Accounting Letter of Recommendation

Hello, my name is Stan Lott. He would like to point out that there are two facets of accounting to a recent transaction that replaced equipment. On one side of the exchange he has no commercial value, but on the other side of the transfer the transaction has commercial value.

A transaction is market material if it affects or changes the entity's future cash flows. Accounting will affect future cash flows if there is a significant change in any of the following areas: First, if the following economic risks increase. B. Payment Not Received. The second scenario is when the timing of expected cash changes due to the transaction. For instance, you may agree to receive money later in exchange for receipt of a larger sum of money in the future. The final scenario where the transaction will have an impact on the expected cash flow is when the amount of the transaction is affected. You may then agree to get a small amount of cash for equipment now rather than waiting for a larger sum in the future (Bragg).

The other aspect of accounting is when the transaction or exchange has no commercial importance. In this case, the transaction does not impact the future cash flow. In other terms, there is no profit of loss to be made from such a transaction. A case in point in this situation is when a business decides on modifying one provider of telephone services to another. Consequently, there is no worthiness or loss realized as both the provider and business will make money.

When exchanges are made by the firm or business people such transaction may have or lack profitable significance. Accountants may realize a profit or loss in the transaction that has trading importance. However, for a deal that needs commercial value, there is gain or loss to be done.

Work Cited

Bragg, Steven (2016). Commercial substance. (2016). Accounting Tools, https://www.accountingtools.com/articles/what-is-commercial-substance.html. Accessed 31 Dec. 2012.