Scenario: BizCon, a consulting fixed, has proportioned completed its primary year of operations. The posse's sales augmentation was explosive. To advance clients to employ its services, BizCon offered 180-day financing - sense its largest customers do not pay for almost 6 months. Accordingly BizCon is a new posse, its equipment suppliers contend on life compensated capital on introduction. Also, it had to pay up face for 2 years of security. At the end of the year, BizCon fair employees for one unmeasured month of salaries, but due to a capital insufficientfall, it promised to pay them the primary week of present year.
As the greater accountant, the Chief Financial Officer has asked you to ad a memo to be sent to superintendence notifying them of the advanced wage payments.
Prepare the memo in a utmost 700 utterance including the forthcoming notification to improve plan the situation:
Explain how capital and accrual accounting differs for each of the events listed in the aloft scenario and define the fit accrual accounting.
Assess how at the end of the year, BizCon reputed a indulgent net allowance, yet the posse's superintendence is uneasy accordingly the posse is very insufficient of capital. Explain to superintendence how BizCon could possess confident net allowance and yet run out of capital.