1. Discuss at length at least four things you could do to help shorten the close
process as a new controller.
The existing closure procedure must be documented before a new controller can attempt to
minimize the time it takes to close. Following this stage, a controller may decide to change
the timing of closure activities, optimize the use of journal entries, or make particular
enhancements to specific operational areas.
It is critical to document the present close procedure in order to achieve a quick closure. It is
necessary to document all functional areas of the close, including accounts payable,
accounts receivable, cash and inventory, the general ledger, and the compilation of the
financial statements. By bringing together the documentation of all of the closing procedures,
it will be possible to get a complete view of how long each task takes and what might be
causing bottlenecks in the process.
The existing close process can be recorded, and once that is done, a new controller can
change the time of the closing actions. Consider the following scenario: rather than waiting
for the bank statement to be generated at the end of the month, an accountant may process
cash transactions on a weekly basis. This would shorten the amount of time required to
execute a key step throughout the closing process. The usage of journal entries can be
made more efficient, which can help to speed up the closing process. For example, with the
accounting system you are now using, repeating monthly or quarterly journal entries could
potentially be automated. Alternatively, you may have entered earlier in the month. Making
specific enhancements in functional areas can result in significant increases in the speed
with which a closing is completed. One example would be the implementation of a more
efficient billing system. A more recent system may allow for the generation of bills, the direct
emailing of bills to clients, and the collection of bill payments by electronic means. Upgrades
to accounting systems can make it much easier for accountants to carry out their day-to-day
responsibilities, which should result in a faster closing process.
2. Name at least two documents a public company would be required to file under the
SEC.%% How often must they be file? Describe what they are and what information
they would provide to the public.
Form 8-K, as well as Forms 10-K and 10-Q, are the two documents that a public corporation
is required to submit with the SEC. Form 8-K must be completed in order to report
substantial, previously unknown events. As an illustration, consider a corporation that
declares bankruptcy. These forms must be submitted no later than four business days after
the event. The financial statement and associated disclosures forms are designated as
Forms 10-K and 10-Q. At the end of the year, a 10-K is required. During the first, second,
ACC 340 Final Exam 1
and third quarters of a company's fiscal year, a 10-Q is required to be submitted. These
documents would offer investors with information about corporate activities, legal processes,
the market for the company's stock, and other pertinent information.
3. Discuss at least two methods the controller can use to reduce costs.%Discuss the
pros and cons to each.
When it comes to cutting costs, the controller can utilize a variety of tactics, such as a spend
analysis overview and a staff reduction research, to accomplish this.
Cost-benefit analyses (also known as spend analysis) are the process of arranging
procurement data by suppliers and commodities, and then leveraging this information to gain
bulk discounts and rebates from a smaller number of vendors. PIO stands for procurement
information organization and is a subset of it. Despite the fact that this technique is often
time-consuming, it has the potential to save a large amount of money. Through the use of
workforce reduction analysis, it is possible to study the costs that are directly associated with
each individual, as well as any revenue that the employee may directly contribute. This
allows a controller to better manage costs and make smarter decisions. In the near term, this
method may save costs, but it may also have the opposite effect in the long term. Even
though keeping employees on the payroll can save a company money, paying
unemployment insurance, severance payments, accrued vacation payouts, and fighting
against lawsuits can actually cost a company more money in the long term.
4. The Brock Company has decided to replace some equipment and needs 2 million
dollars to do this. Discuss in detail several options the company could use to
acquire this equipment and include several options of financing this equipment.
To obtain funds to purchase new equipment, The Brock Company can issue shares in
exchange for cash, or it might take out a loan in exchange for debt in order to receive
finances. After going public with a second or third round of stock files, if the Brock Company
is already publicly listed, it is possible that they will go public again with a second or third
round of stock filings, allowing them to raise funds in exchange for equity in the business.
Borrowing money from a financial institution is another option for raising funds. This form of
loan is often accompanied with interest-only repayment terms that must be followed.
However, despite the fact that interest payments appear to be a negative in this scenario,
The Brock Company would not lose any ownership in this type of arrangement.
5. Company X has been in operation for 7 years, and a public company for 5 years.
They have yet to offer a dividend to their shareholders. What are some possible
reasons they haven’t offered a dividend yet? If they do decide to offer a dividend,
what positive and negative impact might this have on the company?
A company's decision not to pay cash dividends may be motivated by the desire to reinvest
the earnings back into the company. For example, investing in new gear or computer
software is a wise decision in the long run. Another possibility is that the economy is
experiencing a downturn. In spite of the fact that the company is profitable, the management
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anticipates that the next few quarters will be challenging. The ability of a corporation to
generate cash flow may be important to the continuation of its operations. Although this
could result in a fall in the value of the company's shares in the short term, it could also lead
to the company becoming more lucrative in the long run.
Short answer questions
1. What are liquidity measures?
Liquidity measures are ratios that are used to assess a company's capacity to meet short-
term financial obligations. A few examples are the current ratio, the cash ratio, and the
number of expense coverage days.
2. What are ratios used to measure a company’s ability to make its debt payments
In order to assess a company's ability to meet its debt obligations, the current ratio, quick
ratio, and cash ratio can be calculated.
3. Name two items that should be included in an RFP for a financial systems
System requirements and a proposal guideline are two components that should be included
in a request for proposals for a financial systems installation project.
4. Label the following as temporary or permanent tax differences:
Meals - Permanent
Accruals - Temporary
Entertainment - Permanent
Prepaids - Temporary
Penalties - Permanent
5. What is a loan covenant?
Typically, loan covenants are the requirements of a financial contract.
ACC 340 Final Exam 3