Learning Team A Week One Reflection Essay

The object of the comment for this week is to discuss the objectives for Week One and their relation to the importance of the equilibrize planer to internal and external characterrs. The objectives discussed by Learning Team A are the components of cash and cash equivalents, and the comparison and contrast of diverse strain cost flow assumptions and how they are valued. The internal users are indentified as heed and the external users are investors and creditors. Cash and Cash EquivalentsCash is defined in the text as the most gas of assets and is identified by companies as a current asset. (Weygandt, Kimmel, & Kieso, 2010) What has become very popular is the mixed bag called cash and cash equivalents. FASB has de preconditionined that classification to be misleading and it will probably be eliminated from financial statements. Cash will be cash and what used to be short term cash equivalents will without delay be reported as temporary investments. One of the situations leading to this determination is some companies having to take large losses on auction-rated nones. These notes are liquid because they can be traded daily, but they are not short term because the terms of the notes can be lengthy, in some cases 30 years. When the saving went bad, the auctions stopped, the value went away and the companies participating had to take sizeable losses. Why line is important on the Balance SheetInventory is an important position on the proportionateness rag. When an outsider studies the balance sheet, they suck to look at the assets that the friendship currently has to make the origin portion of the balance sheet make sense. The reason that the archive shows on the balance sheet as a current asset is so outsider investors assume the parentage sells in the future when the product is complete. When investors review the balance sheet, they also same to see that the company does not have too much livestock in case they are cannot sell it, or ge t disengage of the inventory in the future. If companies do not have an accurate sum total of inventory they have to estimate it to reflect the information on the balance sheet. Calculating inventory value using Gross Profit and sell Inventory methodsThe gross profit inventory valuation method is middling simple. Beginning inventory positivist purchases minus sales at change price less gross profit percentage equals ending inventory. The major(ip) disadvantage of this method is that it is an estimate and not actual which is why it is not a GAAP approved method unless physical inventory is make to back up the valuation (Kieso, Weygandt, & Warfield, 2010).The retail inventory method, on the other hand, is an acceptable way to valuate inventory. Many retail stores have so many items it is really impractical to do regular inventory counts. To calculate inventory valuation this way, the store takes the beginning inventory plus purchases less sales to mould ending inventory at the retail price. Then the goods available for sale at cost amount is divide by the goods available for sale at retail amount to determine the cost-to-retail ratio that figure is multiplied by the retail ending inventory to come up with the cost.Internal users of account statement can include management, employees, and owners. Managers use this accounting information to view the companys performance. Employees view accounting information for job security. Owners view accounting information to view acquire from their investments. External users can insist of creditors, investors, and customers. Creditors use this information to check the companys credit worthiness. Investors would like to earn money from their investments. Customers would like to assign a long term company customer relationship. The balance sheet allows internal and external users to view what the business has and what the business owes. Knowing a companys net worth is very important. Using different methods to c alculate inventory for companies can be very critical.