Learning Team Reflection

Teresa Watkins
ACC 291
January 24, 2014
Michael Bluvas












The objectives overview for week four and five are discussed here below. We discuss
how cash flows, ratios, journal entries, payment dividends, and the unethical behaviors of people
and the importance of the Sarbanes-Oxley Act, all relate to a business and there uses. There are
two main methods of organizing the cash of any business and those methods are the direct and
indirect methods of cash flow statements. These two methods are to help separate the revenue in
and the revenue out, which in other words would be considered cash or expenses. In the direct
method the business owner would have to make sure to determine what their cash and what may
be expenses within that business. The direct method is to help the business understand the major
sections of the cash flow statements and also what the total gross of the cash receipts and
payments are for that business. One main thing about the direct method is that if the taxes are
paid and it directly affects the cash flow then the method of the transaction is the direct method.
However on the other hand in the indirect method of the any business is when an increase or
decrease of the companys assets affecting the net income. This means that the indirect method
has mostly to do with the net income of the business and it has to separate the revenue that does
not reflect on the cash flow statement. This also means that in this method the entries that do not
affect the cash flow are subtracted and the entries that do affect the cash flow are added to reflect
the cash flow.
In accounting there are three different analyses that aid in analyzing financial statements
and they are ratio, vertical, and horizontal analysis. Ratio analysis expresses the connection
between chosen financial statement data. The vertical analysis conveys each item within a
financial statement as a percent of a base amount. Horizontal analysis evaluates a cycle of
financial statement information over a period of time to establish the increase that has taken
place articulated as an amount or a percentage.
Intra- and inter- company comparisons are used by vertical analysis. Horizontal analysis
is used within intra-company comparisons primarily. Within these comparisons statements are
show comparative financial data for a minimum of two years. Then a review of the data is
presented for a series of five to ten years plus.