Variable cost-Changes with ac vity.

Per unit- Constant Fixed cost-Remains unchanged with ac vity Per unit – inversely varies Cost-Any resource given up achieving something.
Cost object-Anything for which you can assign a cost. Opportunity cost- benefit given up when selec ng this alterna ve instead of something else. Sunk cost- Sunk costs cannot
be changed by any decision. Direct cost- Traceable to cost object. Direct Material - Flight a endants, fuel, res, radio. Direct traceable. Direct labor- SME, Person working on
product wages. Direct tracible. Indirect cost-Not traceable to cost object. example is Manufacturing overhead is Plant cost that cannot be traced back to specific unit. Ex-
Maintenance cost of depts Differen al cost-difference between the cost of two alterna ve decisions.
Product costs-Cost incurred to manufacture a product. They are not expensed immediately. Expensed when product is sold. AKA inventoriable cost .
Manufacturing cost- Indirect manufacturing costs that are necessary but cannot be traced to product. (MC=Direct materials+Direct labour+Manufacturing Overhead)
Work in process formula (cost of goods manufactured) is Beginning work in process inventory+Total Manufacturing cost (Use abv formula) =Total work in process for the period
– Ending work in process =Cost of goods manufactured
Cost of goods sold/ formula –Direct materials + Direct labor + Manu Overhead =Manufacturing cost + Beginning work in process inventory+Total Manufacturing cost=Total work
in process for the period – Ending work in process =Cost of goods manufactured + finished goods inventory+ Cost of goods manufactured =Cost of Goods available for sale –
Ending finished goods inventory = Cost of goods sold
Period cost- Any cost that is not a product cost. Expensed when incurred on income statement . EG- Sales office, Head office, Marke ng, selling, admin costs.
Indirect labor- Not involved directly-Janitor. Indirect Material- Glue, Lube. Cost incurrent to run the factory- Rent, maintenance.
Prime cost – Direct materials plus direct labor Conversion cost − Direct labor plus manufacturing overhead
Balance sheet -Manufacturer Contribu on Statement
Current Assets. Sales
 Cash – variable expenses
 Receivables = contribu on margin
 Prepaid Expens - fixed cost
 Inventories =Net Income
Raw Materials
Work in Process
Finished Goods
Inventory flow= Beginning balance + Addi ons – Ending Balance = Withdrawal
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Internal users- managing and opera ng the company

External users (not involved in running the company
Horizontal Analysis is Percent change= Used for the difference in me , (Analysis period amount –Base Period Amount)divided by Base period amount X 100%
Ver cal (Common size analysis) – Evaluate Base amount (Analysis period amount –Base Period Amount)divided by Base period amount X 100%)
Ra o Analysis – *Liquidity and Efficiency – Meet short term cash requirements and generate revenue. Current ra o = Current assets divided by current liabili es
Acid-Test Ra o (or quick ra o)- Cash + Investments + accounts receivable divided by current liabili es (more rigorous then current ra o & doesn’t include inventory as it takes
me to liquidate)
*Efficiency - Merchandise/Inventory turnover ra o- Measures how long a company holds inventory before selling it. (Cost of goods sold divided average inventory ) (Avg
inventory formula is year 1 + year 2 divided by 2)
Days’ Sales Uncollected- (evaluate how frequently/a er how long a company collects its receivables/credit) (Days sales uncollected =Accounts receivable divided by net sales x
365)
*Solvency- Generate future revenue and meet long term obliga ons . Debt Ra o (Debt – Assets Ra o) por on of assets contributed by a company’s creditors (Total liabili es
divided by total assets x 100) Profitability – Financial rewards enough to a ract and retain financing.
Profitability- ability to generate an adequate return on invested capital Profit Margin = profit divided by sales or revenues X 100) Return on Total Assets- overall measure of a
company’s
profitability.( Profit divided by average total assets x 100)
*Market – generate posi ve market expecta ons. Price-Earnings Ra o – investors judge the company’s future performance. (market price per share divided by earnings per
share ) (Earnings per share =profit divided by number of shares available)
Contribu on margin ra o = revenue – variable cost divided by revenue
Contribu on Margin= is difference between revenue and expenses
Managerial accoun ng – used by management . Historical and future perspec ve. Relevance . Timeliness . individual units or en re org . No prescribed standards . Requirement-
not mandatory . Financial accoun ng – used by internal , statutory , Shareholder, creditor, investor, regulatory bodies . Historical perspec ve. Variability . en re org . Must
follow IFRS , GAAP Precision. Requirement- mandatory.
Lean model – Just in Time, Total Quality Management (Plan-do-check-act), Process Reengineering ( jus fy business process and redesign to include stps of value) , Theory of
Constraints( iden fy weakest link-limit strain on process- strengthen weakest link) .
Corporate governance- mo vates BOD to pursues interest of company.
Ethics, Corporate Governance, and Code of Conduct
Global Interaction: Global business interactions emphasize ethical responsibility.
Professional Ethics: Focus on preventing unethical behavior driven by short-term gains.
Code of Conduct and Corporate Governance: Implementing ethical codes and governance to enhance stakeholder confidence.
Income statement – Total Revenues – opera ng expenses = Net inc (Opening + deposit – withdrawal = closing)
Statement of equity - Investment -withdrawal + net income ( profit -loss)
Balance sheet – Assests debit and liabili es credit
Cash flow – 3 Parts (Opera ng/inves ng &financing)add what is coming in and minus all expenses
Debt financing – taking loans from creditors (loans or firm )
Capital financing – raising shares or investoers , stocks ipos
Trial balance – total balance and credit should match
T account – Dr on le , cr on right
Double accoun ng – double entry system.
Payroll/salary entries – Salary expense in dr - EI Payable (1:14), Cpp (1:1) Payable , IT Payable in cr = Net income
Payroll Tax – EI expense and Cpp Expense on dr and II Payable and Cpp Payable on cr
CPP- 5.70% of eligible earnings , 1:1 Ra o , Max $3,754.45 , 3500 exempt
EI – 1.633% of earnings max 1003.45 , 1:1.4 ra o (Number X 1.4 =)
CRA T4 – Last day of feb
 Percentage (To find percentage amount X number of percent and percent symbol

Enron
- Management sold their own shares in 2000-1 for millions, but told employees & the public that the stock was a
safe investment. Its accounting was complex and misleading, and contained several violations of accounting practices.
- The operating result grew rapidly: in 1997 it was 515 million dollars, in 1998 it was 698 million, in 1999 it was
957 million and in 2000 it was 1,266 million. The peak of the share price was 90.56 dollars reached on August 23,
2000 , when the value of the share was 70 times compared to the earnings per share.
- Company's assets grew from $3,500 to $13,000M between 1996 and 2000. End of .com boom, it lowered Enron's
share price to $40 in August 2001.
- In Oct ‘01, losses of $618M were recorded, and in Nov ‘01, company's assets were reduced by $1,200 M in
accounting. On Dec 2, ‘01, the company filed for bankruptcy. Debts of 31.2B were recorded in the bankruptcy filing,
and the total amount was later refined to 40B.
- In bankruptcy, firms’ employees lost jobs, pension & health insurance. Shareholders lost assets invested. 7/17
directors were charged with insider trading.
- Arthur Andersen was auditor, managed internal audit & consulted the firm. His inability to achieve audit
independence ultimately led to Enron's downfall.
- In Dec ‘99, Andersen's auditor Carl Bass questioned a transaction, which led to his being transferred to other
duties.
- Arthur Andersen's collapse was a significant blow to the US-based auditing firm, which was considered a guarantee of independence and fairness. He had a floor in Enron's office, where it
embellished Enron's turnover and systematically disposed of embarrassing evidence for Enron.
- Andersen's $1.6 million lobbying budget led to Securities and Exchange Commission (SEC) withdrawing guidelines in 2000, allowing him to serve as Enron's consultant and auditor. After
Enron's bankruptcy, US auditing firms have differentiated consulting and auditing.
- Enron's operations were evaluated by prominent US market analysts, whose independence was questioned due to lucrative investment banking income, prompting the SEC to investigate
their conflicts of interest.
- Executives were connected to all levels of US administration & supported 2 major parties. Expansion was facilitated by market liberalization & regulatory exemptions, shaped by Congress
& SEC. Enron gave election funding to 1/2 of House of Representatives & 2/3 of Senate, with President George Bush receiving most donations.

What were some of the fundamental problems within Enron that contributed to its downfall
Financial Mismanagement, Lack of Transparency, Corporate Culture, Conflicts of Interest, Weak Corporate Governance, Regulatory Failures, Auditor Complicity, Stock Price Manipulation,
Reckless Risk-Taking and Public Trust Erosion. Enron's leadership fooled regulators with fake holdings and off-the-books accounting practices. Enron used special purpose vehicles (SPVs),
or special purposes entities (SPEs), to hide its mountains of debt and toxic assets from investors and creditors. Enron is a merger between Houston Natural Gas Company and InterNorth
Incorporated created in 1985. Kenneth Lay became CEO & chairman, rebranding Enron as an energy trader and supplier. In 1990, Lay created Enron Finance Corporation & appointed Jeffrey
Skilling as head. Skilling joined Enron during a minimal regulatory environment, which allowed the company to flourish during the dot-com bubble and the Nasdaq's peak. Investors and
regulators accepted spiking share prices as the new normal, allowing Enron to capitalize on the deregulation of energy market

Trump
- Trump paid no federal income taxes for 10/15 years in start of 2000 cause he was losing more than he made. The year he won presidency & his 1 st year in white house he paid $750
in federal taxes. Trump denied tax evasion and claimed he paid a lot of taxes.
- Extensive financial losses and years of tax avoidance damaged Trump's political career and the business-tycoon brand he built on.
- Trump is willing to release his tax returns once he’s done getting audited by the internal revenue service, but he can release it whenever, though he claims otherwise.
- Trump used $427.4M he got for “The Apprentice” to fund his other biz, mostly his golf courses, & put more cash into his biz than he was taking out.
- Trump has been battling IRS for years over whether his claimed losses should have resulted in a nearly $73M refund. Alan Garten said “most, if not all, of the facts appear to
be inaccurate” & requested the documents.
- The 2016 presidential candidate broke election norms by refusing to provide his tax returns for public review, which have remained private since his election. Trump has used being
audited by the IRS as a defence against releasing his financial information, but they doesn’t stop anyone from releasing their tax returns publicly.
- In 2016, Trump's tax attorneys confirmed audit, but the IRS completed reviewing his 2002-2008 taxes, despite the audits being over, he did not release his tax returns.
- Trump's 1990s tax fraud, involving his parents' real estate empire, allowed him to amass a fortune of $413 million, starting at age 3.
- There are potential conflicts of interest between Trump's business and his position, including an additional $5 million per year at Mar-a-Lago since 2015 and a 2017 payment from
Billy Graham Evangelistic Association to Trumps DC hotel. Trump has collected $73 million in overseas revenue in his first two years.
- House Ways and Means Committee Chairman Richard Neal reaffirms his commitment to accessing Trump's tax returns, stating that the report underscores the importance of the
ongoing lawsuit. He believes the law supports the Ways and Means Committee's case, and the report is expected to fuel further attacks on Trump.
- Joe Biden’s deputy campaign manager Kate Bedingfield used this information against Trump.

Accounting: Information system that measures business financial activities, processes that information into reports and communicates that information to decision makers. Called: language
of business. Accounting info is used by decision makers, like Individuals, Business users, Creditors, Investors, Not-for-profit & gov. regulatory and tax, etc

Calculate Projected Income

= (revenue-variable cost) x Quan ty – Fixed Cost