Contract Administration and Property Management Essay

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Executive Summary

To begin with, it should be stated that property management companies are engaged in the sphere of managing the issues associated with movable and immovable property, legislative, social, and commercial factors of its ownership. Originally, it is often emphasized that there are numerous aspects of this engagement, which entail managing the accounts and finances of the real estate. An integral part of the activity entails participating in litigation processes with owners, dealers and insurance agencies. Litigation, in its turn, which is regarded to be the integral part of property management is not within the main operating activities of the company as these issues are regarded to be the separate function, set aside for highly qualified attorneys.

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Following the research by Solomons (2005, p. 301), the following statement should be emphasized:

Special attention is given to landlord/tenant law and most commonly evictions, non-payment, harassment, reduction of pre-arranged services, and public nuisance are legal subjects that gain the most amount of attention from property managers. Therefore, it is a necessity that a property manager is current with applicable municipal, county and state laws and practices.

In the light of this fact, it should be stated that the responsibility level of the director is high enough, as the property managers have a wide range of responsibilities and possible assignments. Consequently, the director of the company is responsible for the financial, legislative, social, marketing, and surely managerial activity of the company.

As for the matters of financial activity, it should be emphasized that the data, provided for the analysis will be analyzed from the perspective of structural analysis of the financial information, and will entail the following parts:

  • Profit and Loss Account for 2007 & 2008
  • A Balance Sheet for 2007 & 2008
  • Appropriate Notes to the Accounts

The results of the financial activity of the company are included in the balance sheet, and the statement of revenue and expenditure.

Profit and loss account 2007, 2008

The profit of the company is made from selling the consultancy services to those who require it, performing the described operations and winning sues against property owners, insurance agencies, etc.

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In accordance with the financial statement, the profits and losses of the company will be counted on the basis of the following data

Year20082007
Income: service charges82807200
Income82807200
Management fees20091502
Property Maintenance13863526
Window cleaning682820
Accountancy250250
Gardens13351780
Sundry expenses35
Insurance10511169
Bank charges129125
Postage, printing, stationery101110
Expenditure69439317
Balance being excess of income over expenditure1337(2117)

The total profit will be 1337 for 2008, and 2117 of losses in 2007.

As for the matters of taxation, it is stated that Corporation Tax is not payable on residual profit as the company is a mutual company.

Balance Sheet

First of all, it should be stated that balance sheet is the financial statement that is aimed to prove the summary of company’s assets, liabilities and shareholders’ equity at a particular period of time. Often the balance sheets represent a snapshot of the financial activity of any company. Originally, it gives any company the information about the possessions and debts of the company, and how much is invested into this company.

In accordance with the accounting practices, the balance sheet is counted using the following formula:

Assets = Liabilities + Shareholders’ Equity

In the light of this fact, there is strong necessity to mention that the assets, which are generally represented in these calculations are regarded as the means, used to operate the company, and aimed to the balanced financial obligations of the company along with the equity investment, which is brought into the financial system of the company and the retained earnings. In accordance with Van Riper (2004, p. 541) the following statement should be emphasized:

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Assets are what a company uses to operate its business, while its liabilities and equity are two sources that support these assets. Owners’ equity, referred to as shareholders’ equity in a publicly-traded company, is the amount of money initially invested into the company plus any retained earnings, and it represents a source of funding for the business.

Thus, in accordance with the stated rules and principles, the balance sheet for the company will be the following

Item20082007
Bank interest received7142
Debtors8161287
Current account44352959
Deposit account2726
Accountancy costs250250
Accruals11031100
Assets
Current Assets
Cash in bank$ 129$ 125
Accounts receivable82807200
Inventory1 3863526
Prepaid expenses2 1464 076
Other current assets
Total Current Assets$ 11 941$ 14 927
Machinery & equipment1 3863526
Furniture & fixtures
Leasehold improvements
Land & buildings13351780
Other fixed assets
(LESS accumulated depreciation on all fixed assets)(101)110
Total Fixed Assets (net of depreciation)$ 2 620$ 5 416
Intangibles$ 887$ 920
Deposits2726
Goodwill
Other
Total Other Assets$ 914$ 946
TOTAL Assets$ 15 475$ 21 289
Current Liabilities
Accounts payable$ 250$ 250
Interest payable8161 287
Taxes payable
Notes, short-term (due within 12 months)
Current part, long-term debt
Other current liabilities
Total Current Liabilities$ 1 066$ 1 537
Long-term Debt
Bank loans payable$ 1 103$ 1 100
Notes payable to stockholders
LESS: Short-term portion
Other long term debt
Total Long-term Debt$ 1 103$ 1 100
Total Liabilities$ 2 169$ 2 637
Owners’ Equity
Invested capital$ 1 0511169
Retained earnings – beginning129125
Retained earnings – current157144
Total Owners’ Equity$ 1 337$ 1 438
Total Liabilities & Equity$ 3 506$ 4 075

Notes for the balance Sheet

As for the calculations, and the notes on the matters of the balance sheet, it should be stated that the data which was obtained was processed in accordance with the principles of the generally accepted accounting practice. Thus, the shareholder’s equity may be regarded as the net worth of the company. Originally, as it is stated in Ryan et. al.(2006) it represents stakeholders’ claim to business benefits after all creditors and debts have been paid in accordance with the accounting documentation and financial agreements of the company. As Mitschow (2003, p. 109) emphasizes: “Shareholder equity is also referred to as Owner’s or Stockholders’ Equity. It can be calculated by taking the total assets and subtracting the total liabilities”.

The assets, which are calculated, originate from the shareholder’s equity and incorporate the sources of this equity, which generally take its origin from the finances, which are invested in the company, along with the additional investments. The second source of this equity originates from retained incomes, which the company is capable to amass over time by the means of its financial activity. As Mitschow (2003, p. 224) emphasizes: “In most cases, the retained earnings portion is the largest component.” As for the balance sheet in general, it is often stated that all the components and segments of this sheet will have numerous accounts within the segments of the sheet itself. The document itself has its own value as well as the rules of accounting. Thus, such accounts, as cash, inventory, property, insurance, fixed assets, and others represent the positive side of the sheet, while accounts payable and other liabilities are regarded as the negative side. As Ryan et al (2006, p. 561) emphasize: “The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses”.

Reference List

Mitschow, M. C. 2003. William R. Scott, Financial Accounting Theory. Issues in Accounting Education, 18(4), 463.

Ryan, S. G., Herz, R. H., Iannaconi, T. E., Maines, L. A., Palepu, K., Schrand, C. M., et al. 2006. Evaluation of the FASB’s Proposed Accounting for Financial Instruments with Characteristics of Liabilities, Equity, or Both: AAA Financial Accounting Standards Committee. Accounting Horizons, 15(4), 387.

Solomons, D. 2005. Making Accounting Policy: The Quest for Credibility in Financial Reporting. New York: Oxford US.

Van Riper, R. 2004. Setting Standards for Financial Reporting: FASB and the Struggle for Control of a Critical Process. Westport, CT: Quorum Books.

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IvyPanda. (2021, November 27). Contract Administration and Property Management. https://ivypanda.com/essays/contract-administration-and-property-management/

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"Contract Administration and Property Management." IvyPanda, 27 Nov. 2021, ivypanda.com/essays/contract-administration-and-property-management/.

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IvyPanda. (2021) 'Contract Administration and Property Management'. 27 November.

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IvyPanda. 2021. "Contract Administration and Property Management." November 27, 2021. https://ivypanda.com/essays/contract-administration-and-property-management/.

1. IvyPanda. "Contract Administration and Property Management." November 27, 2021. https://ivypanda.com/essays/contract-administration-and-property-management/.


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IvyPanda. "Contract Administration and Property Management." November 27, 2021. https://ivypanda.com/essays/contract-administration-and-property-management/.

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