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Sample Essay on Accounting Coursework Questions

Accounting Coursework Questions

Question 1

The cash flow statement indicates the actual amount of cash that is available in the company at the end of the financial year. This information cannot be shared in other financial statement, since they are prepared through the accrual accounting method.

Management would be more interested in the ‘cash flow from operating activities’ column of the cash flow statement. This column shows whether the daily trading activities of the business are generating positive cash flows, which is the main role of managers. The section can be used for instance, in the monitoring of trade debtors and creditors.

However, the investors would have an interest in the ‘Financing activities’ section that shows the amount of cash used in the payment of dividends or obtained from sale of stock.

Question 2

The cash flows of Apple have significantly grown since 2011 when it had a negative cash flow of $1.446 billion to 2013 when it had a positive cash flow of $ 3.53 billion. Most of the company’s cash flow is acquired from its operational activities. Over the three past financial periods, investing and financial activities do not give any cash flows except in 2011 when it gave out stock. A greater percentage of the company’s money is used in paying for dividends and capital expenses.

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Apple needs to find an avenue for generating cash from its investment activities since although it is using lots of money on investments, it does not generate any cash from them.

Question 3

Callable preferred stocks are shared that are issued to their holders at preferential terms under circumstances that they shall be redeemed back by the company. They take the preference over common stock in the distribution of dividends and compensation at the time of the company’s liquidation (Miller & Jentz, 752). Corporations issue stock when they urgently need to raise capital but do not wish to increase the number of shareholders in the long term.

I would prefer cumulative preferred stock since dividend on their payment is guaranteed and the company is not able to redeem them.

Question 4

Management accounting is focused on the generation of information for use within the company for instance, annual budgets. On the other hand, financial accounting is aimed at communication with external parties like potential investors about the financial position of the company for example, on the position of cash flow and operating profits.

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Work Cited

Miller, R., & Jentz, G. (2012). Business Law Today: Comprehensive: Text and Cases. Mason        OH: South-Western Cengage Learning. Web. 12 February 2014. Retrieved from

<http://books.google.co.ke/books?id=fdM8AAAAQBAJ&pg=PA752&dq=advantages+of+callable+prefered+stock+guaranteed+dividends&hl=en&sa=X&ei=E877Uoa2POKM4ASTh4DwDQ&redir_esc=y#v=onepage&q=advantages%20of%20callable%20prefered%20stock%20guaranteed%20dividends&f=true>

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