Define GAAP : __________________________________________________________________
ID: 2786308 • Letter: D
Question
Define GAAP : __________________________________________________________________________________________________________________________________________________________________________________________________________________
Name the four basic requirements to which all accounting rules must adhere. 1)____________________________________________________________________________
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Name the four primary financial statements listed in the textbook and briefly explain each 1)____________________________________________________________________________
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Perform a Breakeven Analysis (monthly or yearly) for you company.
$_________________ Monthly / Yearly
What is the gross profit margin of your company? Be sure to show your calculation.
Gross Profit Margin = ------------------- = ______________
Develop a 12-month projected income statement for your business. Make sure to include specific details on Cost of Goods Sold, Operating Costs and Depreciation. Your sales should not be consistent over the course of the year as every business has some fluctuation. An example has been provided or you can find an example to follow online.
Please provide your monthly break-even sales. You may need to include your projected income statement in your business plan.
PDAWare Pro Forma PROFIT and LOSS Staternent Year 1 evenue: Dec Gross Sales 71.004 78504 89 658638 110025 152575 150.306216.208 35,176 65,966 Less: Sales Returns and A Net Sales llowances 159,306216,298 29.145 71.094 78.594 80,656 96388 0 67,312 152.575159.306 110,925 216 298 216,298 , ost of Goods: Materials Variable Labor 10,000 5,000 938 5,000 10,000 5,000 5,000- Less: Ending Inventory Cost of Goods Sold 10.000 938 19.145 27676 60. 66374 70.1587588,718 95.450 109.987 147578215.30 Gross Profit (Loss) Controllable Expenses Advertising 45,000 27.500 10,000 35,000 25.00015,000 25,000 40.005 8,000 5,688 2,000 15,000 13.250 2,000 15,000 15,00015,000 79.49981,33481,334 82,157 16,431 17,304 2,000 500 25,000 30,250 6,050 34,787 6,957 5,385 6624915,899 12.206 46.006 9.201 Payroll Taxes and Benefits Sales Commissions Professional Fees Operating Supplies Travel 11,041 2.000 6,000 2.814 2,000 2.332 8,874 2,000 2,000 2.000 2,000 2,000 6,000 3,000 6,000 3,000 3,0003.0003,000 3,000 3,000 3,000 Maintenance and Ropairs Office Supplies 1,000 850 850 Fixed Expenses: Permits and Licenses Interest 1.500 1,500 1,500 1,500 1,500 Property Taxes 5,000 ,200 5,000 5,000 800 200 5,000 5,000 5,000 1,200 1,200 Utilities Bad Debts Bank Service Charges Total Expenses Net Operating Income 43,58778,188 5,661 -36.805 29.587 13,889, 30.819 21,877 17,907 69,351 Other Income: Gain (Loss) on Sale of Assels Interest Income Total Other Income Net Income (Loss) 7.652 69.351 36,805 Net Income (Loss) eftor texes43.587Explanation / Answer
GAAP is an acronym which stands for General Accepted Accounting Principles. It is that common set of accounting procedures and principles which the companies must follow while preparing and reporting their periodic financial statements. The purspose of GAAP is that the industries follow the same standard while preparing their financial numbers and hence, it becomes easier for investors to make a inter/intra companies comparison. There is no universal GAAP and it may vary from one geographic region to another. Another commonly used standard which tries to set global standards is IFRS i.e. International Financial Reporting Standard. In USA, the body that issues GAAP is FASB i.e. Financial Accounting Standards Board. Though GAAP provides standard to improve transparency but it doesn't guarantee that the reported numbers do not contain any anomalies or unscruplous data. So, the investors should thoroughly investigate the numbers before taking a financial call.
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