- Have any questions? Contact us free of charge
- 233245354352
- 5432431
- [email protected]
classmate3.pptx
classmate3.pptx
Comparing Segmented Income for Investment Centers
Vamsi Krishna Garimella – 592312
Comparing Segmented Income for Investment Centers
The starting point for evaluating investment centers is typically with reviewing segmented income for each investment center
Investment centers are responsible for costs, revenue and investments in assets.
Review the segmented income for each investment center.
Management determines the level of profit each center generates.
The segmented income gives the information of how much profit is generated
Not all divisions are equal in segmented income while in investment centers divisions are equal.
Using Decentralized Organizations to Control Operations
Decentralized organization is responsible for decision-making and other managerial responsibilities in each segment
Each department is assigned a leader who is in charge of discipline and other malpractices.
Decentralized organization is unlimited to all particular organizations.
Most organizations have grown in size and complexity.
Have increased expertise, quick decisions and refocus on the top management responsibilities.
Limitations are associated with duplication of services, conflict of interests, and loss of control.
Maintaining Control over Decentralized Organizations
This aims at holding managers responsible for revenue, assets and cost controllable.
Managers in various companies are responsible for controlling the production costs.
Manager’s control will help determine the type of responsibility center used for each manager.
Has cost center which supervises production departments in a firm.
Production managers are evaluated based on meeting cost budgets for producing a certain level of goods.
Managers of these departments are evaluated based on providing a certain level of services for the company at a reasonable cost.
Purpose of Cash Flow
Provides cash receipts and cash payment information and reconcile the change in cash for a period of time.
Determines the cash flow statement, where cash came from and where it went to.
Keeps track of personal cash transactions for that particular year in a check register.
For example all cash statements from the paycheck are added together and shared in one line as an item.
The statement of cash flows was created due to a lack of cash flow information on the income statement, balance sheet, and statement of owner's’ equity.
Three Types of Cash Flow Activities
Operating Activities. Cash activities related incomes. Example, cash generated from sales of goods and paid to merchandise.
Investing Activities. Activities related to the noncurrent assets. Examples, long-term investments, properties and equipment.
Financial Activities. Cash activities related to noncurrent liabilities and owner’s equity. Example, principal amount of long-term debts, stock sales and repurchases.
Key Steps to Preparing the Statement of Cash Flows
Prepare the operating activities section by converting net income from an accrual basis into a cash basis.
Prepare the investing activities section by identifying all the cash activity for noncurrent assets.
Prepare the financing activities section by identifying all the cash activity for noncurrent liabilities and owners’ equity.
Reconcile the change into cash.