

The pretreatment stage allows the cleaning of all the contaminants that have accumulated on the body of the vehicle. Phosphate is usually applied at this stage of production as primary coating to ensure a protective layer is evenly applied. The Electro Coat Primer Operation is applied to increase the vehicles paint effectiveness. Sealing and the other remaining processes are utilized to obtain a fine finishing of paint application. The other activities in the paint line are listed in table 1 below.

Activities in Paint line (Table 1)

Activities

A1 – Air Abatement

A2 – Light Building

A3 – Air Conditioning

A4 – Liquid Heating

A5 – Manual Sealing

A6 – Moving Air

A7 – Moving Liquid

A8 – Moving Product

A9 – Operating Robot

A10 – Lighting Process

A11 – Repairing Product

Each of the activities mentioned above have several other activities below them. The following are the activities under Air conditioning activities in the paint shop.

Example of Activity States (Table 2

Level 1	Level 2
A3 – Air Conditioning	A3.1 – Startup Air Conditioning
	A3.2 – Production Air Conditioning
	A3.3 – Setback Air Conditioning
	A3.4 – Maintenance Air Conditioning
	A3.5 – Shutdown Air Conditioning

To conclude, ABC costing has a wide range of applications. Numerous studies have been successfully undertaken to determine the flexibility of activity based accounting including the environmental metrics. ABC accounting can be applied to any manufacturing process and can also be expanded to include other non-traditional costs that are only associated with cost accounting.

Reference

Garrison, R., Noreen, W. & Brewer, P. (2009) Managerial Accounting, New York, NY: McGraw-Hill Irwin. 65 -70

Jurek, P., Bras, B. Guldberg, T., D’Arcy Seon-Chan, O, and Biller, S. (2012) Activity Based Costing Applied to Automotive Manufacturing, http://www.manufacturing.gatech.edu/sites/default/files/uploads/pdf/Final%20version%20_Jan%2026%202012_.pdf

Weil, R.L. and Maher, M.W. (2005) Handbook of Cost Management, New Jersey, John Wiley & Sons.

Activity Based Costing

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Masters in Accounting Personal Statement

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Masters in Accounting Personal Statement

INSTRUCTIONS:

Write an application for the master program in accounting, this program is designed for students with no prior background in accounting or business. The Masters in Accounting Personal Statement should reflect your career journey, aspirations and achievements.

A personal statement, also known as a “statement of purpose” or “goal statement,” is a document that demonstrates your writing ability on a more personal level for your application into a graduate program.

A personal statement, also known as a “statement of purpose” “goals statement” or “admissions essay” serves to:

Demonstrate your writing ability on a more personal level for your application into a graduate program.
Discuss your personal, career, and educational goals or answer a general question posed by the graduate school’s admission committee.
Gauge your critical and analytical thinking as well as your writing, editing skills, and general reasoning skills and your ability to reflect on your education and work experience.
Provide insight into who you are which helps to determine if you would be a good fit into a specific graduate program.

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Merchandise Operations

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Merchandise Operations

Merchandise Operations: Inventory consists of finished goods, partially finished goods, and raw materials. A manufacturing firm might have raw materials and partially finished goods that require further processing while retail might have finished goods that are awaiting shipment at the end of the financial period. The method used for inventory costing directly affects the cost of good which affects the gross profit and net income.

The periodic inventory costing system uses the physical inventory counts the estimates for the cost of goods for closing inventory balance since it does not track inventory daily. Moreover, the perpetual inventory costing method updates each sale and purchase thereby continually updating the inventory and cost of goods balance. First-in-first-out, last-in-last-out, specific identification and weighed average costing are the most common valuation methods (Michael 2012). Costs of inventory include but not limited to shipping, acquisition, and direct costs.

During inflation, FIFO costing flow method is likely to give high ending inventory. If the inventory is high, the net income is also expected to be high. FIFO method uses the assumption that the first purchased inventory item becomes the first one to be used in production or sold (Chirantan 2016). Therefore, when there is inflation in the market, the cost of goods in the income statement consists of the less expensive items. However, the ending inventory includes the most expensive items. As a result, the amounts of ending inventory and net income are high.

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It is, therefore, impeccable that a company applies different inventory costing methods to counter inflation and deflation. Under LIFO method, ending inventory and net income is lower than under FIFO method. When weighted average costing method is used, inventory cost is high and net income is low during inflation (Michael 2016). Specific identification method provides net income that is dependent on acquisition costs of inventory. Therefore, FIFO is the only costing method that produces high inventory and high-income amounts during inflation.

References

Chirantan Basu (2016). How different inventory methods can affect net income. Retrieved from http://smallbusiness.chron.com/different-inventory-methods-can-affect-net-income-34570.html

Michael Celender (2012). FIFO method, LIFO method, and Weighted average cost. Retrieved from http://www.accounting-basics-for-students.com/fifo-method.html

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Inventory Costing Methods

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Inventory Costing

Inventory consists of finished goods, partially finished goods, and raw materials. A manufacturing firm might have raw materials and partially finished goods that require further processing while retail might have finished goods that are awaiting shipment at the end of the financial period. The method used for inventory costing directly affects the cost of good which affects the gross profit and net income.

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References

Chirantan Basu (2016). How different inventory methods can affect net income. Retrieved from http://smallbusiness.chron.com/different-inventory-methods-can-affect-net-income-34570.html

Michael Celender (2012). FIFO method, LIFO method, and Weighted average cost. Retrieved from http://www.accounting-basics-for-students.com/fifo-method.html

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FIFO, First-in-first-out Costing Method

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FIFO, First-in-first-out Costing Method

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References

Chirantan Basu (2016). How different inventory methods can affect net income. Retrieved from http://smallbusiness.chron.com/different-inventory-methods-can-affect-net-income-34570.html

Michael Celender (2012). FIFO method, LIFO method, and Weighted average cost. Retrieved from http://www.accounting-basics-for-students.com/fifo-method.html

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Budgeting for a Start-up Company

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Budgeting for a Start-up Company

Budget to Implement for a Start-up Company

Starting a company can be a daunting task if not well planned. Creating a budget is an essential task for a start-up company and it can help one understand where the business is going and if it is on the right track. The accountant helps in giving financial information that helps managers, tax authorities, investors and others in making decisions about resources allocation in the budget.

A budget should be realistic and accurate for a certain company depending on its goals (Banham, 2009).It helps explain how a company will utilize its resources to attain its goals. The main aim of this paper is to explain a budget to implement in a start-up company that will help it reach its financial forecast.

Although budgeting is indeed more work, it pays off with many benefits. Some of these benefits include price setting, capital and credit procurement, flexibility, and forecasting. A master budget involves linked budgets of production costs, sales, purchase, and income. In the management of a company, it serves as the controlling and planning tool. It has two components, the financial and operational budget.

A business plan is a guide to owners, investors, and managers as a business starts and through its growth in different stages. Apart from a start-up plan, there exist several forms of business plans, which include internal, strategic, feasibility, operations business, and expansion plan (Livingstone, 2013).

Budgeting for a Start-up Company

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A manufacturing company is a company that converts raw materials to finished goods. The consumer buys the finished goods directly or another manufacturing business uses them for making a different product. For the purpose of this paper, a bakery will be the manufacturing company. Value chain is a series of activities that add value to a company. The bakery company value adding activities are of two types, these include primary and support activities. The activities in the primary type include,

Inbound logistics, this will entail the receiving of raw materials.
Operations, this is the manufacturing stage which involves conversion of wheat into baked items.
Outbound logistics will help in the distribution of the baked goods to consumers.
Marketing and sales, this will involve identifying customer’s needs and generating sales for the company.
Services, this activity will provide after sales support services for the consumer.

The secondary activities will be in four categories, which include human resource management, business infrastructure, technological development, and supply chain management. Business infrastructure activity will involve organization of structure, culture, and control systems. Human resource management will involve employee’s recruitment and training. Technological development activity will entail having information technology to support the value chain and the company. Supply chain management will entail purchasing materials, equipments, and suppliers for the company (Hornyak, 2008).

Budgeting for a Start-up Company

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An operating budget is the analysis of asserts, expected costs, and predicated income over a specific period. This type of budget will be appropriate for the bakery company. The budget must account for factors such as material coast, production, labor cost, sales, manufacturing costs, and administrative expenses. The budget is manageable on a weekly, monthly, or yearly basis.

The operating budget also provides a way for a company to estimate its immediate future expenses and revenues. Several reviewing steps are necessary in ensuring the company attains its goals, these steps include, review of business goals against performance, review of budget variance, and access issues associated with budget overages (Livingstone, 2013).

The idea behind benchmarking is to make ensure that its services, products, and practices are the best against their competitors. Four benchmarking process will be utilized in the bakery company these includes,

Process benchmarking this demonstrates how top bakery companies accomplish specific task that earn them success. Interviews, site visits, and research are ways of obtaining information.
Performance metrics this involves use of qualitative measures as the reference for comparisons.
Strategic benchmarking this identifies winning strategies and lessons that have enabled top bakery companies to be successful.
Financial benchmarking involves a financial analysis of the bakery comparing it with top performers in order to assess the company’s competiveness.

Budgeting for a Start-up Company

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Benchmarking has several benefits, which includes, clarity of specific areas of opportunities, set performances expectations, and enable monitor and manage company’s performers (Hornyak, 2008).

Cost accounting involves collecting, analyzing, summarizing, and evaluating numerous alternatives to help managers take the most suitable course of action in the management of the company. The bakery will implement process costing as its type of costing systems. Process costing is a system that allocates direct and indirect cost for the manufacturing process. It assigns goods in large amounts.

The system is important since it will help the company keep track of the expenses in the production and distribution of goods. For example, the company may produce large number of bread but they may sell in small quantities, therefore it is necessary to allocate total product costs to units of product. One of the challenges that the company will face due to this system are costs errors.

Process costing does not allocate direct costs to individual goods leading to cost errors. This leads to increase in production cost thus increase in consumer product price. The company will implement the value chain analysis to overcome the problem that will help reduce the non-production cost thus creating the greatest possible value and price for consumers (Banham, 2009).

Budgeting for a Start-up Company

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For a start-up company to be successful it needs to draft a well-planned budget. This budget determines the success or failure of a company. By using this vital tool, one is able to track company’s expense, asserts and revenue required to keep the company growing. It may also help the company identify problems before they arise and be able to solve them. Therefore, a budget is like a roadmap for a company.

References

Banham, R. (2009). Better Budgets. Journal of Accountancy , 40-63.

Fearon, C. (2010). The Budgeting Nightmare. CMA Managment , 100-112.

Hornyak, S. (2008). Budgeting Made Easy. Management Accounting , 25-40.

Livingstone, J. L. (2013). The Portable MBA in Finance and Accounting. Accounting , 83-95.

Budgeting for a Start-up Company

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Bank Reconciliation and Internal Control

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Bank Reconciliation and Internal Control

Bank Reconciliation and Internal Control. Bank reconciliation refers to the process performed by companies in ensuring that a company and its records such as ledger accounts and balance sheet are correct including the bank records. The process begins with the company making notification of balances per the statements and after that making some notations concerning the bank balances.

Possibilities can emerge that the bank received money during the closing date of the organization and recorded it properly in its records (Osborn 2013). It might have been recorded in the bank’s records late and appears in the records of the next bank statement, hence resulting in a deposit in transit.

It is, therefore, an important tool in internal control because it gives an accuracy of the records of accounting in the financial statements of the company. If the bank reconciliation statement is carried out properly, it presents the actual performance and help in the elimination of discrepancies in accounting information. After the adjustment in balance per bank to represent the true balance and the balance per book adjusted, the actual values are a true representation and help in internal control by avoiding omissions due to the hard and tedious process of filling accounting information (Weygandt et al., 2015).

It helps in the preparation of statements of accounts for the disparity amid cash balance according to the bank statements and the money equilibrium in the money account of the company.

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The person receiving cash payments should not perform the reconciliation or prepare the reconciliation statements. When the bank reconciliation is done by someone other than the one authorized to check the record keepers and the signers, internal control over cash has been achieved by the company. The main argument behind this is that, if the same person performs both tasks, then the same discrepancy or omission can be repeated if there was any hidden fault in the records.

References

Osborn, J. P. (2013). A Forensic Accounting Integrated Case. Journal of the International Academy for Case Studies, 19(7), 39.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting. John Wiley & Sons.

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