Essays on Adjusting Entry

Cardillo Travel Systems

The Cardillo Travel Systems case shows the way the management cooked up the books only to be caught later. This essay will attempt to answer some questions on this case. False Representation to External Auditors: The executives at Cardillo Travel Systems were aware it needed to maintain a minimum of $3 million of stockholder’s equity threshold established by the court outstanding against the organization. (Ritterburg, 2012). This was the reason that shaped their intent to falsify the organization’s books to misrepresent facts before investors and creditors. The issue started with the accountants at Cardillo making an improper ...

Question One: SEC’s Rationale to Charge Cardillo Executive

Making False Representation to External Auditor The executives of Cardillo intended to give false financial information to lure investors and creditors. They intended to get at least $3 million thresholds that were established by the court. As a result, the executives made inappropriate adjusting entry, which gave the SEC the reason to charge them. They lied to the external auditors that the $203, 000 that was received from United Airlines was income to the company, which was not the case (Ritteberg, 2012). In the real sense, the money that was paid by the United Airlines was supposed to be ...

Adjusting of entries takes place at the end of accounting period. Adjusting entries is necessary because the dates on which actual transactions occur and thereby the dates of normal entries not always coincide with the date respective to the principles of accrual accounting and revenue recognition. There are two categories of adjusting entries. One of the categories is deferred revenues and expenses. Such adjustments are needed in case there has been a cash flow in the past, but respective revenues or expenses must be recorded now. The second category is called accrued revenues and expenses. In this case there ...

Adjusting process is the method of analyzing and correcting the accounts at the end of the period before the preparation of the financial statements while the journal entries that always update the accounts at the end of every accounting period is the adjusting entries (Godwin & Alderman, 2012). Firstly, it is important to make the appropriate journal analysis of each transaction during the adjustment procedure. Secondly, post every transaction to the respective ledgers. However, at the end of the accounting period, several balances in the ledger account can be reported without any change in the financial statements. For instance, the ...