BrightBooks Project - Accounting for Decision Making - Math Problem Example

The paper “BrightBooks Project - Accounting for Decision Making” is an informative example of a finance & accounting math problem. The profitability of the current year seems to be lower compared to that of the previous two years. On the other hand, the liquidity of the current year is higher compared to previous years and this means that the company is in a better position to settle its dues. The operating efficiency is also high meaning that the business is running its resources well.

Finally, the financial flexibility of the company is also high meaning that the company is less to vulnerability to risk.6 d) BenchmarkingBenchmarking is a process of measuring a company’s performance by making a comparison with the performance of other companies in the same industry. The benefits associated with benchmarking are that a firm is able to adopt the best practices such as management and training that other firms are using. It also helps companies carry out a self-assessment about their performance and it leads to greater productivity.

The disadvantage associated with benchmarking is that what works for other businesses may not work for your company.Q7Ethical issueThe financial statements are very useful in providing information to various users on the financial position of a company. Examples of users of the financial statements are the shareholders, financial institutions such as the banks, and the creditors.In our case, the bank from which Dylan Bailey wants to borrow an additional loan is the user. Therefore, the bank will use the recent financial statement dated as at 30th June 2010 to determine whether to extend the loan.

Bailey is suggesting to his accountant that he should include some of the sales invoices pre-dated July in the current financial year which is supposed to end on 30th June. According to the generally accepted accounting standards (GAAP’s), only transactions relating to the current accounting period are to be reflected in the financial statements. Therefore, if the accountant accounts for the invoices stated as of July, then he will not be conforming to the generally accepted accounting standards (GAAP’s).