Case Study Analysis in Accounting Assignments: Real-World Application

The moment you think of accounting, you can already picture rows and rows of complex mathematical equations, calculators, and a lot of stress. Some might even wonder if complex accounting knowledge is even required in the real world. Well, if you think the same, then you’re in for a shock.

It’s natural to want to get accounting assignment help when you’re struggling to keep up with deadlines. But how do you expect to learn when you delegate all your tasks to other experts? In this blog, you’ll cover some case studies on real-world applications of accounting. This should give you a better idea of the importance of this subject in your day-to-day life.

Case Study 1: The Home Heaters Case

Recently, a student approached an expert on Myassignmenthelp.expert for an accounting assignment solution on the Glenwood Heating, Inc. and Eads Heaters, Inc. The case reveals how two companies with the same transactions throughout the year end up having different financial statements.

The expert shared it recently, and I believe it is the perfect example to show how accounting matters in real life. Once you realise the true value of this subject, you’ll pay for assignment writing only when you’re in dire need of assistance.

In the case study of Glenwood Heating, Inc. and Eads Heaters, you’ll notice that both companies had similar transactions throughout the year. But their year-end financial statements were different because the companies used different accounting methods for the following sections – 

• Recording methods of the costs for the goods that were sold
• Terms for equipment that was leased
• The depreciation method chosen regarding the delivery of items

Eads Heaters chose more conservative methods that focused on long-term goals, while Glenwood focused on short-term profitability. Now, as an investor, if you look only at the net income and earnings retained, Glenwood would seem like the better option. But in reality, Eads has more assets compared to Glenwood. Their focus on long-term goals led to them setting aside more allowances for bad debts compared to Glenwood. Thus, any smart investor would choose Eads over Glenwood since the company has long-term goals in mind. 

Notice how different accounting methods can have such an important impact on the future of any company. If you need more examples, let’s check out another case study.

Case Study 2: Palfinger AG

Palfinger AG uses the International Financial Reporting Standards (IFRS) instead of the Generally Accepted Accounting Principles used in the United States. Now, if any company uses a depreciation method that does not accurately express their depreciation in the best manner, then the financial statements obtained can have inaccuracies. A quick investigation reveals that Palfinger AG uses the straight-line depreciation method, which depreciates equipment uniformly over a period of time. However, this might not be the most suitable method for the company.

Since this method depreciates equipment uniformly, anything that might disrupt that uniformity can hamper the financial statement. For example, if the company overuses equipment in one quarter, then the depreciation value will be underestimated in that quarter. 

Another issue might occur if the depreciating equipment is sold before it is depreciated. In that case, the company might end up reporting a wrong value, which can impact its financial statements. If the depreciation is overestimated, they’ll end up reporting a profit. But if it is underestimated, then the company will report a loss. So, accuracy becomes a serious cause of concern.

If you believe minor financial statement inaccuracies can be excused, then think again! Such inaccuracies can result in executives making poor financial decisions, the company being subjected to regulatory fines, and losing their reputation and business in the long run.

In conclusion,

A thorough knowledge of accounting can save you from encountering plenty of financial trouble. The Home Heaters case reveals that companies must choose the most appropriate accounting methods that can make them more appealing to investors. Meanwhile, the Palfinger AG case shows the dangers of choosing the wrong depreciating methods. Now that you’ve covered these real-life scenarios, you should focus more on understanding the fundamentals of this subject.