Overview
LEVEL 1: Analyze transactions by determining their effect on the accounting equation.
Accountants are responsible for solving a wide range of problems that embrace critical business functions beyond the technical skills required for “crunching the numbers.” As machine learning and automation play an ever-increasing role in accounting, accountants are spending less time on those manual tasks and more time solving complex problems.
As a result, accountants need to be able to work cross-functionally to gather facts and evidence, research alternative actions, and synthesize their findings to solve problems in a way that provides relevant and purposeful solutions.
Accountants as Problem Solvers - Strategic Finance-1.pdf Download Accountants as Problem Solvers - Strategic Finance-1.pdf
Today’s accountants, therefore, need to employ a methodical process that allows them to work cross-functionally to solve problems and provide meaningful analysis. The five-step IDEAL method provides a proven process for solving these critical problems.
Problem-Solving Poster.pdfDownload Problem-Solving Poster.pdf
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As staff accountant for a local accounting firm, your supervisor asks you to confirm equity amounts entered in the financial statements for three clients--Addison Company, Office Store Co., and Quaker Company. Applying the IDEAL method, analyze each of the following problems based on the accounting equation:
- At the beginning of the year, Addison Company's assets are $300,000 and its equity is $100,000. During the year, assets increase $80,000 and liabilities increase $50,000. (1) What is equity at year-end?
- Office Store Co. has assets equal to $123,000 and liabilities equal to $47,000 at year-end. (2) What is the equity for Office Store Co. at year-end?
- At the beginning of the year, Quaker Company has liabilities equal to $70,000. Quaker's assets increase by $60,000 during the year. At the end of the year, Quaker's assets equal $190,000. Liabilities decrease by $5,000 during the year. What are the (3) beginning and (4) ending amounts of equity?