Week 1

Relevance and reliability are two of the four key qualitative characteristics of financial
accounting information. The others being understandability and comparability. Relevance
requires that the financial accounting information should be such that the users need it and it is
expected to affect their decisions.

Reliability requires that the information should be accurate and true and fair. Relevance and
reliability are both critical for the quality of the financial information, but both are related such
that an emphasis on one will hurt the other and vice versa. Hence, we have to trade-off between
them. Accounting information is relevant when it is provided in time, but at early stages
information is uncertain and hence less reliable. But if we wait to gain while the information
gains reliability, its relevance is lost.

Examples

After the balance sheet date but before the date of issue a company wants to dispose of one of its
subsidiaries and is in final stages of reaching a deal but the outcome is still uncertain. If the
company waits they are expected to find more reliable information but that would cost them
relevance. The information would be outdated and no longer very relevant.
After the balance sheet date during the time when audit is carried out, it becomes clear which
debts were realized and where were not hence it improves the reliability of allowance for bad
debts estimate but the information loses its relevance due to too much time being taken.
Timeliness is key to relevance.
Healy, P. M., Myers, S. C., and Howe, C. D. (2002). R&D accounting and the trade-off between
relevance and objectivity. Journal of Accounting Research, 40(3), 677-710.

Brownlee, E. R., Ferris, K. R., and Haskins, M. E. (2001). Corporate financial reporting. New
York: McGraw Hill.

Responses

Thread:DQ-WEEK 1-UNIT 1Post:RE: DQ-WEEK 1-UNIT 1Author: Shamyra Kennedy-Jones

Posted Date: April 3, 2016 11:05 PMStatus:Published
Managerial accounting is more effective with the use of ERP. The use of ERP has made it
possible to have detailed, comprehensive, and integrated data and this has changed managerial
accounting. It has integrated different systems and processes such as financial reporting and cost
management among others. The systems enable the integration of financial data and data that is
not financial (Horngreen, Datar & Foster, 2006).

Horngreen, C., Datar S, & Foster G, 2006, Cost accounting: a managerial emphasis, Prentice
Hall

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Thread:Discussion 1Post:RE: Discussion 1Author: Shamyra Kennedy-Jones Posted Date: April

3, 2016 11:04 PMStatus:Published
Managerial accounting incorporates different processes, which include measuring and analyzing
data and interpreting the information through communicating it. Without the correct information,
managers will not be able to make good decisions that will benefit the company. Managers are
able to make good decisions when they receive the information they need quickly. An ERP
system has a common data structure, which makes it easy to enter and access data. Managers
make decisions regarding capital investment and pricing (Drury 220-320). Managers are also
able to get the information they need concerning the companys performance when they need it.

Drury, C. 2007, Management and cost accounting, London: Thomson Learning.

Horngreen, C., Datar S, & Foster G, 2006, Cost accounting: a managerial emphasis, Prentice
Hall.

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Thread:Unit 1 Discussion QuestionPost:RE: Unit 1 Discussion QuestionAuthor: Shamyra

Kennedy-Jones Posted Date: April 3, 2016 11:02 PMStatus:Published
Many companies are using different information technology applications for different reasons.
The enterprise resource planning system has a common database, which links all the company
systems together. The presence of ERP has enabled companies to link different systems together,
thus easing information exchange. This is essential for managerial accountants because it helps
them make decisions more effectively. It enhances effectiveness because the information is
received quickly and it contains few, if any, errors. It has become easier to get computers and
managerial accounting is easier because the computers have more applications.

Horngreen, C., Datar S, & Foster G, 2006, Cost accounting: a managerial emphasis, Prentice
Hall

Week 2
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Unit 2 Discussion Question

Post:

RE: Unit 2 Discussion Question

Author:

Shamyra Kennedy-Jones

Posted Date:
April 10, 2016 6:02 PM
Status:
Published

Since Ben Grahams first wrote about his concept of margin of safety, there has been a general
consensus about the definition of the term. I think Seth Klarman said it best when he stated that a
margin of safety is achieved when securities are purchased at prices sufficiently below
underlying value to allow for human error, bad luck, or extreme volatility in a complex,
unpredictable and rapidly changing world. For most value investors, the idea of utilizing margin
of safety as the bedrock for their investment process is essential to their success. The idea of a
value guru purchasing an investment at a price equal to or exceeding its fair value is so flawed as
to be ludicrous in nature.

Klarman, S. A. (1991). Margin of safety: risk-averse value investing strategies for the thoughtful
investor. HarperBusiness.
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DQ 2 - Decision Making

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RE: DQ 2 - Decision Making

Author:

Shamyra Kennedy-Jones

Posted Date:
April 10, 2016 5:48 PM
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At the breakeven point, total revenue equals total fixed costs plus the variable costs incurred at
that level of production. Beyond the breakeven point, each unit sale will increase operating
income by the unit contribution margin (unit sales price unit variable cost) because fixed cost
will already have been recovered.
The breakeven point in units is calculated by dividing total fixed costs by the unit contribution
margin. If selling price is constant and costs increase, the unit contribution margin will decline,
resulting in an increase of the breakeven point.
Ross, W. J., (2002),Corporate Finance, Sixth Edition, Vol 1.
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Allie Miles - DQ 2

Response to Allie
Author:

Shamyra Kennedy-Jones
Posted Date:
April 10, 2016 5:35 PM
Status:
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Allie, Great post. I also agree with you post, but also, in an income statement, profit is the bottom line. Its
objective is to show you how much income or loss was earned during a given accounting period. Margin
of safety is used to determine what percentage that sales can decrease before a business generates a
net loss. It reveals what percentage of sales is above the break-even point. The margin of safety is
normally used by a company's management to determine profitability levels that result from sales
fluctuations. Parties that are not directly involved in a company's financial management seldom view a
company's margin of safety. An income statement showing the amount of profit earned by a company is
read by parties with vested interest, such as owners, investors, creditors, and tax collectors.

Brealey, R. A., Myers, S. C., Marcus., A. J, (2001). Fundamentals of Corporate Finance, Third
Edition.
Brigham, E.F. (1995), Fundamentals of financial management, Fort Worth: Dryden Press.
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Shamyra Kennedy-Jones
Posted Date:
April 10, 2016 5:22 PM
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The margin of safety is the reduction in sales that can occur before the breakeven point of a
business is reached. This informs management of the risk of loss to which a business is subjected
by changes in sales. The concept is useful when a significant proportion of sales are at risk of
decline or elimination, as may be the case when a sales contract is coming to an end. A minimal
margin of safety might trigger action to reduce expenses. The opposite situation may also arise,
where the margin of safety is so large that a business is well-protected from sales variations.
Operating leverage measures a companys fixed costs as a percentage of its total costs. It is used
to evaluate the breakeven point of a business, as well as the likely profit levels on individual
sales. The following two scenarios describe an organization having high operating leverage and
low operating leverage.
Both measures provide management with important information about levels of profitability and
the risk associated with not meeting the target levels. The breakeven point will provide
management with the number of products/services required to be sold to cover total costs,
thereby assisting with developing the sales budgets. The margin of safety will allow management
to determine by how much sales can fall before the entity is at a loss making level.
Reference
Blazenko, G.W. (1996), Corporate leverage and the distribution of equity returns, Journal of
Business Finance and Accounting 23(8), 1097-1120.
Brealey, R. A., Myers, S. C., Marcus., A. J, (2001). Fundamentals of Corporate Finance, Third
Edition.
Brigham, E.F. (1995), Fundamentals of financial management, Fort Worth: Dryden Press.
Ferri, M.G. and Jones, W.H. (1979), Determinants of financial structure: A new methodological
approach, The Journal of Finance 34(3), 631-644.
Remmers, L., Stonehill, A., Wright, R. and Beekhuisen, T. (1974), Industry and size as debt
ratio determinants in manufacturing internationally, Financial Management 3(2), 24-32. 10
June.
Robinson, Thomas R., Hennie van Greuning., Elaine Henry and Broihahn, Michael A, (2002),
International financial, CFA Institute investment series.
Ross, Westerfield., Jaffe., (2002),Corporate Finance, Sixth Edition, Vol 1.
Weston, J.F. and Brigham E.F. (1969), Managerial finance, New York: Holt, Rinehart and
Winston.

Week 3
Thread:

UNIT 3 INITIAL POST

Post:

RE: UNIT 3 INITIAL POST

Author:

Shamyra Kennedy-Jones

Posted Date:
April 17, 2016 8:58 PM
Status:
Published

I agree also, that is feasible. TQM has also been introduced to community colleges by
mid- level managers who have come in contact with its principles through a curriculum designed
and provided by the college for local business and industry. These managers begin to introduce
TQM practices within their own areas. This grassroots approach often spreads laterally before
upward. Other colleges have actually become involved in TQM along with a consortium of
businesses in their service area. Business and college participants learn both TQM and about the
challenges they have in common. The consortium then becomes a critical link with the
community, as well as a source of problem solving, support, and encouragement for TQM.
Deming, W.E. (1982). Quality, productivity and competitive position. Cambridge, MA: MIT
Press, Massachusetts Institute of Technology, Center for Advanced Engineering Study.
Deming, W.E. (1986). Out of the crisis. Cambridge, MA: Massachusetts Institute of Technology,
Center for Advanced Engineering Study.
Dow, D., Swanson, D., & Ford, S. (1999). Exploding the myth: Do all quality management
practices contribute to superior quality performance? Production and Operations Management,
8(1), 127.
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Allie Miles - DQ 3

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RE: Allie Miles - DQ 3

Author:

Shamyra Kennedy-Jones

Posted Date:
April 17, 2016 8:51 PM
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Allie,

It is legitimate to ask the question why any leader would be attracted to TQM since the model
demands basic changes in established management practices. However, a rationale for
experimenting with TQM is not difficult to articulate. At its best, TQM can provide a focus and
structure for institutional effectiveness that includes the dimensions of quality and accountability
and operationalizes them throughout the college. TQM can provide a structure for involving
faculty and staff in college problem solving and decision making in ways that are meaningful to
them and to the college. TQM can also provide a model for transforming a stagnant college
organization to a new level of fitness.

Deming, W.E. (1982). Quality, productivity and competitive position. Cambridge, MA: MIT
Press, Massachusetts Institute of Technology, Center for Advanced Engineering Study.
Deming, W.E. (1986). Out of the crisis. Cambridge, MA: Massachusetts Institute of Technology,
Center for Advanced Engineering Study.
Dow, D., Swanson, D., & Ford, S. (1999). Exploding the myth: Do all quality management
practices contribute to superior quality performance? Production and Operations Management,
8(1), 127.
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Is TQM feasible?

Post:

RE: Is TQM feasible?

Author:

Shamyra Kennedy-Jones

Posted Date:
April 12, 2016 12:05 PM
Status:
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Geoffery I agree with you but also, TQM can play an important role in the companys
development. Although it can benefit some organizations, its members and society, many
companies have difficulties in implementing it. According to John Stark (1998), by consulting
firms some surveys have found that only 20-36% of companies that used TQM had obvious
improvement.
Ahire, S. L., Golhar, D. Y., & Waller, M. A. (1996). Development and validation of TQM
implementation constructs. Decision sciences, 27(1), 23-56.
http://www.johnstark.com/fwtqm.html. Retrieved April 12, 2016.
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Kennedy-Jones

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Kennedy-Jones
Author:

Shamyra Kennedy-Jones

Posted Date:
April 12, 2016 10:22 AM
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ABC is a method of segregating the inventory into high value, medium value and low value or
fast moving , slow moving and non-moving . This segregation brings in inventory cost control
and facilitates right purchases. TQM is a quality movement where in you follow quality in all
processes in the value chain to reduce cost and wastage. The savings could be in terms of money
or time or other resources. Both of these concepts are very much in use in many progressive
enterprises because of its huge advantages. Quality is a journey and not a destination. So there is
no end to it and it requires consistent focus and effort.

Feasibility of TQM depends on the organization and its commitment to resource-allocation. It

may not be feasible for each & every organization pertaining to economic conditions, limitation
in resource procurement, resource allocation, resource deployment, high costs, etc.
Hence, it is not feasible for every organization.
Ahire, S. L., Golhar, D. Y., & Waller, M. A. (1996). Development and validation of TQM
implementation constructs. Decision sciences, 27(1), 23-56.
Hendricks, K. B., & Singhal, V. R. (1997). Does implementing an effective TQM program
actually improve operating performance? Empirical evidence from firms that have won quality
awards. Management science, 43(9), 1258-1274

Week 4
Thread:

Andrea Dodson-DQ 4

Post:

RE: Andrea Dodson-DQ 4

Author:

Shamyra Kennedy-Jones

Posted Date:
April 22, 2016 8:16 AM
Status:
Published

Andrea great post. Participatory budgeting generally involves several basic steps: 1)
Community members identify spending priorities and select budget delegates 2) Budget
delegates develop specific spending proposals, with help from experts 3) Community members
vote on which proposals to fund 4) The city or institution implements the top proposals.
Reference:
Golembiewski, R. T. (Ed.). (1997). Public budgeting and finance. CRC Press.
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unit 4

Post:

RE: unit 4
Author:

Shamyra Kennedy-Jones

Posted Date:
April 22, 2016 8:12 AM
Status:
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Rosa, this was a really god post. If i had anything to add it would be that: Participatory budgeting
(PB) allows citizens to identify, discuss, and prioritize public spending projects, and gives them
the power to make real decisions about how money is spent. When PB is taken seriously and is
based on mutual trust local governments and citizen can benefit equally. In some cases PB even
raised people's willingness to pay taxes.

References:

Burnett, S. (2003). The future of accounting education: A regional

perspective. Journal of Education for Business, 78(3), 129-134.
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Kennedy-Jones

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Kennedy-Jones
Author:

Shamyra Kennedy-Jones

Posted Date:
April 22, 2016 7:51 AM
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Perspective budgeting is the budgeting process in which managers as well as subordinates

participate. This type of budgeting is sometimes referred to as a bottom-up approach, since
not only managers are creating the budget, but also subordinates work in different areas of
the operation.
Participative budgeting's main objective is to involve people in decision making and more
equitable distribution of resources. The resources are limited, so their allocations should be
done in an efficient manner. Information subordinates can provide through participation in
the budgeting process allows an efficient resources allocation. For example, if members of
the Board of Education were in position to gain insight as to the needs of the school, then
they would thereby be more likely to allocate the resources to where it would benefit the
school system the greatest.

References:
Edwards, P., Ezzamel, M., McLean, C., & Robson, K. (2000). Budgeting and strategy in schools: The
elusive link. Financial Accountability & Management, 16(4), 309-334.
Plant, J. F., & White, L. G. (1982). The politics of cutback budgeting: An alliance building
perspective. Public Budgeting & Finance, 2(1), 65-71.

Week 5
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Post:

Unit 5 Discussion

RE: Unit 5 Discussion

Author:

Shamyra Kennedy-Jones
Posted Date:
May 2, 2016 9:16 PM
Status:
Published

Companies that rely on the actual cost approach are presented with several difficulties. It is often
assumed that reality keeps up with valuation, but this doesnt hold true in the semiconductor
industry. Often times invoices come in weeks, or even months, after the inventory has been
manufactured and shipped off. This makes actual cost methods inefficient because they require a
wait for inventory to be cost, which is unrealistic. Another obstacle companys face when using
actual cost is yield.
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Allie Miles - DQ 5

RE: Allie Miles - DQ 5

Author:

Shamyra Kennedy-Jones
Posted Date:
May 2, 2016 12:22 PM
Status:
Published

I agree that, "managers need to know the best price for

materials". Suppliers are essential to almost every business. Without
raw materials to make what you sell or manufacturers to provide what
you resell, you will have a tough time growing. There are also many
supplies and services your business consumes as part of general
overhead, from paper clips to Internet access.
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Allie Miles - DQ 5

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RE: Allie Miles - DQ 5

Author:

Shamyra Kennedy-Jones

Posted Date:
May 2, 2016 12:20 PM
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thebestpriceformaterials".Suppliersareessentialtoalmosteverybusiness.Without
rawmaterialstomakewhatyousellormanufacturerstoprovidewhatyouresell,youwill
haveatoughtimegrowing.Therearealsomanysuppliesandservicesyourbusiness
consumesaspartofgeneraloverhead,frompaperclipstoInternetaccess.
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Jones

Jones
Author:

Shamyra Kennedy-Jones
Posted Date:
May 1, 2016 7:32 PM
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Factors that need to be considered when developing standards to be used in a standard cost
environment are: 1. Rate variance - A change in the rates of the product based on various factors
of production involved. If the cost of any factor of production is varied, the accuracy of the
standard cost becomes dubious. 2. Volume variance - Any major changes in the volume of the

product may lead to inefficiencies caused due to labor scheduling conflicts and contracts. This
can also create a major inventory cost in case the product is stored in advance in anticipation of
the larger demand. These costs should be kept in mind while calculating the standard cost. 3. Age
of Equipment - For a machine that has been used for a long time may produce lesser volumes
than the machines which are relatively new. The older machine would generate more scrap and
therefore, a higher cost variance would be required in that case. 4. Efficiency of Labor - It is
important to consider the efficiency of labor and their skill levels while estimating standard cost
of the product. A higher skilled labor would lead to lesser defects and therefore, lower costs. 5.
Wages - Any changes in the wages of the labor which are scheduled have to be included while
calculating the cost of the product which is being produced. 6. Purchase contracts - If a contract
can be negotiated or a change of supplier to lower the costs of production, it should be estimated
in the standard costs of the product.
References:
Barlas, S. et al. How does your company measure performance? Strategic Finance, December
2004, Volume 86, Issue 6, pp 17-21
Lucas, M. Standard costing and its role in todays manufacturing environment. Management
Accounting, April 1997, Volume 75, Issue 4, pp 32-34
Nassiripour, S and Xu, L. A new method towards better comprehension of variance analysis.
Journal of Accounting and Finance Research, Winter II 2004, Volume 12, Issue 7, pp 34-40

Week 6
Thread:

DQ- Unit 6

Post:

RE: DQ- Unit 6

Author:

Shamyra Kennedy-Jones

Posted Date:
May 8, 2016 9:59 PM
Status:
Published

Workers should be able to clearly associate the reward to their accomplishments.

Imagine if someone told you Thank you and did not say what for. One of the purposes of a
reward is to reinforce the positive behaviors that earned the reward in the first place. If
employees understand what behaviors they are being rewarded for, they are more likely to
repeat those behaviors.
Rewards should occur shortly after the behaviors they are intended to reinforce.
The closer the occurrence of the reward to the occurrence of the desired behavior in the
workplace, the easier it is for the employee to realize why he/she is being rewarded. The
easier it is for him/her to understand what behaviors are being appreciated.
Fear is a powerful motivator, but only for a short time and then it dissipates. For example, if
you have initially motivated employees by warning them of a major shortage of funds unless
they do a better job, then they will likely be very motivated to work even harder. That
approach might work once or twice, but workers soon will realize that the cause of the

organizations problems is not because they are not working hard enough. They might soon
even resent managements resorting to the use of fear. If, instead, management motivates
by reminding workers of their passion for the mission, the motivation will be much more
sustainable.

Marc, D. L., & Farbrother, S. (2003). Changing organization culture, one face at a time. PUBLIC
MANAGEMENT-LAWRENCE THEN WASHINGTON-,85(9)
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initial post

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Jones
Author:

Shamyra Kennedy-Jones

Posted Date:
May 8, 2016 9:56 PM
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Rewards should support behaviors directly aligned with accomplishing strategic

goals.
This principle may seem so obvious as to sound trite. However, the goal of carefully tying
employees behaviors to strategic goals has only become important over the past decade or
so. Recently, the term performance is being used to designate behaviors that really
contribute to the bottom line. An employee can be working as hard as anyone else, but if
his/her behaviors are not tied directly to achieving strategic goals, then the employee might
be engaged only in busy-work.
Grimaldi, J., & Schnapper, B. P. (1981). Managing employee stress: reducing the costs, increasing the
benefits. Management review, 70(8), 23-8.
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Kennedy-Jones
Author:

Shamyra Kennedy-Jones
Posted Date:
May 6, 2016 9:20 PM
Status:
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Can you think of or locate an example where a company evaluating this way could actually
encourage the opposite of the behavior that they intended to promote among its employees?
Yes, this happened where I used to work. The ration can be made to look good by raising the
return (which is what the company wants) or by keeping the return the same and selling off
assets of valuing them lower. By only measuring this ratio, the company is opening itself to
management and employees manipulating the metric so that it looks good when it may in fact
just be a result of lowering valuation of assets rather than actually increasing rate of return.
What might an employee do if their raise or bonus depended on a single financial measure?

Manipulate the metric and over focus efforts on making it look good to get a bonus when in
reality not doing the best for the company as a whole. For example, where I worked management
was measured on inventory levels. To manipulate the numbers inventory would sometimes be
scrapped early to sent from one department to another.
Croucher, R., Stumbitz, B., Quinlan, M., & Vickers, I. (2013). Can better working conditions
improve the performance of SMEs? An international literature review
Haque, M. M., Ahlan, A. R., & Razi, M. J. M. (2006). FACTORS AFFECTING KNOWLEDGE
SHARING ON INNOVATION IN THE HIGHER EDUCATION INSTITUTIONS (HEIs).
Week 7
Thread:

Unit 7 Discussion Question

Post:

RE: Unit 7 Discussion Question

Author:

Shamyra Kennedy-Jones

Posted Date:
May 11, 2016 10:35 AM
Status:
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Marginal costing or variable cost are seen more realistic than the method of absorption costing. It
is because variable costing considers only those costs that are easily attributable and identifiable
to the job or a product. Variable costing is more suitable, reliable and accurate with internal
financial reporting, whereas absorption costing is most appropriate for external financial
reporting and analysis.
Absorption costing cannot be used for managerial decision making because the costs that it takes
in to account are imprecise in nature. Normally, marginal costing is widely recommended for
managerial decision making as the costs that it considers are traceable to a particular product and
hence it is useful for managerial decision making. Absorption and marginal costing are basically
different in terms of treating the overheads, inventory valuation, appropriateness for decisionmaking, net income and methods of calculation.
Zimmerman, J. L., and Yahya-Zadeh, M. (2011). Accounting for decision making and control.
Issues in Accounting Education, 26(1), 258-259.

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Absorption costing or Variable costing

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RE: Absorption costing or Variable costing

Author:

Shamyra Kennedy-Jones

Posted Date:
May 11, 2016 10:29 AM
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Under absorption costing method, prices are the functions of the costs and therefore demand of
the product is never considered. It includes past costs that may not be relevant to the prevailing
decision making and pricing processes. It is thus criticized that absorption costing may not be
able to provide accurate information so that decision making can be more effective and useful
especially in todays highly dynamic and complex business environments. Under absorption
costing, all overhead costs are absorbed to a particular product along with direct costs. According
to SSAP 9, absorption costing technique is an essential requirement for the external reporting
purposes. It is because costs of inventory must include all production overheads with both fixed
and variable cost (Broadbent and Cullen, 2005, p. 92).
Broadbent, M., & Cullen, J. (2005). Divisional control and performance. Management Control:
Theories, Issues and Performance, 137-166.
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Absorption versus Variable costing

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RE: Absorption versus Variable costing

Author:

Shamyra Kennedy-Jones

Posted Date:
May 11, 2016 10:25 AM
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Both absorption costing and marginal or variable costing are types of product costing systems.
Absorption or full costing includes direct materials, direct labor and both variable and fixed
manufacturing overhead in the product costs whereas variable costing doesnt include
manufacturing fixed costs along with direct material and direct labor (Weygandt, Keiso and
Kimmel, 2005, p. 265).Marginal costing is the basic tool that helps management in taking most
appropriate decisions and understands accurate cost structures. Marginal costing or variable
costing considers direct materials, direct labor and variable manufacturing overhead costs as
product costs. Under marginal costing, variable costs are attributed to cost units for a fixed
period and fixed costs are written off in full against the total contribution. (Lucey and Lucey,
2002, p.296).
Lucey, T., & Lucey, T. (2002). Quantitative techniques. Cengage Learning EM
Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. (2005). Financial accounting (Vol. 1). John Wiley
& Sons Incorporated.
Week 8
Thread:
Post:

Unit 8 Discussion Question

RE: Unit 8 Discussion Question

Author:

Shamyra Kennedy-Jones
Posted Date:
May 22, 2016 8:20 PM
Status:
Published

Great post, I agree with your post. Companies and investors always like to see positive cash flow
from every aspect of a company's operations. After all, without positive cash flow, a company
may have to borrow money to do these things, or in worse cases, it may not stay in business.
Having negative cash flow for a time is not always a bad thing. If a company is a net spender of
cash for a time because it is building a second manufacturing plant, for example, the company's
might show negative cash from investing activities. Nonetheless, this could pay off for investors
later if the plant generates more cash. On the other hand, if the company has a negative cash flow
from investing activities because it is making poor asset-purchase decisions, then the long-term
benefit might not be there.
Lan, CFA, J. (2012). The Cash Flow Statement: Tracing the Sources and Uses of Cash. The Cash
Flow Statement: Tracing the Sources and Uses of Cash. Retrieved May 22, 2016, from
http://www.aaii.com/journal/article/the-cash-flow-statement-tracing-the-sources-and-uses-ofcash.touch.
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Initial Final post

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RE: Initial Final post

Author:

Shamyra Kennedy-Jones

Posted Date:
May 19, 2016 8:58 AM
Status:
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Great post. I agree with you that, cash flow statement helps alleviate many of these issues by
providing a link between the income statement and the balance sheet (Lan, 2012). Think of the
cash flow statement like your checking account. Cash flow is the lifeblood of your business.
Without adequate inflow, you wont have sufficient funds to cover your own expenses a real
threat when it comes to startups and new businesses. And in fact, statistics show that 80% of
businesses fail due to cash flow management problems.
Lan, CFA, J. (2012). The Cash Flow Statement: Tracing the Sources and Uses of Cash. The Cash
Flow Statement: Tracing the Sources and Uses of Cash. Retrieved May 19, 2016, from
http://www.aaii.com/journal/article/the-cash-flow-statement-tracing-the-sources-and-uses-ofcash.touch.
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Unit 8 DQ

RE: Unit 8 DQ
Author:

Shamyra Kennedy-Jones
Posted Date:
May 19, 2016 8:44 AM
Status:
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Lead time reduction is a great way to improve productivity, increase output of finished products
and streamline operations. However, original equipment manufacturers (OEMs) often encounter

road blocks that extend lead times, which can slow down and otherwise negatively impact the
manufacturing process. Here are five issues you are likely to encounter that can drag production
down, and how you can approach these problems when you're working on reducing lead times.
When ordering parts like fasteners and class C components, the lead time can vary from vendor
to vendor. This makes it difficult to predict when items will be delivered and even harder to
coordinate production. Rather than ordering from various providers and receiving shipments at
random, having one supplier means everything will arrive together. This can help cut down on
shipping costs and make it easier to schedule builds and get them done with less hold-up.
Zhao, X., Stecke, K. E., and Prasad, A. (2012). Lead time and price quotation mode selection:
Uniform or differentiated? Production and Operations Management, 21(1), 177-X.
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Kennedy-Jones

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Kennedy-Jones
Author:

Shamyra Kennedy-Jones

Posted Date:
May 19, 2016 8:33 AM
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Corporate cash flow statements include three components:

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
For example, when a company sells a TV to a customer who uses a credit card, cash and
accrual methods will view the event differently. The revenue generated by the sale of the TV
will only be recognized by the cash method when the money is received by the company. If
the TV is purchased on credit, this revenue might not be recognized until next month or next
year.
Accrual accounting, however, says that the cash method isn't accurate because it is likely, if
not certain, that the company will receive the cash at some point in the future because the
sale has been made. Therefore, the accrual accounting method instead recognizes the TV sale
at the point at which the customer takes ownership of the TV. Even though cash isn't yet in
the bank, the sale is booked to an account known in accounting lingo as "accounts
receivable," increasing the seller's revenue. (Differences between accrual accounting and
cash flows show why net income is easier to manipulate.
Negative numbers can mean the company is servicing debt but can also mean the company is
making dividend payments and stock repurchases, which investors might be glad to
see. While "negative" cash flow doesn't sound good, it isn't always bad - sometimes you've
got to spend money to make money. Companies need to invest in their businesses in order to
grow. Of course, red ink can't be the only color on the statement. Conversely, high cash flow
doesn't mean the company is in good shape - it may just be selling off assets. Non-recurring
revenues such as making $1 billion by selling off a division boost cash flow, but that division

can't be sold again next year. When reviewing the numbers, it is critical that income
generated by such non-recurring events as sale of fixed assets, securities, retirement of
capital obligation or litigation be taken into proper consideration. Any or all of these numbers
could represent a one-time profit or loss that would distort the firm's prospects if viewed as
recurring items.
Clearly, cash flow analysis is complex, but a useful topic for investors when analyzing the
health of a specific company. Just keep in mind that a company's cash flow statement is only
one source of data providing insight into a firm's health. Think of it as a compressed version
of the company's checkbook that includes a few other items that affect cash, like the
financing section, which shows how much the company spent or collected from the
repurchase or sale of stock, the amount of issuance or retirement of debt and the amount the
company paid out in dividends. Other important sources of information include a firm's
balance sheet and income statement.
References:
Graham, J. R., Harvey, C. R., and Rajgopal, S. (2005). The Economic
Implications of Corporate Financial Reporting. Journal of Accounting and
Economics, 40(1), 3-73.
Kothari, S. P., Leone, A. J., and Wasley, C. E. (2005). Performance matched
discretionary accrual measures.Journal of Accounting and Economics, 39(1), 163-197.
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