Assignment-daixieTM为您提供利物浦大学University of Liverpool INTRODUCTION TO FINANCIAL ACCOUNTING ACFI101财务会计入门代写代考和辅导服务！
Instructions:
Financial statements are formal reports that summarize a company’s financial activities and performance. They are prepared at the end of a reporting period, typically monthly, quarterly, or annually, and provide important information to investors, creditors, and other stakeholders about a company’s financial health.
The three main financial statements are:
- Income Statement: This statement shows a company’s revenues, expenses, and net income or loss for a specific period. The income statement helps to measure the profitability of a company.
- Balance Sheet: This statement reports a company’s assets, liabilities, and equity at a specific point in time. The balance sheet shows the financial position of a company.
- Statement of Cash Flows: This statement shows the cash inflows and outflows of a company for a specific period. The statement of cash flows helps to assess a company’s liquidity and cash flow management.
To prepare financial statements, companies must first record financial transactions. This involves the use of accounting systems, such as bookkeeping, to capture and classify financial transactions into appropriate accounts. The two primary methods of accounting are:
- Cash Basis Accounting: This method records revenue and expenses when cash is received or paid out.
- Accrual Basis Accounting: This method records revenue and expenses when they are earned or incurred, regardless of when the cash is received or paid out.
In addition to recording financial transactions, adjusting entries must be made to account for items such as accruals, prepayments, and depreciation. These adjustments ensure that financial statements reflect the true financial position and performance of a company.
Finally, financial statements are prepared by aggregating the financial data recorded and adjusted during the period. This involves organizing the data into appropriate categories and presenting it in a format that is clear and easy to understand. Financial statements are typically audited by independent auditors to ensure their accuracy and completeness.
On January 1, 2005, Golf Tee Inc. will acquire a vehicle from a car dealership for $\$ 50,000$. The dealership offers to lease the vehicle to Golf Tee Inc. for five years with payments of $\$ 12,462$ due on December 31 of each year. The expected resale value of the car after five years is $\$ 0$, and the borrowing rate for Golf Tee Inc. is $12 \%$.
A. By simply examining the terms, do you believe this lease qualifies as a capital lease or an operating lease? Explain.
Capital Lease, because “the expected resale value of the car after five year is $\$ 0$ “, which means that the useful life of the car is five years Golf Tee Inc. leases the whole useful life of the car.
B. What borrowing rate is the car dealership charging Golf Tee Inc.? Is it $10 \%, 12 \%$, or $14 \%$ ? Explain.
Answer 1) $12 \%$. It is the borrowing rate for Golf Tee Inc. If the car dealership charges more than $12 \%$, then Golf Tee can go borrow the money from its bank and purchase the car. Therefore, $12 \%$ is the highest rate the car dealership can charge Golf Tee.
Answer 2) $8 \%$. Since Golf Tee leases five years out of the five years useful life of the car, the market value of the car has to be equal to the present value of the lease payments.
$50,000=\$ 12,462 *$ PVOA(r, 5 periods)
PVOA(r, 5 periods $)=4.0122$
$\mathrm{r}=8 \%$ (approximately)
C. Assuming the borrowing rate is $12 \%$, and assuming the lease qualifies as an operating lease, provide the journal entrees for Golf Tee Inc. for the first two years of the lease.
12/31/: Dr. Rent Expense \$12,462
$$
\text { Cr. Cash } \$ 12,462
$$
$2^{\text {nd }}$ year: Dr. Rent Expense $\$ 12,462$
Cr. Cash $\$ 12,462$
