Financial Accounting and Reporting providedâ€Myassignmenthelp.Com

Question: Discuss About the Financial Accounting and Reporting? Answer: As per the provided letter, the managing directors of Grandmas Kitchen Limited have raises three specific issues regarding the accounting process of the organization. After observing all the issues, one can guess that all the three issues are crucial issues in the preparing of the financial report of the organization. After the observation of these three issues, the possible solutions are provided below: The first issue is about the recording of credit sales of the company. As per the mentioned issue, there are three types of customers in the company. They are retail customers, wholesale distributors and several cafes, motels and others. In order to increase the business and to reach to many customers, the organization has decided to provide credit facilities to all types of customers of the company. After the selling of the products, the business representatives of the company use to make the invoice of the sales. After the issue of sales invoice, the customers are provided a time of one month to make the payment. After receiving the money from the customers, the selling entries are made and the amount is sent to the bank. However, as per the finance director and Charada Flam, this process is incorrect and this is a wrong process indeed. As per the accounting principles, it is the responsibility of the business organizations to register all the processes related to sales. As per the current practice of recording the sales revenues, the organization does not record the entry of credit sales at the time of occurrence of the sales of the products. In order to get the track of all the selling processes, the business organizations need to record the entry of credit sales in the financial books of the organization. In order to do this, the business organizations need to pass the necessary journal and ledger entries for credit sales. After receiving the sales revenue, the company needs to adjust this entry with the credit sales entries to get the current and accurate result. There are several advantages of this process (Giles 2014). This process will assist in establishing coordination among the aspects of credit sales and cash sales and with the help of this accounting process; the possibility of accounting error becomes less. In addition, this process will be helpful for the auditors at the time of conducting the audit operations. This process will make all the sal es related information available for the auditors and will bring transparency in the organization. Hence, it is advices to Grandmas Kitchen to change the process of the record of sales revenue according to the provided procedure (Droms and Wright 2015). As per the accounting principles, the business organizations need to show the fixed assets of the business organization in the financial statement. In addition, the revenue generated from those fixed assets need to be considered as sales revenue (Zhang and Xu 2013). In the present situation of Grandmas Kitchen, the manufacturing designer of the company have manufactured a machine that has been helpful for the production operations of the company. With the assistance of this process, the production time per batch of the company has reduced to 2 hours less per batch. As the machine has been invented within the organization, the production process has only taken $80,000 for the purchase of the required materials. As per the calculation of the factory manager of the company, the estimated fair value of the machine is $225,000. It can be said that the advised process of the factory manager of the company to treat the new machine is a fair and good process. The machine is treated as a fixe d asset of the company and it is providing good services to the manufacturing process of the company. In addition, the factory manager is asked by two other companies to build the same machine for them. This process is increasing the goodwill of the company as well. Hence, there is a fare scope for the company to treat the machine as the fixed asset of the company (austlii.edu.au 2017). However, the company needs to follow certain steps to treat this. First, the company needs to derive the fair value of the machine as per the market price that the factory managers has already done (Sreekumar and Pavithran 2015). After that, the particular machinery needs to be shown in the assets side of the balance sheet of the company as on 30 June 2017. Lastly, the earned revenue from that particular machine needs to be shown in the treading account of the company for the year ended 30 June 2017 as sales revenue. The company needs to follow this process for the treatment of the new asset (Garca?T eruel, Martnez?Solano and Snchez?Ballesta 2014). Allowance for doubtful debt is done out of the profit of the company. Due to this allowance of doubtful debt, the amount of profit decreases. In case of Grandmas Kitchen, the required rate for the allowance of doubtful debt was 2% on the sales revenue, but due to the fault of the clerk, the rate is wrongly charged to 0.02% on sales revenue. Certain procedures are available for this treatment. In case of the prior period of making the trial balance, 2-.02= 1.98% needs to be charged against the sales revenue and the entry will be adjusted (aasb.gov.au 2017). After the completion of the trial balance, the detection of this error will be adjusted with the help of suspense account and necessary notes needs to be given about the adjustment of this entry. In case the error is detected after the completion of trial financial statement, the additional percentage that is 1.98% needs to charged against the net profit of the company to adjust the less amount (legislation.gov.au 2017). In the fin ancial statement of the company, the necessary notes of this adjustment needs to be mentioned. Before the adjustment, it needs to be determined that in which level the error has occurred. References Aasb.gov.au. (2017).Accounting standards. [online] Available at: https://www.aasb.gov.au/Pronouncements/Current-standards.aspx [Accessed 15 May 2017]. Austlii.edu.au. (2017).CORPORATIONS ACT 2001. [online] Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/ [Accessed 15 May 2017]. Droms, W.G. and Wright, J.O., 2015. Finance and accounting for nonfinancial managers: All the basics you need to know. Basic Books. Garca?Teruel, P.J., Martnez?Solano, P. and Snchez?Ballesta, J.P., 2014. Supplier financing and earnings quality. Journal of Business Finance Accounting, 41(9-10), pp.1193-1211. Giles, R., 2014. Finance Accounting New 4th Edition. Lulu. com. Legislation.gov.au. (2017).Corporations Act 2001. [online] Available at: https://www.legislation.gov.au/Details/C2013C00003 [Accessed 15 May 2017]. Sreekumar, K. and Pavithran, K.B., 2015. Management Accounting Practices and Organisational Performance: A Study of Environmental and Organisational Antecedents as Perceived by Finance and Accounting Managers in the Manufacturing Sector in India (Doctoral dissertation, Cochin University of Science and Technology). Zhang, M. and Xu, T., 2013. Auditor-customer Private Relationship and Audit Quality: Based on the Audit Fee and Opinion. In Accounting Forum (Vol. 1, p.