Accounting Essay Example | Topics and Well Written Essays - 500 words - 24

Accounting - Essay Examplee interested parties conceptualize as well as enabling them have a better sense of the financial soundness of the firm (Donald, 2007).For a new business, as well as an existing one, in give tocontinuewill its operations, meeting customers hireand its objectives of wealth maximization, there is a need tosourcefunds (Steven, 2009).The twobroadsources of funds aredebtand equity which may vary depending on a number of factors, though not limited to the nature of the firm, its operations and itsmarketrepute. The combination of these two sources of funds refers to thefirms capital structure. In order to achieve the stated objective of the firms four employees as stated in the question, employees numbersare assignedi.e., employee no. 1, 2, 3, and 4. The most appropriate rate of remunerationis monthly for easy accounting.To achieve this, firm has togeneratesome accounts in its charts ofaccountincluding payroll, salaries andwagepayableaccounts.These accounts are de bit (Dr) and credit (Cr) as argued by (Donald, 2007). For effective operation of the business, tangible assets like plant andmachinery, computer, motor vehicles equipment, furniture and fittings among others. According to FASB guideline, all these assets are subject to depreciationdueto wear and part as they continuebeing used. Therefore, accounts like depreciation expense, accumulated depreciation as well asindividualassetsaccountshould be prepared and be included in thefirms charts of accounts. An example of journal entries based on charts of accountsis shownbellow.Some of the internal controls which are aimed at reducing the firms overall lay on the line are, compliance with laws and regulation, reliability of financial reporting and effectiveness as well as efficient operation of the