Accounting for Bad Debts

Accounting for bad debts is necessary yet not always straight forward. Both the income statements and the balance sheet are affected. To shareholders reviewing a company’s annual report, it is crucial to investigate the company’s bad debt standing. On the …

Stock Issued to Employees

Many companies offer stock to employees. If stock is available to all employees and may be purchased for at least 95% of its market value, then accountants need not record the discount portion of the employee compensation. The stock’s worth …

Troubled Debt Restructuring

Many companies carry long-term liabilities. Noncurrent or long-term liabilities are debt obligations the business is not required to pay back for at least a year from the date on the balance sheet. They are recorded at their present value, the …

Audit Report Contents in the Annual Report

The content of a publicly traded company’s audit must be disclosed in the annual report. Each paragraph of the audit report has a specific purpose. The ultimate purpose of the audit report is to expand the awareness of the features …

Reports Required by Sarbanes-Oxley

As a result of the scandals of Enron, Tyco and WorldCom, the Sarbanes-Oxley Act was passed through Congress. The purpose of this act was to prohibit several questionable activities like some insider trading, conflicts of interest involved with auditors, and …

Reports on Internal Controls

Internal controls protect the company’s assets as well as their shareholders’ investments in the company. Therefore, the SEC requires companies to report on internal controls as part of Management’s Report of Responsibilities. The Committee of Sponsoring Organizations (COSO) of the …