Financial Statement and Cash Accrual Analysis Paper

Guillermo Furniture Store

Meoshe Curtis

ACC 561

July 19, 2010
Instructor: Prof. Cathleen Davis

Guillermo Furniture Store

Guillermo, a renowned Mexican entrepreneur found himself like most ordinary business persons would from time to time, facing a crisis as economic conditions began to alter the market for his products. Prior to the 1990s his business experienced success because of the lack of competition. However, in the early 1990s the market for improved furniture using high-tech equipment forced Guillermo to make some decisions concerning the furniture store. This paper will therefore seek to; address some of the ways in which Guillermo can use budgets and performances reports to make effective decisions; demonstrate how ethics can influence accounting decision-making; and make references to relevant information Guillermo would need to consider when making decisions concerning for the company.
Budgets and performance reports would be a very vital tool for Guillermo to use in the process of deciding exactly what to do after observing a drastic decrease in the company’s profit margin. Siegel and Yacht describe the process of using budgets and performance reports as an “aspect of personal financial planning, a tool to make better financial decisions…It puts your current situation and your choices into a larger context, giving you a better way to think about where you are, where you’d like to be, and how to go from here to there.” A proper analysis of the situation would allow Guillermo to examine the opportunity costs he may face if he were to use his facilities to explore other products or outsource the business to a larger firm. Guillermo wanted to remain independent of the larger companies that might affect the amount of time spent with family members.
Guillermo considered using high-tech equipments that were being used by the other larger competitors. The reports indicated that the use of high-tech equipments served to minimize production...