Response 1:

Managers can choose from several analytical techniques to help them make capital investment decisions. Each technique has advantages and disadvantages.

Respond to the following in a minimum of 175 words: 

  • Distinguish between the 3 capital investment techniques of (1) Net Present Value, (2) Internal Rate of Return, and (3) Payback Method.
  • Describe what you consider to be the top 2 advantages and 2 disadvantages of each technique and provide an example to support your top advantage of each method.

Response 2:

The type of product a company produces affects the type of accounting system needed to determine product cost. The 2 most common types of costing systems are job-order costing and process costing.

Respond to the following in a minimum of 175 words:

  • Compare and contrast job-order and process costing systems. How can events in a job-order costing system affect financial statements? How can events in a process costing system affect financial statements? Provide specific examples for each type.

Response 3:

Budgeting is a tool used by management for performing the functions of planning, coordinating, and controlling operations of a business. Our textbook, Managing Accounting Concepts, describes 2 main types of budgeting: static budgets and flexible budgets.

Respond to the following in a minimum of 175 words:

  • Differentiate between the 2 types of budgets.
  • Provide an example of the type of business or company that would benefit from using a flexible budget.
  • Provide support for your business selection and include the advantage for using a flexible budget over a static budget.

Response 4:

Choosing the form of business to create is one of the most important decisions an enterprise makes. The extent of liability and control the owner will have depends on the form of the business.

Respond to the following in a minimum of 175 words:

  • Differentiate among the major forms of business organization and describe what you consider to be the top 2 advantages and disadvantages of each form. Address the regulatory and financial statement differences of each form of business.

Response 5:

Consumer laws were established to protect purchasers of goods and services.

Respond to the following in a minimum of 175 words:

  • What purpose does the Federal Trade Commission serve and why must business owners be educated on Federal Trade Commission practices?
  • Consider 1 of the following sections of the Federal Trade Commission Act:
  • Deceptive Advertising
  • Labeling and Packaging Laws
  • Sales
  • Regarding the section you chose, provide an example of when a deceptive practice has been used in business and the consequence(s) for the deceptive practice.  

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ACC 543 Discussion Posts

Response 1

Net present value and Internal rate of return are somewhat the same because they generate the same accept or reject decision. Cash flows magnitudes and timing bring about the variance between the Internal Rate of Return and Net Present Value. in Net Present value the cash inflows are reinvested at the cost of capital. On the other side reinvestment on the internal rate of return is influenced the project IRR. Payback period method is different from the other two because it takes a qualitative approach in making decisions. The Payback Period method provides a précis on how a project would return an organization to its previous financial standing. One advantage of Net Present Value is that it considers the time value of money, especially when involving discounted net cash flows of an investment (Graybeal, Franklin, & Cooper, 2018). NPV also helps companies in decision making after determining whether an investment is profitable. The two concerns with NPV are that there is no approach or strategy set in computing the desired rate of return. Also, the Net Present Value of Return is not applicable when comparing projects of dissimilar sizes.

            Internal Rate of Return is simple to use and understands when measuring the value of multiple projects. The method also considers the time value of money. The use of an unrealistic assumption that profits are easily reinvested to give similar profits is one of IRR drawbacks (Graybeal, Franklin, & Cooper, 2018). The approach also ignores economies of scale. Conversely, the payback method is simple to use when comparing multiple projects. The method gives précis on how an organization financial statement will strengthen within a short duration. However, the payback does not consider the time value of money. Projects profitability indexes are floated in the method.

Response 2

           Job costing and process costing are exercised either manually or in computerized accounting systems. In job costing, the production costs are more detailed than in process costing. Job costing is applicable when accounting accruals of certain or specific (unique) items, whereas Process costing accounts for multiple and different items .process costing is lengthy because many activities and products are involved. Job costing can be applied in the design and production of a customized product (Ngandu, 2018). An illustration of process costing is during the refinery process of crude oil to petrol, bitumen, diesel, kerosene, amongst others. Small production activities are accounted through job costing, whereas process costing is used in large production activities. Process costing dwells on aggregated costs, whereas records on time and material costs influence accruals. A hybrid system which encompasses both job costing and process costing can be used in a mixed production system.

Response 3

Underlying molds used in formulating a budget can be used to change a flexible budget. Conversely, a static budget does not change even if major changes are initiated in the underlying molds. A flexible budget is bound to change based on the degree of activity achieved. The output attained does not change a static budget. In case of changes, a static budget loses accuracy is accounting cost (Aryshev & Ivanyuk, 2020). A flexible budget is more effective in accruing costs when activities change. Static budgeting is limited due to its inefficiencies during changes. Flexible budgets are widely used to especially during cost control. Classifying the costs is considered in flexible budgets, whereas static budgets do not consider the classification of costs. A flexible budget is suitable for a seasonal business unit because there a high possibility that it will change its workforce and randomly change positions held by its staff (Aryshev & Ivanyuk, 2020). The major advantage of using a flexible budget is due to its adaptability attribute. Since change in the mentioned business is inevitable, a flexible budget is desirable to account for all the different costs and the variable expenses.

Response 4

Partnerships, limited liability companies (LLC), sole proprietorships and corporations are four main forms of business organizations. A sole proprietorship is owned and managed by an individual. The business lingers as long based on the decisions made by the owner. The venture is subject to little regulations. The owner is entitled to all profits. However, the owner is liable to pay all debts incurred by the business. Also, ownership of the venture is difficult to transfer to another person. Partnerships are either general or limited. General partnerships are not subject to a formal agreement like in a limited partnership (Cappellino, 2020). General partners invest differently, but all debts incurred are irrespective of the contributions. Limited partnerships necessitate a certificate of partnership. However, liabilities are shared based on the portion of contributions. Partnerships are advantageous because all parties share the total profits. The pooling of resources gives the business more capital to invest in. nevertheless, the company ceases to exist after on partner settles on ending the partnership. Moreover, selling the venture is exasperating since a new partner must be identified. 

Profits generated in corporations are taxable. Profits after tax are shared amongst investors in the form of dividends. Corporations are advantageous because they can be transferred to a new owner easily. Personal assets cannot be used to pay company debts. On the flip side, establishing and running a corporation is very costly. In some instances, the corporation income can be taxed twice, especially when exceptions are involved (Cappellino, 2020). Owners in Limited Liability Company are limited to liabilities like in partnerships. Benefits enjoyed in partnerships and corporations are present in LLCs. The major concerns surrounding LLCs is that certain state laws define ownership of the venture, also, starting and an LLC is very expensive due to the extensive filing and legal fees.

Response 5

The main purpose of the federal trade commission is implementing and overseeing consumer protection laws. The agency imposes the trade regulation rules. It protects consumers from the greatest harms that can be manipulated by manufactures or businesses. The Federal Trade Commission serves to examine and avert deceptive advertising, consumer exploitation and unfair methods of competition (Ward, 2020). It provides injunctions and restitution to consumers. Those who violate the FTC Act or the Clayton Act are subject to civil penalties. Business owners must be educated on Federal Trade Commission practices to avoid violating consumer protection laws. Education helps them adopt desirable advertising and implement fair competition practices. Business owners get to reckon fraudulent practices that are subject to punishment. Again they get to know their rights and responsibilities in the marketplace; antitrust laws help business owners acquire knowledge about pricing, open and free markets. The theory behind deceptive advertising is that all adverts should be truthful, appropriate and scientifically proven (Ward, 2020). It is a crime to employ deception in marketing or mislead consumers with lies about a product. If the price, value or the quality of any product or service creates a negative impression, then that is a major offence. A god example is Dannon product “Activia yogurt” which had nutritional benefits that were lacking in other brands. After a class action settlement, The Company was fined 45 million dollars for spreading a lie and painting a bad image about other brands.

References

Aryshev, V. A., & Ivanyuk, T. N. (2020). Budgeting In the Context of Business Digitalization. Bulletin of Zaporizhzhia National University. Economic Sciences, (2 (46)), 49-53. https://doi.org/10.26661/2414-0287-2020-2-46-08

Cappellino, A. (2020). How to Choose the Right Business Organization Form. https://academicworks.cuny.edu/cgi/viewcontent.cgi?article=1030&context=nc_oers

Graybeal, P., Franklin, M., & Cooper, D. (2018). Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions. Principles of Accounting, Volume 2: Managerial Accounting.https://opentextbc.ca/principlesofaccountingv2openstax/chapter/compare-and-contrast-non-time-value-based-methods-and-time-value-based-methods-in-capital-investment-decisions/

Ngandu, E. (2018). An Analysis of Costing Systems. https://spark.parkland.edu/cgi/viewcontent.cgi?article=1244&context=ah

Ward, P. C. (2020). Federal trade commission: Law, practice and procedure. Law Journal Press.