business memo (write a conclusion to this business memo)

he memo must be at least 1 ½ pages in length and no more than 3 pages, be formatted and addressed as a business memo, and contain the information the prompt required you to answer. Use authoritative sources such as the FASB Codification to support your answers, your textbook is not an authoritative source. You can access the FASB Accounting Standard Codification at the FASB website (

www.fasb.orgLinks to an external site.

) and select Standards and then Standards for Codification for free access. Cite your sources using APA format

Business Memo 2
“This one’s got me stumped,” Janice says to no one in par cular. “First day on the job; I’d be er get it
right.” It’s the classifica on of notes payable in the statement of cash flows that has Janice in doubt. Having
received an “A” in Intermediate Accoun ng, she knows that a note payable represen ng a bank loan is
financing ac vity, but this one is a note payable to the employer’s primary merchandise supplier. “I wonder
if the accoun ng is the same,” she asks. Janice comes to you, her supervisor, for guidance.
Help Janice by wri ng a memo explaining how to classify this note. Cite the relevant authorita ve literature
on cash flow classifica on and provide the specific nine‐digit Codifica on cita on that specifies the
classifica on of notes payable to suppliers, so that Janice can go over the informa on. Also let her know
if accoun ng is the same for both short‐term and long‐term notes payable to suppliers.
San Diego State University, Charles W. Lamden School of
Accountancy Fowler College of Business
Memo
To:
From:
Subject:
Janice, CPA
John, Staff Supervisor Accountants
specific classification of notes payable to suppliers and
Relevant authoritative literature on cash flow statements
Considering financial reports are studied by people and organizations such as
government, customers, managements, creditors, competitors, investment
analysts, general public, credit rating agencies, investors, employees,
suppliers, lenders, and owners, investment and loan can be based on what
financial statement analysis necessitates. The company periodically reports
financial account elements are identified as part of this judgment. The
connection between the amount of accounts in financial statements can be
decisive to portray the financial condition of the company. For example, quick
ratio can be used to measure the ability of a company to pay its immediate
obligations and debt equity ratio to evaluate a company’s ability to raise cash
from new debt. In addition these comparisons are often made in income
statement between the revenue and expense and in balance sheet between
asset, liability, and equity accounts.
According to the Financial Accounting Standards Board(FASB), in their last
version of Accounting Standards Codifications, the citation that specifies the
classification of notes payable to suppliers FASB ASC 230-10-45-17 stipulates
in the paragraph a. that “all of the following are cash outflows for operating
activities: cash payments to acquire materials for manufacture or goods for
resale, including principal payments on accounts and both short- and long-term
notes payable to suppliers for those materials or goods. The term goods
includes certain loans and other debt and equity instruments of other entities
that are acquired specifically for resale, as discussed in paragraph 230-10-4521.”
San Diego State University, Charles W. Lamden School of
Accountancy Fowler College of Business
Yes, the account is the same for both short-term and long-term notes payable
to suppliers. For instance, a monthly report covers a short cycle of time and
facilitates adjustments that will affect business operations the next month.
However, a quarterly or annual report provides analysis that might help in
finding trends over the long term. But, note that operating costs are a part of the
indirect costs of the business that are different to the cost of goods sold
because this last are direct result of production or distribution of goods.
San Diego State University, Charles W. Lamden School of
Accountancy Fowler College of Business