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Financial Accounting Discussion Paper
Financial Accounting Discussion Paper
Order ID 53003233773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Financial Accounting Discussion Paper
You know that the accounting equation is A = L + OE. You know that the balance sheet is a “snapshot in time.” You know that it is important to study the balance sheet of a company when making a decision to invest in that company. So, if you were an investor, what would you look for in the balance sheet, and how would you know if the statement you were reading was telling the whole story?
You must post your initial response to the discussion board by Wednesday at 11:59 p.m.
You will reply to 2 peers by Sunday at 11:59 p.m. In your responses to your classmates, note if you are in agreement with their treatment. State why, and support your response with evidence. In your response to your peers, be sure to address if you agree or disagree with the information they provided. Be sure to give a detailed explanation of your position.
Richard：
Financial accounting in a firm involves the recording, analyzing, and posting of financial transactions in a firm. It is one of the most sort information across the world. The basic accounting equation provides three particulars: assets, liabilities, and capital. Looking at the balance sheet can help investors and other stakeholders know which company is worth investing money in for a good return (Climent-Serrano, Bustos-Contell & Labatut-Serer, 2019).
According to accounting principles, investors are prudent, and they will put money in firms that are making a profit. Therefore, it is crucial to understand the information to use in decision-making. The balance sheet study is important because it helps determine risk and return, secure business loans and extra capital, and provide fundamental financial ratios.
Analyzing and developing of balance sheet helps determine the risk and the return. Users of information can predict the profit they will make in a certain company if they have data from the balance sheet. Suppose a balance sheet has a lot of debt in the form of short and long-term long loans and payable; in this case, it can communicate the weakness of a firm (Climent-Serrano, Bustos-Contell & Labatut-Serer, 2019).
Leverage can help a company, but bad borrowing can affect a corporation negatively. The stakeholders and users of information need to collect the best data to guide them to know the balance they have in terms of capital or cash and the investment they make, and how they can affect the output and sales.
Access to loans is possible if a firm’s balance sheet is smart. Having more assets shows that a firm is stable and can repay its debts without defaulting. In contrast, when many loans and liabilities, it can signal investors that an organization is failing and not performing well (Climent-Serrano, Bustos-Contell & Labatut-Serer, 2019).
Therefore, an investor will need to look at the company’s number of loans to determine their potential to repay because having many loans can make it hard to repay (Bakkar, De Jonghe & Tarazi, 2019). Having a good report can help a secure organization loan; thus, investors need to look for these figures to determine their performance in the market.
Before a person invests in a company, they do a background check which tells how the firm is performing. The balance sheet helps determine the ratios. Different ratios such as solvency, liquidity, profitability ratios, and more use the information from the balance sheet.
The computation of the quick ratio shows the firm standing in terms of the short loan and how quickly it can repay the loans (Bakkar, De Jonghe & Tarazi, 2019). The computation of various ratios explains more about the organization’s performance in the market. Analysis of this information can tell more about the corporation’s capabilities. However, the users of the information must depend on the quality data sources.
The information that the people decide to use must provide correct data for management and other users. If the information shows the use of the accounting principles, it is crucial to depend on such information. It is all good until the information provides the right data and figures to the customers and other stakeholders.
Reference
Bakkar, Y., De Jonghe, O., & Tarazi, A. (2019). Does banks’ systemic importance affect their capital structure and balance sheet adjustment processes? Journal of Banking & Finance, 105518.
Climent-Serrano, S., Bustos-Contell, E., & Labatut-Serer, G. (2019). Importance of balance sheet composition in stress test estimates. Journal of Economic Science Research, 1(1).
Sarah：
If I was an investor for a company, the things I would look for in a balance sheet are the three main accounts that make up the accounting equation which are assets, liabilities, and stockholder’s equity. To look further into these three accounts more, assets should be looked at to see if they are short-term or long-term, or if they are property, plant, and equipment that may end up depreciating in value over the year due to being used.
Liabilities also need to be looked at on a short-term and long-term basis simply to identify what kind of debt will be getting paid off within a year, and what will be paid off in a year or longer. After reviewing the assets and liabilities for the year, the stockholder’s equity would then be generated which shows any kind of book value after any kind of deductions are made.
I think first analyzing these three accounts help to determine what kind of financial stability, or loss the company may have, and then after doing the initial review it can be easier to observe anything else. The only way to determine if the statement that was being read was telling the whole story was to make sure that everything has been recorded, and if a description can be put in a note, then that can help further explain why something for example may have been put into another assets line, or even other liabilities.
I think the main focus in the balance sheet is to make sure all transactions that happened during the year are property recorded, and that is a reason the assets and liabilities should always equal the same before moving onto completing any other kind of financial statement. Balance sheets are an important piece of a financial statement needed, especially when making financial decisions such as asking a bank for a loan.
Bank’s want to know what kind of assets the company has, along with the liabilities to determine if the debts are being paid off in order to determine if the loan, they are asking for will be able to allow that company to make the payments on the loan per month.
Sources:
Spiceland, J. David, et al. Intermediate Accounting. McGraw-Hill Education, 2020.
Financial Accounting Discussion Paper
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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