Analysis in Accounting Essay

Submitted By kcandelas
Words: 708
Pages: 3
Open Document
Analysis in Accounting
Katherine E Candelas
Ashford University

Abstract

There are all kinds of information that is given in the world of accounting. Companies have to look at all many different forms of financial statements. In order for the company to understand them they have to find the different ways of utilizing analysis in the company. There are many different types of analysis that can be used in the work force. From horizontal to ratio to vertical you will know how to utilize it when a situation comes about.

Analysis in Accounting

Accounting is a good way for people to make useful decisions given the right information. When a company is comparing and contrasting their financial records there are different types of ways to accomplish this. In this paper you will find the different analysis ways to look at a financial statement as well as different scenarios on how they are used. Horizontal analysis is also known to companies as trend analysis (Edmonds, Mcnair,
Olds, Tsay, 2010). This type of analysis is the way in which to study the behavior of individual financial statement items over several periods of time. The time does not have to be within the same year. This type of analysis tends to focus more on the absolute dollar amount of an item.
Companies can utilize this way to find out what is doing well in business or even what is not doing well. The company can take a look at the increased revenue from one year and see that it went up or down by an absolute dollar amount or that it went up by a percentage (Edwards, et al.) This can let you know what you are doing right or wrong.
Vertical analysis utilize percentages more to compare individual components of financial statements. This type of analysis compares the items many times within the same period. The income statement, also known as common size income statement, requires that you convert each income statement component to a percentage of sales (Edwards, et al.). For example you can find a company that the cost of goods sold increased significantly as a percentage of sales. That means that the percentages of sales went up do to the increase of selling the goods. Ratio analysis studies the various relationships between different items reported in a set of financial statements. They calculate many different ratios for so many different reasons.
You have liquity ratios which show a company’s ability to pay off their short term debts. Current ratio is the absolute amount that you have working with right now. The current ratio can be calculates as current assets/current liabilities. Quick ratio is also known as acid test ratio in which is a conservative way of the current ratio. This type is
Show More

Related Documents: Analysis in Accounting Essay

Accounting Analysis Essay

of disclosure, e.g. press releases, initial public offerings (IPOs), web sites, company brochures, newsletters”(Gelb, 2002). It principally bases on the set of enterprise activities, using financial statements as the main sources of information to analysis and synthesis the enterprise process. Its purpose is to understand the past, evaluate now and predict the future, helping report users to improve decision-making. As AASB (2004) stated, the aim of annual report is to provide financial information…

Words 2259 - Pages 10

Swot Analysis Of Accounting

I. Accounting issues Role: My role is to help identify accounting issues, describe measurement and presentation differences between Canadian GAAP and IFRS, suggest additional audit procedures, SWOT analysis and draft a report clarifying R&M’s obligations and procedures involved. Users/Objectives: Shareholders are the most important users of the financial statements and they want to evaluate the stewardship based on the financial statements. And they also prefer a higher net income. Auditors…

Words 1939 - Pages 8

Accounting Changes And ERRAR Analysis: Accounting Change And Error Analysis

CHAPTER 22 ACCOUNTING CHANGES AND ERROR ANALYSIS TRUE-FALSe—Conceptual Answer No. Description F 1. Change in accounting estimate. T 2. Errors in financial statements. F 3. Adoption of a new principle. T 4. Retrospective application of accounting principle. F 5. Reporting cumulative effect of change in principle. T 6. Disclosure requirements for a change in principle. T 7. Indirect effect of an accounting change. T 8. Retrospective application impracticality. F 9. Reporting…

Words 9258 - Pages 38

Analysis Of An Accounting Information System

To determine the requirements needed within an organization for an accounting information system is through planning and analysis. Before the development an organization needs to be analyzed internally and externally by the users to establish the need. Once the need has been established, than an assessment of the functions of the system must have to satisfy the need and the benefits must override / out weight the cost. After this has been confirmed, must determine the budget, gather all system…

Words 642 - Pages 3

Management Accounting And Cost Analysis

BUSN7031 Management Accounting and Cost analysis Introduction& cost terms Ch 1 & 2 1 Copyright ©2014 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9781442563377/Horngren/Cost accounting/2e Outline  Introduction to management accounting o The contemporary management accounting environment o Role of management accounting and the management control system  Cost terms: o Revised definitions o o o 2 Cost groupings Service, retail and manufacturing organisations…

Words 3123 - Pages 13

Accounting Company Analysis Essay

Verizon Financial Analysis By Maria G. Rodriguez MBA 6150-Accounting Financial Statement Analysis Professor Wendy Achilles August 19, 2011 Executive Summary The following is financial analysis comparing the most recent three years of data from communications company Verizon. The competitor to be compared is the most recent year of at&t. The most recent year will begin at 2010 and go as far as 2008. This includes an analysis of both financial ratios and common size percentages…

Words 2698 - Pages 11

Accounting Analysis: Financial Issues And Analysis Of A Company

Role: Accounting manager - review several accounting reporting issues, advise the CFO on appropriate treatments, and finalize the financial statements. Key Users: CFO - he requires the controller’s advice on the accounting treatments of the following issues and attaches importance to the profitability of the company. Management team - they also attach great importance to the company’s profitability and growth. Shareholders, creditors, and private placement investors - they will be relying…

Words 1079 - Pages 5

Acc 541 Accounting Theory And Analysis

Understanding ACC 541: Accounting Theory and Analysis Anne-Marie Sweat April 12, 2015 Willard Berry Introduction I would like to take the time to introduce myself, my name is Anne-Marie Sweat and I am a Staff Accountant with ABC LLC. I have been given the task of analyzing the work papers for your company and for that I am thankful. In my findings I have discovered that there are several items that additional information is needed in order to complete my analysis. I will try to be as…

Words 1048 - Pages 5

Case Study Analysis: Accounting, Behavior And Organisations

ACCT1014 Accounting, Behaviour and Organisations Semester 1, 2014 Assessment 1 - Case Study Analysis DYLAN SPECIALTY BICYCLES CASE Introduction Dylan Lee began buying and selling second-hand bicycles at outdoor markets in Melbourne, Victoria, when he was still in his teens. After considerable success with this venture he was able to lease his first store in a busy shopping strip in Doncaster, a suburb of Melbourne, Australia, where he began to buy and sell new bicycles and spare parts. He…

Words 2664 - Pages 11

Essay on Accounting : Financial Analysis of Ebay

| |[pic] | |Financial analysis statement…

Words 3948 - Pages 16