Accounting -The Assignment YOU DO NOT HAVE TO DO THE ASSIGNMENT ITSELF,

| January 31, 2017

Question
FINA425-1201A-01: Budgeting

Discussion Board

The Assignment (YOU DO NOT HAVE TO DO THE ASSIGNMENT ITSELF, ONLY RESPOND TO STUDENT POSTS, BASED ON THE ASSIGNMENT!)

For this assignment, you must answer the following questions:

• What is the difference between forecasting and budgeting?

• What is the difference between an operating budget and a cash budget?

• Explain what zero-based budgeting is and how it can improve the efficiency of the organization?

Remember to use the library or other credible resources to support your argument. Be sure to cite your sources using the correct standard of APA.

How to respond to students’ posts:

Your DB assignment and your comments to classmates should be critical and meaningful.

• Include detail and specific content

• Illustrate critical thinking

• Relate the learning to the class readings

• Create opportunities for discussions that lead to fuller understanding of the subject matter

• Use credible sources to support positions

• When agreeing with postings of classmates, give specific information that supports the concept

• When disagreeing with postings of classmates, give specific information illustrating the credibility of the disagreement

• Constructive debate using proof to support points

• Reflective thinking should be displayed in responses

• Incorporate pertinent real-life experiences (optional)

• The mechanics, grammar, spelling and structure should be accurate, logical, and clear

Discussion Board Grading Criteria:

“A” – Answer the question fully and intelligently, providing meaningful responses to classmates and use the text as support. To earn a high A, you must site external research sources, make reasonable inferences, and/or use a real world example. Responses are posted within the allotted timeframe and are written at a college-level.

Student Posts:

Student#1

Forecasting & Budgeting

Forecasting is predicting the outcome of events. It is an essential starting point for budgeting. Budgeting is planning for a result and controlling to accomplish that result. Budgeting is a tool, and its success depends on the effectiveness with which staff use it(Shim,Shim& Siegel 2012). Forecasting can be looked at as just looking ahead to the outcome of upcoming events, while budgeting on the other hand is planning ahead one has more control over the results when budgeting is done.

Operating & Cash Budget.

An operating budget deals with the costs for merchandise or services produced. It covers income statement items comprised of revenues and expenses. A cash budget is for planning and control. It presents expected cash inflow and outflow for a designated time period. The cash budget helps management keep cash balances in reasonable relationship to its needs and aids in avoiding idle cash and possible cash shortages. The cash budget typically consists of four major sections:receipts, disbursement, cash, and financing sections.

Zero-Based Budgeting

Is a priority form of budgeting, ranking activities such as products and services. It can be used by financial managers to identify,plan, and control projects and programs. It enhances effectiveness and efficiency and matches service levels to available resources. It can lower production, service, and operating costs. This type of budgeting can improve efficiency of an organization because justification is needed in order to fund a project.

Ref:

Shim,Shim and Siegel-2012

Student#2

Misty Touchet

When a budget is created the business is essentially making a plan and creating a formal statement that can be presented to the board that shows what the company plans to do and how they plan to do it. The individual projects that will take place during a specific time frame are carefully planned out. The funds needs to complete the projects, as well as the funds needed for the company to run, such as salaries and utility costs, are put together in a budget so that there is a clear picture of what it is going to take to achieve the goal.

A forecast on the other hand is a prediction of what might happen. A forecast can show the changes in costs due to inflation, the stock market, supply and demand, and other ever changing aspects that cause prices to increase or decrease substantially. Forecasts can help managers when they are looking at a project costs for budgeting purposes.

The operating budget shows the income and expenses of a company. It follows the costs of the supplies and the income generated by the produces. The cash budget shows the inflow and outflow of the cash and helps managers keep the cash balance in check. There are four major sections to the cash budget, the receipt section which shows the beginning cash balance and tracks the cash receipts collected from customers, the disbursement section that tracks all the payments made, the cash surplus or deficit section which shows the difference between collections and payments, and the financing section which tracks money that is borrowed and repaid.

A zero-based budget (ZBB) is a budget that begins with a zero balance. The budget must be reviewed and then determined if it will be funded. If the budget is not funded it could affect other projects so alternatives must be pursued. Non-profit organizations use zero-based budgets frequently. ZBB forces an organization to prioritize its projects and look for alternative ways to fund or do projects. ZBB also forces organizations to plan over several years because of the time and cost required.

Reference

Shim, A. I., Shim, J. K., & Siegel, J. G. (2012). Budgeting

Basics and Beyond. Hoboken: John Wiley & Sons Inc .

Student#3

Chanta Johnson

AIU

January 11, 2012

Forecasting is the real prediction of your values and budget projected into the future and sets an expected result within a specific time frame; the objective of it is to reduce risk in decision making. On the other hand budgeting is the process of systematizing your on hand earnings and everyday expenditure for the idea of foretelling your financial values to achieve desired outcome into the future. (Shim, Siegel, & Shim, 2012)

What is the difference between an operating budget and a cash budget? Operating Budget is the process that provides an overview of the operating expenses to organize or manage a business. It includes the businesses daily fixed cost and income that gives them the chance to analyze an expected income. In general in a government ran institute entities included consist of wages, profit, rental fee, utilities, equipment, and replacement of reduced price for tools in the operating plan.

Cash budget, also acknowledged as the cash flow budget is a calculation or forecast of yet to come cash revenue and spending for a specific time period, typically in the short-range future. This budget shows the tangible standing of the company and foresees how the business will meet its overheads without external financial support. (AIU, 2012)

Explain what zero-based budgeting is and how it can improve theefficiency of the organization? Zero-based budgeting is the process in which managers can plan an educated guess of his or her projected expenses for a precise time period as if the process were being completed for the initial time.

This process is essential because it enables mangers a chance to start a budget cycle from a base of zero and forces them to take look closely at all of the companies operating cost. The outcome of this process and findings are then reviewed and validated to top executives. A process that aids in improving to support and reduce any companies surplus which will increase effectiveness of any organization.

References

AIU, (2012) FINA425 Unit 1: Fundamentals of Budgeting. Multimedia Presentation [Course Material] Retrieved from AIU Online Virtual Campus, FINA425-1201A-01: Budgeting

Shim, J. K., Siegel, J. G., & Shim, A. I. (2012). Budgeting Basics and Beyond. (4thed.) Hoboken: John Wiley and Sons Inc.

ACCT311-1201A-01 : Principles of Financial Accounting

The Assignment (YOU DO NOT HAVE TO DO THE ASSIGNMENT ITSELF, ONLY RESPOND TO STUDENT POSTS, BASED ON THE ASSIGNMENT!)

Companies often try to manage earnings by recognizing revenue before it is actually earned according to GAAP, or by deferring expenses that have been incurred. For example, to meet the targeted earnings for a specific period. A company may capitalize a cost that should be expensed. Read the following scenario and then decide how you would handle this opportunity to manage earnings.

You are a division manager of a large public company. Your bonus is calculated on your division’s net income targets that you must meet. This year that target is $1.5 million. You are authorized to sign off on any decision made within your division. You are faced with the following situation:

On November 15, your division of the company ordered $150,000 worth of supplies in anticipation for the seasonal rush. Most of these supplies will be used by year-end. These supplies were delivered on November 30. If you record this expense this year, your net income will be $1.45 million and you will not meet the target, and therefore not receive your bonus of $25,000 that you have worked hard for all year. What would you do and why? (1 to 2 paragraphs)

Suggestions for Responding to Peer Posts

• Compare and contrast your peer’s response to your own. Were there any similarities or differences?

• Were the reasons your peer gave for his or her decision ethical and professional?

How you should respond to students’ posts:

Your DB assignment and your comments to classmates should be critical and meaningful.

• Include detail and specific content

• Illustrate critical thinking

• Relate the learning to the class readings

• Create opportunities for discussions that lead to fuller understanding of the subject matter

• Use credible sources to support positions

• When agreeing with postings of classmates, give specific information that supports the concept

• When disagreeing with postings of classmates, give specific information illustrating the credibility of the disagreement

• Constructive debate using proof to support points

• Reflective thinking should be displayed in responses

• Incorporate pertinent real-life experiences (optional)

• The mechanics, grammar, spelling and structure should be accurate, logical, and clear

Discussion Board Grading Criteria: “A” – Answer the question fully and intelligently, providing meaningful responses to classmates and use the text as support. To earn a high A, you must site external research sources, make reasonable inferences, and/or use a real world example. Responses are posted within the allotted timeframe and are written at a college-level.

Student#1

Accounting: Timing & Mechanics

Trisha Parish

Unit 2 DB

One of the perks of being the division manager of a large company is the $25,000 bonus that I receive if the division meets its target of $1.5 million by the end of the year. A shipment of supplies worth $150,000, which was ordered on the 15th of November in anticipation of a seasonal rush, was delivered on the 30th of November. It is a given that these supplies are need and most of the supplies will be use by the end of the year. The recording of this expense however, will not help the division reach its target; the division will still be $.5 million short of the target. As division manager I need to decide on whether to include the expense or not.

Even though, I would not receive my bonus of $25,000 I would do the ethical thing and report the expense of the supplies. As a division manager it is important to remain ethical and professional at all times. According to RushworthKidder,President of the Institute for Global Ethic (2009), “Ethics in its broader sense, deals with human conduct in relation to what is morally good and bad, right and wrong.” Using ethics in decision making we need to apply values, such as honesty, fairness, responsibility, respect, and compassion to our decisions (Kidder, 2009). Therefore, not reporting an expense as it occurs would be an unethical behavior; it would be a display of un-honesty among other things. The act of omitting information on a financial statement is considered knowingly misrepresentation of the preparation of a financial statement. This is action is against an accountants code of ethics.

Another reason that I would not falsify a financial statement is that altering the books can lead to more deceit later on. Sure it would be nice to wait until January of the next year to place the expense of the supplies that arrived in November, so that the next year’s financial statement would take of better. However, how would I explain the use of supplies that are not even there, or the need to reorder an abundance of supplies in the middle or end of January, when supposedly we just received supplies at the beginning of the months. One little lie could lead to a multiple amount of lies in no time. Clearly, I see the act of falsifying information as a total disaster. Besides the lies and deceit, I would ruin my name as a reliable employer, which is something that I am willing to do.

I would take the fact that I missed the bonus this year as a lesson to be learned. Next year I would definitely need to be more on top of things. I will need to plan ahead and look for ways to make the company more productive, which in turn making more likely to achieve next year’s target sales. Life is about making the right choices and striving for a better future, life is about learning.

References

AIU Online. (2012). ACCT 311: Unit 2: Accounting: Timing & Mechanics [Multimedia presentation]. Retrieved from AIU Online Virtual Campus. Principles of Financial Accounting: ACCT311-1201A:01 website.

Kidder, R. (2009).Ethics in Accounting. Retrieved from http://www.articlesbase.com/ethics-articles/ethics-in-accounting-1276428.html

Student #2

Financial Accounting Unit 2 Discussion Post

By Donielle Davis

Being that I am the division manager of this large public company and I’ve been working hard all year I would really be happy to get my $25,000 bonus for meeting the year target of $1.5 million. If I place the order for the supplies in anticipation of the seasonal rush for $150,000 my bonus could very well be comprimised. I have two choices either I can record the expense this year or I could hold out and record it in January.

I feel like I would need to be honest and record the expense because if I don’t that would be unethical. You shouldn’t fix financial statements especially for personal financial gain. This is one of the reasons I feel like managers should have no knowledge of earning a bonus for meeting yearly target, it should just be a surprise. Receiving a personal bonus is never a good reason to postpone reporting financial information. This is one of the reasons the Sarbanes-Oxley Act of 2002 was created by Senator Paul Sarbanes and Representative Michael Oxley. This act eliminates corporate scandals like the scandals that came about with Enron, WorldCom, and Tyco. (www.sox-online.com)

One way that I possibly could meet the $1.5 million goal and still record the expense is I could increase production. Even though there is a chance that the items produced may not get sold they will still have direct overhead assigned to them. What this means is while they are sitting in inventory it will shift some of the overhead expenses to the following year. Wild, J., Saw, K., Chiappetta, B. (2009)

References

Sarbanes-Oxley Essential Information.(2006). Retrieved from http://www.sox-online.com/basics.html.

Retrieved on 01-09-12 by Donielle Davis.

Wild, J.J., Shaw, K.W., Chiappetta, B. (2009).Fundamental Accounting Principles. New York, NY:

McGraw-Hill.

Student#3

I would record the expense even though I will not receive my bonus. My reasoning behind this is that it is the ethical thing to do. When a person starts to manipulate expenses for personal gain, that is when the act becomes unethical, illegal and against GAAP principles. If in the past the company has accrued the expenses and recorded only the supplies used, then not only is it ethical but depending on the other expenses and revenue received in December, I could possibly still get my bonus for the year. I tend to err on the side of caution and if there is any question about whether I should do something, I will do the right thing and record it instead of taking the chance of getting caught, causing my company to be audited or even losing my job. The $25k bonus isn’t worth losing my job especially if I enjoy where I work and have been there for a while (Horngren, Sundem, Elliott and Phil brick, 2006).

Another reason is that if I don’t record the expense, then the balance sheet, income statement, and the statement of retained earnings will all be incorrect. The income statement will overstate what the company net income is by understating the expenses that have been incurred. This in turn will affect the statement of retained earnings by overstating what the company’s net retained earnings were. The balance sheet will be affected because the stockholders equity will be overstated by the addition of the retained earnings and supplies will be overstated as well. Another problem is that if the decrease in supplies isnt recorded, then the company might question why I would order supplies in January since nothing was recorded on the books. They might believe that the supplies were being taken by the employees instead of used by the company. Since all of these financials are looked at by the stockholders, and the governing bodies, it is best to record the expense and not receive my bonus then to cause the company and myself major embarrassment by not recording the expense. The numbers being reported have to be neutral with respect to the quality of information that is objective and free from basic. (Horngren, Sundem, Elliott and Phil brick, 2006).

In the case of recording an expense for financial gain on my part, this would violate the principle of neutrality. It also would violate the principle of validity. This principle states a correspondence between the accounting numbers and the objects or events those numbers purport to represent (Horngren, Sundem, Elliott and Phil brick, 2006).

If the expense isn’t recorded in the books, then the numbers might be considered to be invalid and anyone looking at the financial statements would question if any of the numbers reported are accurate or valid. When dealing with financial statements and the cost not just internally but also externally as to reliable and valid information, trust is critical. If outsiders cannot trust that the information being reported is truthful, then the will pull their money out of a company and it could cause the company to go out of business. Once trust is lost in a company or the employees within a company, it is very hard to earn that trust back from the public or the consumer. For all of these reasons and many more, I would just bite the bullet, lose my bonus and report the expense. It definitely would make me think twice about how I would order and manage my department in the future and what steps I would need to take to not make the same mistake again (Horngren, Sundem, Elliott and Phil brick, 2006).

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