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Current assets
When it comes to a company's classified balance
sheets you will find current assets sheet. Current
assets is cash or cash equilivants that the company will
use. What you will find on a current asset sheet is Cash
and equilvants, Short term investments, Accounts
receivables, and other assets.
Long-term investments
Long-term investments when it comes to balance sheet
are investments that the company intends to hold onto.
The investments that are listed are as follows, bonds,
stocks and cash. You will also find short-term
investments in the company. The difference between
short-term and long-term investments is that the short-
term investments will be sold and the long-term
investments normally the company will choose to keep
it.
Property, plant, and equipment
Property, plant, and equipment are what the company
calls "fixed assets". Property, plant and equipment are
assets that can not be easily converted into cash.
These are basically items such as company car (used to
deliver products), computers and copier machine, and
freezer used for restaurants.
Intangible assets
Intangible assets are non-monetary items that can not
be seen or touched. For example, trademarks,
copywriters, patents and goodwill. Intangible assets are
normally listed in the separate assets.
references
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ACC 291 Final Exam Guide (New)
Discussion Question 1:
Based on what you know about accounting, what role

do you see it playing in business operations? How
dependent do you think a business is on its accounting
department? Why?
For Discussion Question 1: Post your response to the
following:
When reviewing a financial report, why should
information be reliable, relevant, consistent, and
comparable?
In other words, why are these accounting
characteristics important?
What kinds of problems could be created if a
financial report is not reliable, relevant, consistent, or
comparable?
It is extremely vital that the company has accurate
financial reporting. This information determines
whether or not to invest in your company's stock. This
information will help them decide if it is profitable to
invest or not to invest in your company based what is
in your financial history. The information must be
relevant because it will help the company, investors
and lenders make decisions. It helps answer questions
like, "how stable is your company", or "what future
does this company have". The information should be
reliable. In other words the information that is reported
must be able to be verified, backed up with truthful
information. Comparable occurs when different
companies use the same accounting principles. This
makes it much easier to compare results between
company's. Consistency happens when the company
uses the same accounting method every year. When
the financial statements are reported each year, it
paints a financial picture of where the company is
headed now and in the future.
What kinds of problems will occur if the information
does not include these things?
Falsified or manipulated statements doesn't only effect

the company but it also to name a few effects the
lenders, creditors, investor's, etc. This will result in the
company not having a faithful representation.
Another response
The main objective of generating financial information
is providing useful information that can be used in
decision-making... only if this information is relevant,
reliable, comparable, and consistent, can it be useful
for decision makers. (Kieso, 2003).
Relevance gives a basis for making decisions that will
impact the future of a business, and it confirms and
corrects expectations from the past. If the information
makes a difference in making decisions, it is relevant.
Reliability means that the information can be depended
on and it can be proven to be free of error, and the
information is factual. The information cannot favor
one set of users over another. CPAs audit financial
statements to ensure reliability.
Comparability is also an important characteristic of
financial reporting... this happens when different
businesses use similar accounting principles, making it
much easier for one to compare companies, and the
method used in a business must be disclosed to the
users of the information to enable the users to convert
the information as accurately as possible.
Consistency simply means that the business uses the
same accounting principles on a yearly basis...
consistently. This helps decision makers analyze a
company's trends. A company can change the
methods used if they can justify the change, showing
that the new method is more useful for analysis. If the
method is changed, it must be disclosed in the notes
that go with the statements to show users a lack of
consistency.
These characteristics are very important to a
business... decisions cannot be made based on
incorrect information, and everyone involved in a
business venture of any kind, whether they be
management, owners, or investors and creditors, as
well as consumers, etc. must be able to rely on the
financial information provided in order to make any
type of decision. Without this information, it is difficult
to imagine any business succeeding, even for a short
time.
Examples of problems that could occur without reliable,
relevant, consistent, or comparable information
includes not being able to get loans or investments;
management could make decisions that cause
irreparable damage to entire operations, consumers
could easily lose faith and cut their ties... the
possibilities are endless for companies that lack these
qualities in their financial reporting.
DQ2
following:
How does information from financial reports
influence business decisions?
Why is it important for business managers to
understand the information found on financial reports?
How does information from financial reports influence

business decisions?
Once the information from the financial reports have

been posted then a team will review the company's
financial history to see what decision were profitable or
not. The decisions that were made previous to the
financial reports being posted will show which way the
company needs to go to continue to remain #1.

IT is extremely important for he business managers to

understand the information found on the financial
reports. The business managers are going to be the
people that are going to make decisions for the
company. They need to know how to interpret the
financial reports and come up with different strategies
that will continue to make the company money.
Another response
The information from financial reports influences
business decisions because it shows where the
company stands. The managers use the information
from the financial report compared to the current year
from the previous year, whether the company growths
or losses. It is very important for business managers to
understand the information found on financial reports
because the information from the financial reports
enables business managers to see how to improve and
keep the business afloat. It also gives business
managers an insight what came in and went out and
the total operating cost of the company as well as
cutting cost in a certain areas. The information from
the financial reports helps the manager manages the
business accurately.
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ACC 291 Final Exam Guide

we have another New set of Final Exam Guide which could be found
on this link
Financial Statements
Internal Cash Control
By
Kamilah Crooms
Accounting 220
Jess Stern
Internal Cash Control
The accounting department receives from sales invoices once a

month. Most of the information is missing on the invoices.
The accounting department relies on each department within the
company and all the information has to be submitted completely and
in a timely matter. In this scenario most of the information that has
been turned in has information that is missing on the invoices. I
would say that the internal controls that are not being followed are
Documentation procedures. Company documentation is very
important and must be turned in complete. These documents show
proof of delivery or proof of services to the customer. Any incomplete
documents can be very costly and can cause a delay in the company
being paid for any services rendered. For example, one of the
requirements in a transportation department is to make sure that the
drivers verify the load and sign for the load prior to leaving the yard,
these documents says that the load left in good condition. Well, it so
happened that we allowed a driver to leave without signing the
paperwork. This caused a delay in accounting because we had to get
signatures from the driver and the customer which took a month later
to complete.
Rob, Sue, and Bob use the same cash register at the donut shop.
Rob, Sue, and Bob all use one register has often turned into not the
best decision ideally for the company. It can increase the risk for the
drawer being short and it will be hard for the company to find out
which employee or employees had shorted the register. The internal
controls that are not being followed are Establishment of
responsibility. Happens when the company assigns one person to be
in control of a specific job or have authority to make decisions (pg
161 Internal Control and Cash). When the company signs one person
to be responsible over the register it will allow the company to hold
that one person responsible for any shortages.
Sam does the ordering of materials at the beginning of every month
and pays the bill.
In this case Sam is ordering materials and paying all the bills. This
process is actually known as related activities (pg 162 Internal
Control and Cash). This occurs when one person is doing two
different responsibilities just like Sam. The internal Control that is
not being applied is Segregation of Duties. It is better for the two to
be a separate responsibility because it will minimize the billing
errors.
Bank reconciliations are done by the person who is responsible for all
cash responsibilities.
The problem with this scenario is that the same person is responsible
for all cash responsibilities, why is this person doing the only one that
does this job? Having one person take on such a major responsibility
increases the chances of embezzlement and thief. The internal control
that is not being applied is rotating employees duties and requiring
employees to take vacations. One person should not be completely in
control of one job, the company should encourage vacations or
switching positions to prevent incorrect handling of the companys
valuable information.
New checks came in and are left on the shelf with other supplies.
This is a tough scenario because there are all sorts of internal
controls that are not being used in this case. I would say in my
opinion that the first internal control that comes to my mind that is
not being applied is bonding of employees who handle cash.
Every employee that works near or with expensive equipment should

be held reliable or responsible for the companys assets. Bonding of
employees who handle cash protects the company by insuring that the
employee is or isnt a risky applicant (background checks) or
reassuring that the employee that they will be prosecuted to the fullest
extinct if they are found guilty of thief. For example, I had worked at
Mc Donalds and
there were my shift managers and one employee that were caught
with stealing money from the company. This situation had happen
very differently. The armor truck dropped off a deposit that belonged
to another company (armors mistake) but they signed it. Those
employees thought that nothing was going to be traced back to them
but the little did they know, all evidence traced back to them. They
each received jail time, and felony records.
Everyone has access to the computer system and the last audit was
seven years ago by the former accountant
This scenario has two things that are going on at the same time. I
will first start off with the computer system and how everyone has
access to the computer. The internal control that is not being applied
is Physical, Mechanical, and Electronic Controls. This allows the
company to control assets through physical or electronic based
systems or programs. It is extremely important for a company to
invest in computer or informational protection for the company and
for their employees. Todays technology age most companies are
investing in a computerized program. This will help protect from
internal errors and external protection. For example, all companies
invest in a virus protection this will ensure that the companys
information is protected and not in the wrong hands.
Invest idle cash
Invest idle cash occurs when any excess funds or cash needs to be
invested. The money should be highly invest and risk free. For
example, a major company should make investments with their assets
into profitably investments and risk free.
Plan the timing of major expenditures
This is when a company sets aside money for major cash needs. We
live in a world that things happen daily. A good company would set
aside emergency funds. For example, during a terrible thunderstorm,
the winds practically ripped off the roofing shingles off a commercial
business. The company will be able to use the money for emergency.
Delay payment of liabilities
Delay payment of liabilities is when a company pays bills not too

soon and not late. This allows the company to have money available
for bills that that really need to be paid allowing excess funds to be
free for other uses.
Keep inventory levels low
This occurs when the company keeps the inventory low so that it will
bring in more profits. For example, if the managers at a fast-food
over plan and fix too many hamburgers and the customers dont buy
it, then the food will go bad and the company will lose profit.
Increase the speed of collection on receivables
This occurs when money is owed to the company, the company cannot
claim these until the funds have been received. Some companies offer
incentives to encourage customers to pay early or on time. For
example, my job encourages their customers by letting them know
that there will be a price increase on or after a certain date and this
really works because the customers want to pay at a lower price.
References:
http:yourdictionary.com /accounting_statements.org Retrieved

2/13/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52 Stateme

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ACC 291 Final Exam Guide

ACC 291 Final Exam Study Guide
Question 207
On January 1, a machine with a useful life of five years and a
residual value of $40,000 was purchased for $120,000. What is the
depreciation expense for year 2 under the double-declining-balance
method of depreciation?
IFRS Multiple Choice Question 01
Axia College Material
Appendix B
Cash Management Matrix
Directions: Using the matrix, list how each of the principles of internal control works, and give an
example for each. Next, list how each of the principles of cash management works, and give an
example for each.
Principles of Internal Control How it Works
Establishment of responsibility Happens when the company assigns My job, Our Sa

one person to be in control of a specific the only one th
job or have authority to make restocking fee
decisions.
team to be in c
customers retu
Segregation of duties This is when the company has more A church- You ha
than one person to control a task or job the offering and
someone who w
what was receiv
Documentation procedures Evidence or proof of all company My job we delive

transactions customers, and
sign prior to lea
customer sign a
form
Physical, mechanical, and electronic controls Allows the company to control assets Our job has a sy
through physical or electronic based this tracks the e
systems or programs. lunches. Also, m
CSR have been r
Physical control
guard, they requ
to entry.
Independent internal verification Any information that can be reviewed , My job has a wa
compare, and reconciliation by a employee inventory and w
they were short
can go back and
and compare th
system and a ph
determine if the
incorrect
Other controls Bonding of employees, company Our company fir

protects against abuse of assets. because she had
card business ca
was not work re
Principles of Cash Management How it Works E
Invest idle cash Occurs when any excess funds or cash My fathers com
needs to be invested, investments and
favor
Plan the timing of major expenditures A company wants to make sure that During the reces
there is money set aside for major cash lower than expe
needs companies pulle
Delay payment of liabilities When a company pays the bills at an Ok, when times
appropriate time not late and not too bills are due I or
soon. which bills need
soonest, becaus
early I will cut o
could be used fo
Keep inventory levels low Happens when a company keeps the Sees Chocolate
inventory low so that it will continue to sure that they a
bring profit or making too m
the company wi
Increase the speed of collection on Money that is owe to the company by When a custome
receivables other people or customers is money product and has
that can not be counted towards the company can no
companies funds theirs until it is
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ACC 291 Week 1 Assignment Comparative Analysis Problem
Purpose of Assignment The purpose of this assignment
is to help you understand the basics of financial
statement analysis using financial ratios on the assets
section of the balance sheet, data interpretation, and
how ratios are used to gain insight about the
management of receivable. Assignment Steps
Resources: Financial Accounting: Income statement is a
financial statement that shows how much money is
coming from product sales and services prior to any
expenses being taken out. Both internal and external
users such as managers and investors are able to
access this. For example, if a investor wanted to see if
the company made money or lost money they would
use this financial statement report.
Balance sheet shows what condition the company is
currently in. whereas the other financial statements
only came monthly or annually. For example, what if
the management planning team wanted to see the
company's current assets, ownership equity and
liabilities? All they have to do is run the balance sheet
report.
CVP income statement or Cost Volume statement
reports or monitors the effects of the changes in cost
and volume when it comes to the company profits. For
example, I work at a manufacturing plant for roofing
shingles. The CVP analyst studies the cost which
includes but not limited too, manufacturing, material,
labor cost. This financial statement report would help
the management team budget the cost of
manufacturing goods.
Statement of cash flow tracks the movement of cash
coming in or out of the business. This financial
statement will show if the company made cash or not,
or if the net income increased or decreased. For
example, the owner or the management department
will use this to determine if the company has earned
enough money to be able to for any expenses.
Retained earnings statements is a percentage that is
kept by the company to be reinvested or to be used to
pay debts. For example, if a company was looking to
expand their business by purchasing top of the line
equipment they can use this statement to see how
much money the company has put away.
References:
statements.suite101.com/article.cfm/financial_stateme
nts_the_p_l. Retrieved 2/18/2010
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ACC 291 Week 1 Discussion Question 1
How would you describe the entries to record the disposition of
accounts receivables?
Discussion Question 1: Post your response to the following:
How would you describe the difference between financial and

managerial accounting? What are the distinguishing features of
managerial accounting?
There are many differences between financial and managerial
accounting. The financial accounting statements are available to
external users such as employees, stockholders, creditors, investors,
etc. This is available to them so that they can monitor the company's
performances quarterly or annually. Managerial accounting provides
financial information for managers and other internal people or
department. Managerial accounting is confidential so it is only
observed by internal users such as management, owner, and will
provided to external users such as the public. Management uses this
for budgeting purposes or to monitor profit loss/gain within the
company. Managerial accounting can be available to them as often as
needed. Managerial accounting statements is a great way for
management to make decisions based on what has been reported.
Another response
The differences between managerial accounting and financial

accounting are distinct. Managerial accounting reports are for those
in managerial and decision making positions. The managers use the
financial report to answer questions, which would advance the
company and its employees. The manager would want to know if
certain investments should be made and should the company advance
an employee's salary. The manager needs the report to decide if a
factory is built or if a certain stock is brought. The financial
accountant has the job of showing the external users such as creditors
and stockholders a picture of the company's stability.
The manager's purpose is to manage by making stable plans, delegate

duties, motivate the workers, and control the atmosphere.
Distinguishing features of managerial accounting are the fact no cpa
will audit the report, and there is no specific frequency of the report.
The reports are done in a need to know basis and for a specific
reason, which is for business purposes. The reports are detailed and
pertain to specific business decisions. The financial accountant need
only be concerned with the company's finances.
DQ2
Select a management function (planning, directing and

motivating, or controlling) and explain how that function relates to
business as a whole. Next, select a different function listed by a
classmate. Discuss with your classmate how the functions you each
selected complement each other.
The management functions that I choose was controlling. Controlling

job is to make sure that the each department/person is keeping the
company's activities or plans on track and in order to achieve that
they must work closely with Management planning function.
Controlling continually compares the company's performance to
make sure that the planned standards are being met. In my opinion
this is known as the "dirty work". Controlling operations have to
know what to look for and how to keep track of all the company's
activities. They have to take actions and quickly correct any errors
and make sure that the company goals are being achieved in a timely
matter or the time that it was planned. If there are errors it is job of
the controlling operations to take quick action. The controlling
operations not only correct errors after it happens but they also are in
charge of foreseeing any potential errors and act quickly to get that
resolved.
Another response
I chose Controlling as part of the management function. The

controlling function relates to business as a whole because it helps
monitoring the firms performance to make sure the planned goals are
being met. Managers need to pay attention to costs versus
performance of the organization. let say, if the company has a goal of
increasing sales by 10% over the next two months, the manager may
check the progress toward the goal at the end of month one. If they
are not reaching the goal the manager must decide what changes are
needed to get back on track.
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How are bad debts accounted for under the direct write-off method?
Cost, Volume, and Profit Formulas
By
Kamilah Crooms
Due February 28, 2010
Explain the components of cost-volume-profit analysis.
The components of cost volume-profit analysis consist of Level or

volume of activity, Unit Selling Price, Variable Cost per unit, total
fixed costs, and Sales mix.
What does each of the components mean?

Level or volume of activity is the activity that causes change or
behavior when it comes to the cost. Unit selling Price is the cost for
the product basically how much each unit is selling for. The Variable
Cost per unit is something that can change depending on the activity.
The total fixed cost does stay the same as activities change but differ
per unit. The Sales mix is basically what the name says. Its a mixture
of sale items when more than one product sold the sales will remain
the consistent.
Based on the formulas you have reviewed, what happens to

contribution margin per unit when unit selling prices increase?
Contribution margin is the amount of revenue left over after

subtracting the variable cost. So basically Unit sales price
subtracting or minus variable cost.
Illustrate your explanation with an example from a fictitious

company of how an increase in unit selling prices might affect
contribution margin.
Kellys Sweetheart Flowers
The owner of Kellys Sweetheart Flowers is selling their bouquet of

flowers for $10 per unit. The Variable Cost per unit is $4.00. The
contribution margin will be ($10-$4) = $6. If the sells price increases
to say $15, then the contribution margin will be ($15-$6) = $9 per
unit.
When fixed costs decrease, what does this do for sales? Illustrate
your explanation with an example from a fictitious company.
Kellys Sweetheart Flowers
When the fixed cost decreases, the contribution margin ratio the net
income and sales will increase.
For example,
The flowers are $10 per unit. The variable cost per unit is $4.00. The
contribution margin will be ($10-$4) = $6. The fixed cost is $3. We
subtract Contribution margin Fixed Cost= Net income. The net
income is $3.00.
Define contribution ratios
The contribution margin ratio is the contribution margin per unit

margin divided by the unit selling price.
What happens to contribution ratios as one of the components

changes?
Shown in the example above, if one or more of the components

changes is will cause the net income to increase or decrease.
Reference
statements.suite101.com/article.cfm/cost_volume_profits*the_p_l.
Retrieved 2/28/2010
//http:yourdictionary.com /CVP.org Retrieved 2/26/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52 Sta

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ACC 291 Week 1 Wileyplus Assignment E8-4, E8-11, BYP8-

1, and BYP8-2 (New)
Wiley Plus Assignment Week 1
E8-4, E8-11, BYP8-1, and BYP8-2 in MS Excel
Exercise 8-4 Wainwright Company
Exercise 8-11 Fedex Corporation

7 How should mixed costs be classified in CVP analysis? What
approach is used to effect the appropriate classification?
According to our class materials all mixed cost must be classified into
their fixed and variable and variable elements. The method that can
be used to determine is called the high/low method. To determine the
variable cost the analysis takes the total cost and divide it with the
low activity level. To get the fixed cost then the company would have
to subtract the total variable with either the high or low activity level.
9. Cost volume profit CVP analysis is based entirely on unit costs. Do
you agree? Explain.
In my opinion when it comes to making financial decisions for the
company, often times more than one method is used. Cost volume
profit is also based on Volume or level activities, unit selling prices,
variable cost per unit, total fixed and sales mix.
14. You can find the break point in dollars by drawing a horizontal line
to the vertical axis. I you want to find the break even point in units it
will be a vertical line from the break even point to the horizontal axis.
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ACC 291 Week 2 - Fordyce and Atwater (New)
P10-5A
Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note

on December 31, 2007. The proceeds from the note are to be used in
financing a new research laboratory. The terms of the note provide
for semiannualinstallment payments, exclusive of real estate taxes
and insurance, of $29,433. Payments are due June 30 and December
31.
Axia College Material
Appendix C
Budgets Matrix
Directions: Using the matrix, define each of the budgets listed and briefly describe its uses.
Budget Definition Desc
Sales budget Estimate of the expected sales for The sales budg
the period. All of the other budgets units. This will
depend on the sales budget. This is see how many
where all the other budgets will produced for th
start from
Production budget A production of units needed to be Shows manage

produced in order to meet the will be produce
projected sales period and wha
to fulfill invent
Direct materials budget Is the estimated quantity or cost of Shows manage

the raw materials that is needed in materials that
order to produce the units required and or that nee
to fulfill inventory meet inventory
Direct labor budget A estimate of cost and quantity of Shows how ma

direct labor needed in order to laborers neede
meet production units for that b
Management w
be the right am
needed and if t
able to meet th
Manufacturing overhead budget An estimated expected amount of This list all ove
manufacturing cost for the budget cash disbursem
period
Selling and administrative expense budget Anticipated selling and Shows area of b
administrative expenses in the are not listed o
budget period manufacturing.
marketing, pro
the budget per
Budgeted income statement Estimate of expected profitability of Is a very impor

operations in a budget period shows the com
for the budget
Cash budget A projection of expected cash flows Cash budget he

in and out of the business. keep a tally or
balances.
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ACC 291 Week 2 Assignment Financial Reporting Problem,

Apple Inc
is to help you understand the basics of financial
statement analysis related to the assets section of the
balance sheet, data interpretation, and how financial
information is obtained to understand how a company
accounts for its long-lived assets. Assignment Steps
Resources: Financial Accounting For Discussion
Question 1: Post your response to the following:
When reviewing a financial report, why should
information be reliable, relevant, consistent, and
comparable?
In other words, why are these accounting
characteristics important?
What kinds of problems could be created if a
financial report is not reliable, relevant, consistent, or
comparable?
It is extremely vital that the company has accurate
financial reporting. This information determines
whether or not to invest in your company's stock. This
information will help them decide if it is profitable to
invest or not to invest in your company based what is
in your financial history. The information must be
relevant because it will help the company, investors
and lenders make decisions. It helps answer questions
like, "how stable is your company", or "what future
does this company have". The information should be
reliable. In other words the information that is reported
must be able to be verified, backed up with truthful
information. Comparable occurs when different
companies use the same accounting principles. This
makes it much easier to compare results between
company's. Consistency happens when the company
uses the same accounting method every year. When
the financial statements are reported each year, it
paints a financial picture of where the company is
headed now and in the future.
What kinds of problems will occur if the information

does not include these things?
Falsified or manipulated statements doesn't only effect

the company but it also to name a few effects the
lenders, creditors, investor's, etc. This will result in the
company not having a faithful representation.
Another response
The main objective of generating financial information
is providing useful information that can be used in
decision-making... only if this information is relevant,
reliable, comparable, and consistent, can it be useful
for decision makers. (Kieso, 2003).
Relevance gives a basis for making decisions that will
impact the future of a business, and it confirms and
corrects expectations from the past. If the information
makes a difference in making decisions, it is relevant.
Reliability means that the information can be depended
on and it can be proven to be free of error, and the
information is factual. The information cannot favor
one set of users over another. CPAs audit financial
statements to ensure reliability.
Comparability is also an important characteristic of
financial reporting... this happens when different
businesses use similar accounting principles, making it
much easier for one to compare companies, and the
method used in a business must be disclosed to the
users of the information to enable the users to convert
the information as accurately as possible.
Consistency simply means that the business uses the
same accounting principles on a yearly basis...
consistently. This helps decision makers analyze a
company's trends. A company can change the
methods used if they can justify the change, showing
that the new method is more useful for analysis. If the
method is changed, it must be disclosed in the notes
that go with the statements to show users a lack of
consistency.
These characteristics are very important to a
business... decisions cannot be made based on
incorrect information, and everyone involved in a
business venture of any kind, whether they be
management, owners, or investors and creditors, as
well as consumers, etc. must be able to rely on the
financial information provided in order to make any
type of decision. Without this information, it is difficult
to imagine any business succeeding, even for a short
time.
Examples of problems that could occur without reliable,
relevant, consistent, or comparable information
includes not being able to get loans or investments;
management could make decisions that cause
irreparable damage to entire operations, consumers
could easily lose faith and cut their ties... the
possibilities are endless for companies that lack these
qualities in their financial reporting.
DQ2
following:
How does information from financial reports
influence business decisions?
How does information from financial reports influence

business decisions?
Once the information from the financial reports have

been posted then a team will review the company's
financial history to see what decision were profitable or
not. The decisions that were made previous to the
financial reports being posted will show which way the
company needs to go to continue to remain #1.

IT is extremely important for he business managers to

understand the information found on the financial
reports. The business managers are going to be the
people that are going to make decisions for the
company. They need to know how to interpret the
financial reports and come up with different strategies
that will continue to make the company money.
Another response
The information from financial reports influences
business decisions because it shows where the
company stands. The managers use the information
from the financial report compared to the current year
from the previous year, whether the company growths
or losses. It is very important for business managers to
understand the information found on financial reports
because the information from the financial reports
enables business managers to see how to improve and
keep the business afloat. It also gives business
managers an insight what came in and went out and
the total operating cost of the company as well as
cutting cost in a certain areas. The information from
the financial reports helps the manager manages the
business accurately.
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What are the differences among valuation, depreciation, amortization,
and depletion?
Is it appropriate to calculate depreciation using two different
methods? Why?
What is a Flexible budget?
A Flexible budget is a budget that change or is flexible during

different levels or activity. Unlike the static budget which is a budget
based on one activity level, the flexible budget is based off of more
than one activity level.
The steps to development a flexible budget is :
a) Identify the activity index, and the range of activity
b) Find out what the variable cost, and determine the variable cost
per unit
c) Find out what the fixed cost and determine the budgeted
amount for each unit
d) Organize the budget for selected additional activity within the

appropriate range
The information found on a flexible budget cannot begin with

the master budget. The flexible budget uses the same guidelines the
original budget. The budget consists of Sales, Cost of Goods Sold,
Selling Expenses, General and Administrative Expenses, Income
Taxes, and finally the Net Income.
The information on the budget is a great tool to be used for

evaluation performances. The flexible budget can be used for monthly
comparison purposes. Also during the process that management is
identifying the activity index and the range of activity it will allow
them to see the cost of direct labor hours for that budget period.
------------------------------------------------------------------
What types of industries have unearned revenue?
Why is unearned revenue considered a liability?
When is the unearned revenue recognized in the
financial statements?
You know how important it is to create budgets for your

household. How does budgeting help management make
good business decisions?
Budgeting is a very important skill that can be applied to everyday life and
also when it comes to making good business decisions. I really like the way
our class resources says about Budgeting. Budgeting is used as a planning
tool used by management to make good decision for the company. If a
company is successful than more than likely that means that the
management team is very good at managing the company finances.
Budgeting helps management plan ahead, defines what is most important,
shows warning signs, reach a company target without over or under
budgeting and etc.
Another response
In a business, a budget helps a business make good decisions because they are
used by the company to plan for future events and coordinate the events and
duties in the company. They also gives objectives used to evaluate the
performance of the company on each level which can help to make future
decisions that will not hurt the company based on the projected objectives. It
can also be used to alert the company of possible problems or negative trends in
the company that need to be addressed so that there is a clear picture of the
overall health of the company before decisions are made. The budget helps the
company to be able to make an informed decision when making one. It is there
in order to make sure that making a decision like taking on another company will
not hurt the company and is something that the compnay can sustain based on
the budget.
DQ2
What are some of the different types of budgets?

Describe in detail one type of budget covered in the text.
Describe what the budget is used for and what information it provides a
business.
Then, as you respond to your classmates, discuss how the budget you
described relates to the budgets they described.
Discuss how a business benefits from each of the budgets.
There are many different types of budgetting. For example, there sales
budget which allows management to see how many units that need to be
produced, production budget which will allows everyone to see how many
units are going to be produced in or needed to be produced in order to
meet the inventory for that budget period. One budget that I can describe in
detail is called the direct labor budget and this budget shows how many
people, hours is needed in order to meet the required budget for that
period. This will give management an idea of how much money is needed
such as paying the cost of labor. The company benefits by each of these
budgets because it will help manage just how much money it will cost the
company during this period. Management can also see if there are different
ways to cost the company out of pocket cost down during this period.
Another response
I chose to write about the Production Budget. The Production

Budget shows the cost of each unit needed to produce an item or
manufacture a product. The formula used by the Production
Budget :
Budget sales units + Desired ending finished goods units -

Beginning finished goods units = Required production units.
An example would be, every Easter the bakeries in the Bronx

loads up on Hot Cross Buns. My mother and grandmother would
buy these tasty sweet breads,and eat them for breakfast. I
personally would like to eat them every week but, they are only
sold during the Easter season. Maybe, it has something to do with
the glazed cross on the top.
Every Easter Holiday, there appears these Hot Cross Buns and the
bakeries production department allows for the purchases for
items needed to make the buns. After Easter has gone, Hot Cross
Buns are not included in the budget.
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ACC 291 Week 2 Individual WileyPLUS Assignment Week

Two
we have another New set of week 2 Willeyplus assignment which
could be found on this link
Resource:WileyPLUS
Complete the followingWileyPLUS Week Two Exercises and Problem:
Exercise E8-3
Exercise BE9-13
Exercise Do It! 9-4
Exercise E9-9
Exercise E9-10
Problem P9-5A
Capstone Discussion Question: Post your response to
the following:
Think back over what you have studied and learned in

this course. Do you have a new perception of or appreciation
for the field of accounting and how it contributes to
business? Explain.
To be perfectly honest with you I truly had no clue what accounting

did for a company and how important it was. I always thought that
accounting only dealt with payroll. In fact accounting does much
more that just payroll and monitor company supplies (coffee, paper,
pens & pencils). The accounting sets budgets for the entire company,
monitors outflow and inflow of profits, plans budgets for each
department, and much more. When I first begun this class I was
really nervous, I truly thought that I was going to have a hard time
understanding the accounting but I happy to say that I was wrong. I
understood every part of this course.
On a personal note I would like to thank you Jess. If it wasn't for your
pep talk I probably would had gave up. You are truly a
great instructor. I wish you all the best! God Bless

Another response
Accounting has taken a whole new meaning to me in my vocabulary. Prior
to this course, I just took accounting as a calculator and crunching
numbers. I now have a new respect for accounting and all the aspects that
are involved. I never once took into consideration profit, sales, revenue,
and balance sheets also being included with accounting. There is so much
more involved with accounting, and had I not taken this course I would
have never known. Accounting is a very important part of running a
business. I feel that it is imperative to all people thinking of opening a
business should take some type of accounting class to become more
aware of how to run the accounting part of a business.
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ACC 291 Week 2 IndividualWileyPLUS PracticeCh 8,9,10

Quiz
Resource:WileyPLUS
Complete the WileyPLUS Week Two Practice Quizzes
for chapters 8, 9, and 10
Business Plan
By
Kamilah T. Crooms
The name of my business is called DestinyWear. DestinyWear is a urban fashion
clothing company for woman, men and youth. DestinyWear specializes in making clothing
for every occasion. My name is Kamilah Crooms and I am the owner and CEO of
DestinyWear.My goal is to ensure that my company will be succesfull in all areas and in
each department. In order for me to make sure that the company was going to begin in the
right direction I had to priortize what was most important in establishing my business plan.
The main priority is that I had to first choose the appropriate business structure, a high
demanding product, and most of all an outstanding accounting team.
Business Structure
Upon establishing DestinyWear I had to decide which business struture that I felt was
best for me to pursue. I decided that as a Entreprenuer the best choice for me abd the
direction of the company would be for me to be sole proprietorship. Sole proprietorship
allowed me to be the sole owner of DestinyWear. The first and most important reason that I
wanted sole proprietorship is because it is much easier to start a business as sole
proprietorships. Sole proprietorship takes all the profit that and doesn't have to split it
between any other owners or corporations. I also want the power to make and change
decisions along the way without having to first consult anyone else.
DestinyWear Products
DestinyWear products will range from jeans, shirts, accessories and shoes. The
company will first start off with its most profitable product and that will be the DestinyWear
designer jeans line. The jeans line has over twenty different jeans designs
from straight leg, baggy, cargo, overalls, shorts and much more. The jeans line will provide
services within the United States and Canada and will eventually service International
customers. The DestinyWear jeans line will have its own building. In this building the bottom
floor will consist of the factory and the top floor will have the different departments such as
management, marketing and most importantly the accounting department.
DestinyWear Accounting Department
The accounting plays a major role in establishing my company DestinyWear. The

accounting department does more than managing and reporting the companys financial
documents it is the greatest tool in establishing my business. The key to a powerful
accounting department here at DestinyWear is applying the principles of internal control.
These principles consist of establishment of responsibilities, segregation of responsibilities,
documentation procedures, Physical, mechanical, and electronic controls, Independent
internal verification and other controls such as Bonding of employees. In order to ensure
that this business plan works DestinyWear has to hire nothing but the best qualified
employees.
DestinyWear Accounting Staff
DestinyWear accounting team of fine employees will all be hired through the
company. There are several requirements that have to be met in order for myself as the
owner and Human Resource department to even consider the applicant for accounting. We
looked for characteristics, education and work history experience. The first and far most
important qualifying requirements are education. The applicant has to have a Bachelor
BA/BS in accounting degree a plus if he or she has a masters.
The second requirement is experience. The applicant must have the minimum of five
years of experience working in accounting. He or She must have knowledge and
employment experience of working with financial statements, cash management and internal
control. Employees must be experienced in Invest idle cash, planning the timing of major
expenditures, delay payment of liabilities keeping inventory levels low, and increasing the
speed of collection on receivables. In the category of experience we had to hire applicants
according to the position that had to be filled in accounting. For example, if a position in
accounting such as management or supervisory needed to be filled, then we would look for
years of experience in management or supervisory positions. I personally prefer that every
employee have some type of management experience.
Last but not least, the employees characteristics. It is a must that every accounting staff
member has and applies professionalism, great ethic and moral skills, accuracy, and most
importantly punctuality, and reaching company deadlines. These characteristics are very
important to have at DestinyWear.
DestinyWear Accounting Management Team
The DestinyWear accounting management team will be reporting to me and to the

other head staff each week to report updates and any new changes. The management team
is responsible to have all the different types of budgeting reports that includes Sales, Labor,
etc. Management must follow the responsibility reporting system for each department. The
managers will use the companys financial information to predict outcomes of the business. I
require a report from each responsibility center, cost center, profit center and investment
center to be reported each month. Management is responsible to ensure that the company
does not over or under budget and if any changes it must be reported immediately.
Conclusion
DestinyWear will be a very successful team not only because of the products that we
produce but because of having a great accounting team. With the help of accounting team I
DestinyWear products will be in every wardrobe in America.
REFERENCES
//http:yourdictionary.com /CVP.org Retrieved 3/20/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52

Statements. March 19, 2010
Drucker, P. Managing in the next society 2002. retrieved
------------------------------------------------------------------
ACC 291 Week 2 Learning Team Weekly Reflection
Discuss the objectives for Weeks One and Two. Your
discussion should include the topics you feel
comfortable with, any topics you struggled with, and
how the weekly topics relate to application in your
field.
Costco Wholesale Corporation
If we look at the financial statements of the company we can find that the
company is financially strong. Its strength are:
1. It has enough amount of current asset to repay its current liability. The current ratio of
the company 8.18 indicates that the company has $8.18 liquid asset to repay its $1 of
current liability.
2. The operating cost of the company is increasing because the company is able to
reduce its expenses.

3. Cash from operating activity has increased for the company.
Apart from this strength the company also has some weakness in its financial
statement:
(i) Increasing inventory indicates that the company inventory conversion period is
increasing.
(ii) The cash from investing activity shows that the company cash outflow is more in
the short term investment i.e. in non operating activity.

(iii) The overall has for the year 2008 has declined for the company.
Net Income:
If we look at the trend in net income of the company we can find that the
company net income looks fluctuating but it has improved it net income in 2008
as compared to 2007.
Debt ratio as a percentage of total assets:

If we look at the debt ratio as percent of total asset we can find that the debt
ratio is declining in 2008 as compared to 2007 i.e. the company is increasing
equity to finance debt.
Debt as a percentage of total equity:
As we can see that the debt as percent of total equity is declining in 2008 as
compared to 2007 i.e. the company is increasing equity in its capital structure.
As we can see that there is nothing negative in 2008 for the company and this is
the reason it has positive trend as compared to 2007. Hence there is no need to
correct anything for the company.
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ACC 291 Week 2 Wileyplus Assignment P8-3A, BE9-11,

DI9-5, E9-7, E9-8, BYP9, P9-2A (New)
P8-3A, BE9-11, DI9-5, E9-7, E9-8, BYP9, P9-2A.
Problem 8-3A: Bosworth Company
Brief Exercise 9-11: Nike, Inc.
Do It! 9-5
Week 1 DQ 1
Due Tuesday, Day 2

Go to the U.S. Securities and Exchange Commissions Web site
at http://www.sec.gov and the Financial Accounting Standards
Boards Web site athttp://www.fasb.org. Identify the mission and main
activities of each organization. Then, analyze the similarities and
differences between the roles of each entity. Which entity has more
influence over financial statement reporting? Explain your answer.
According to the SEC website their mission is to protect investors,
maintain fair, orderly, and efficient markets, and facilitate capital
formation. The SEC also requires public companies to disclose meaningful
financial and other information to the public. This provides a common pool
of knowledge for all investors to use to judge for themselves whether to
buy, sell, or hold a particular security. The SEC is concerned primarily with
promoting the disclosure of important market-related information,
maintaining fair dealing, and protecting against fraud.
According to the FASB website the mission of the FASB is to establish and
improve standards of financial accounting and reporting that foster
financial reporting by nongovernmental entities that provides decision-
useful information to investors and other users of financial reports. Since
1973, the Financial Accounting Standards Board (FASB) has been the
designated organization in the private sector for establishing standards of
financial accounting that govern the preparation of financial reports by
nongovernmental entities
The major difference in the SEC and the FASB is that the SEC deals with
reporting of financial statements for all industries while the FASB deals
mainly with the private nongovernmental entities. Both are concerned with
the fairness of financial reports and work in the interest of the public. I
believe that the SEC has more influence over financial statement reporting
because they can bring civil action against companies and individuals for
violations of securities laws. Although according to the FASB website, the
Commissions policy has been to rely on the private sector for this function
to the extent that the private sector demonstrates ability to fulfill the
responsibility in the public interest.
Response 2
Go to the U.S. Securities and Exchange Commissions Web site
at http://www.sec.gov and the Financial Accounting Standards Boards Web site
athttp://www.fasb.org. Identify the mission and main activities of each
organization. Then, analyze the similarities and differences between the roles of each
entity. Which entity has more influence over financial statement reporting? Explain
your answer.
U.S. Securities and Exchange Commission (SEC)
According to the SECs website The mission of the U.S. Securities and Exchange
Commission is to protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation(U.S. Securities and Exchange Commission, 2010, Para.
1).
The main activities of the SEC are to interpret federal securities laws; issue new
rules and amend existing rules; oversee the inspection of securities firms, brokers,
investment advisers, and ratings agencies; oversee private regulatory organizations in
the securities, accounting, and auditing fields; and coordinate U.S. securities
regulation with federal, state, and foreign authorities. (U.S. Securities and Exchange
Commission, 2010)
Financial Accounting Standards Board (FASB)
According to the FASBs website The mission of the FASB is to establish and
improve standards of financial accounting and reporting that foster financial reporting
by nongovernmental entities that provides decision-useful information to investors
and other users of financial reports. That mission is accomplished through a
comprehensive and independent process that encourages broad participation,
objectively considers all stakeholder views, and is subject to oversight by the
Financial Accounting Foundations Board of Trustees (Financial Accounting
Standards Board, n.d., Para. 3).
The main activities of the FASB are to identify financial reporting issues based on
requests/recommendations from stakeholders or through other means. The FASB
Chairman decides whether to add a project to the technical agenda, after consultation
with FASB Members and others as appropriate, and subject to oversight by the
Foundation's Board of Trustees. The Board deliberates at one or more public meetings
the various reporting issues identified and analyzed by the staff. The Board issues an
Exposure Draft to solicit broad stakeholder input. (In some projects, the Board may
issue a Discussion Paper to obtain input in the early stages of a project) The Board
holds a public roundtable meeting on the Exposure Draft, if necessary. The staff
analyzes comment letters, public roundtable discussion, and any other information
obtained through due process activities. The Board redeliberates the proposed
provisions, carefully considering the stakeholder input received, at one or more public
meetings. The Board issues an Accounting Standards Update describing amendments
to the Accounting Standards Codification (Financial Accounting Standards Board,
n.d.).
Both the SEC and the FASB have the same goals of fairness, accuracy,
and understandability of financial accounting and reporting. Both
agenecys accomplish these goals in the best interest of the overall public.
The differences between the SEC and the FASB is that the FASB regulates
financial reporting in the private sector of businesses (but are subject to
the rules and regulations of the SEC) and the SEC deals with regulating the
financial reporting of publicly held corporations.
I believe that the SEC has the greatest influence over financial
statements reporting because they have the final approval on all changes
of the rules and regulations. The Sec can also bring civil or administrative
enforcement actions against individuals and companies in violation of the
securities laws.
References
Financial Accounting Standards Board. (n.d.). Facts about FASB. Retrieved
July 15, 2010, from Financial Accounting Standards
Board:http://www.fasb.org/facts/index.shtml#mission
U.S. Securities and Exchange Commission. (2010, May 3). The Investors
Advocate: How the SEC Protects Investors, Maintains Market Integrity, and
Facilitates Capital Formation. Retrieved July 15, 2010, from U.S. Securities
and Exchange Commission: http://www.sec.gov/about/whatwedo.shtml
Week 1 DQ 2
Due Thursday, Day 4
Search the Internet or the Online Library for information about the
Sarbanes-Oxley Act. A useful guide to some of these provisions is
located at http://www.soxlaw.com. Summarize at least two provisions
of the law, and discuss your interpretation of these provisions with
your classmates. Do you think this law will make financial statements
more reliable? Also, discuss how Sarbanes-Oxley establishes
boundaries to ensure ethical practices. What does the law allow or
prohibit, and why?
The Sarbanes-Oxley act has many provisions to give companies

guidelines for responsible, and ethical financial reporting. One of
those provisions is listed in Section 302 of the act. The provision is
that periodic statutory financial reports be certified that signing
officers have reviewed the reports, the report does not contain any
untrue, or misleading information. The financial statements fairly
present the financial condition. The signing officers are responsible
for internal controls. A list of all deficiencies in internal controls, and
a list of fraud involving employees, and anything that could negatively
affect the internal controls.
Another provision pertains to the "management assessment of

internal controls". This provision ensures that information is
published in annual reports regarding the adequacy of internal
controls, structure and procedures.
The Sarbanes-Oxley act is designed to help companies promote

ethical accounting procedures. The act gives guidelines as to how
financial statements are reported. The act requires verification that
officers within the company have checked the information in the
reports for accuracy and true. The act also requires that the
companies have internal controls in place to ensure ethical reporting
practices. The main thing that the Sarbanes-Oxley promotes is
transparency in reporting.
Response 2
Section 802 of the Sarbanes-Oxley Law defines the penalties that
may be assessed against individuals who failed to comply with the
Act. An individual could be subject to 20 years in jail for altering,
destroying, mutilating, concealing, falsifying records, documents or
tangible objects. Guilt is define by the intent to impede a legal
investigation. This part of the law gets to the heart of how Arthur
Anderson reacted by destroying documents important to Worldcom.
The law further defines that any accountant who knowingly violates
their ethics by wilfully violates the requirements of maintenance of all
audit or review papers. These papers are subject to review up to five
years.
The second Section that I reviewed was the Section 302. This
actually is my favorite part of the law because it directly holds the
officers and directors accountable for the accuracy of reporting in
their financial statements. It defines that the management must
review and understand the financial statements and sign that they
are true and accurate. It also holds the management accountable for
the internal controls, requiring any deficiencies to be reported. In the
past directors of companies relied heavily on the internal officers,
management, to report the company performance without
questioning the accuracy or taking their role on oversight committees
seriously. They could hide behind a veil of trust of the key leaders.
This Section clearly puts the responsibility for the Board to remain
independent of the executives and function more effectively on the
respective oversight committees they serve. The example I would
share is what happened in WorldCom. The company leaders shared
what they wanted to with the Board, who trusted implicitly the top
leaders. Had they questioned their legal representation or auditors,
they potentially could have uncovered the fraud that was committed
by the creation of shell companies, with WorldCom employees as
stockholders.
I would love to think this law would protect the investing community.
Financial reporting has improved to some extent. Unfortunately the
scams still continue. Example would be Barney Madoff or what
happened in the financial mortgage industry. These unethical
practices were conducted after Sarbanes Oxley was implemented.
Madoff was able to provide false financial information to investors.
Financial industry was allowed to get to aggressive in underwriting
and product suite. Fines and penalties are deterrents. Ethics still
must be inherent in an individual and company. Laws and
requirements are a guide. There will never be enough auditors,
inspectors or oversight boards to catch all of the fraud in the
corporate community.
The law prohibits falsifying information, failing to notify of material

changes, and destruction of records.
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ACC 291 Week 3 Assignment The Liabilities Section of

OBrians Balance Sheet
is to help you understand the balance sheet
presentation for the liabilities of a company.
Assignment Steps Resources: Financial Accounting:
Tools for Business Decision Making Prepare the
liabilities section of OBrians balance sheet using the
following information: Accounts payable $157,000
Notes payable (due May 1, 2018) $20,000 Lucent
Technologies
Axia College of University of Phoenix

Lucent Technologies is a company based on networking for service providers,
government, and enterprises worldwide (Lucent Technologies, n.d., Para 1). The
products and services they work with are separated into three categories; service
and maintenance, wireless mobility networking, and wire line networking. Lucent
Technologies is backed by Bell Labs, which does research and development in
networking technologies.
During the years of 2001 to 2003 this company has experienced a decrease in
demand because of other companies loss or capital used toward spending. This
is mainly due to a downturn in the economy. As an investor this information is
necessary to know because it explains the decrease or increase in sections of the
balance sheet. In order to compare the growth or decline of the companys profit,
an investor must change a balance sheet into a common-size balance sheet. First
when looking at the balance sheet an investor will see that the amount of paid in
capital has increased from the year of 2003 to 2004, the assets have increased,
but the liabilities have decreased. When running a debt/asset ratio it is noticed
that this ratio drops from 1.2 in 2003 to 1.0 in 2004. This shows the companys
risk is low when concerning financial leverage, usually when the debt ratio is less
than one percent it is financed mainly by company equity, so this company is
close to being debt free from creditors.
After changing the balance sheet to a common-size balance sheet there are
several factors an investor will look at. The current assets have dropped to .48
from .49 in 2004. This does not show harm to the company because only the
accounts receivable dropped while the rest of the current assets increased. This
means the company is not in as much danger of default on money owed to it. It
does have a rise in marketable securities. The one concern in the assets is the
increase of prepaid cost of pensions and goodwill. Goodwill can be used for tax
breaks but prepaid pensions cannot benefit the company.
When looking at the liabilities section an investor will see a drop in pension and
liabilities and an increase in long term debt, both of these could be affected
because of the drop in the economy. Long term liabilities are often increased to
help a company control interest rate increases so as an investor cutting back on
pension liabilities cuts back cost to the company and watching interest rate
increase show the company is concerned with its earning and investors. This
would be encouraging or an investor. The stockholders deficit shows a drop in
accumulated deficits from -1.43 to -1.22 and total deficits of -.26 to -.08. This
shows the company is working to control any money loss and turning it to the
companys advantage. Overall it shows the company is still earning a profit
although small. With an increase of assets and a drop in liabilities the company is
showing it is working in a low risk capital.
After reviewing this information, a creditor or investor must be able to compare

this company to the industry totals. By comparing how this company compares
to other companies similar to it, a person can see if it is competitive and worth
taking a risk. Running ratios will also show if the company is capable of paying
off any debts it has or if it can acquire the needed cash in case of emergencies.
Overall as an investor, I would say this company would be worth investing in.
Reference
Axia College. (2007). Understanding Financial Statements. Retrieved May 10,

2010 from Axia College, Week 2 Assignment, ACC/230.
------------------------------------------------------------------
Why does a company choose to form as a corporation?
What are the steps required to become a corporation?
Preparing an Income Statement

The companies net income is profitable when the sales exceed the cost of goods
sold. In this, the gross profit is $761k. This is beneficial to the company. Though
we took the cost of goods away from the net sales there are still other areas
which need to take a piece of the pie. For this company, once the SG&A and
depreciation are taken out, the company still contains a profit of $290k. But the
buck does not stop there. Once the interest income and interest expense are
adjusted the balance before earnings and taxes is $290k. After taxes are taken
out, the company is left with a net profit of $174k.
In this case I think the company has achieved success with a net profit of $174k.
If the company were unable to be profitable, the company would eventually go
out of business. We would be able to tell if the company was not profitable by
looking at each section individually. The cost of goods sold is what stands out for
me. If we pay more to make the product then we are actually selling it for, there
is no profit to be made. So, I think it should all start there.
------------------------------------------------------------------

Why is preferred stock referred to as preferred?
What are some of the features added to preferred stock
that make it more attractive to investors?
Would you select preferred stock or common stock as
an investment? Week 3 DQ 1
Due Tuesday, Day 2
Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might
the information contained within the stockholder equity
statement be used for management and investor decision-
making? Provide specific examples of situations in which the
stockholder equity information might be used.
The statement of stockholders equity provides the changes in the equity accounts during the
accounting period more in depth than the balance sheet. The information found on the
statement of stockholders equity includes retained earnings, common and preferred stock,
and additional paid in capital. Management uses the statement of stockholders equity to
ensure they are reaching their goal of maximizing shareholder's equity. The use of market
ratios help with the analysis of the statement of stockholders equity, such as earnings per
share, price-to-earnings, dividend payout, and dividend yield. These ratios will help both
management and investors in analyzing the company. For example, if I were looking to
invest in a companys stocks I would utilize all of the financial ratios, as well as the market
ratios. The earnings per share ratio is calculated before the price to earnings ratio, P/E,
because the earnings per share ratio is used in the second. If a company pays dividends,
the dividend payout ratio will come in handy. It tells us The percentage of earnings paid to
shareholders in dividends (Investopedia, 2010, p. 1).
References
Investopedia. (2010). Dividend Payout Ratio. Retrieved August 3, 2010, from
Investopedia:http://www.investopedia.com/terms/d/dividendpayoutratio.asp
Response 2
Explain what can be found on a statement of stockholders equity .
The major elements of stockholders' equity include capital stock, paid-in capital,
retained earnings, treasury stock, unrealized loss on long-term investments, and
foreign currency translation gains and losses.
How might the information contained within the stockholder equity

statement be used for management and investor decision-making?
Provide specific examples of situations in which the stockholder equity
information might be used.
Management may look at the stockholders equity statement retained earnings

section to determine if company should borrow money for capital investments or
finance it through various forms of equity. It may also be used by the stockholder
to evaluate the compensation paid to the company officers. Investors may also
look at the statement for cumulative net unrealized gains and losses before
purchasing stock in the company. Investors are also interested in the paid in
capital because they can compare it to the additional paid in capital and the
difference between the two values will equal the premium paid by investors over
and above the par value of the shares.
DQ 2
Week 3 DQ 2
Due Thursday, Day 4
Provide an example from the text or the Internet that

demonstrates a situation in which a companys net profits
appeared good in the statements, but the gross or operating
profits presented a different picture. Discuss how this might have
occurred. Respond to the following question, addressed in
Problem 3.6 on p. 109 (Ch. 3): Why is the bottom-line figure, net
income, not necessarily a good indicator of a firms financial
success? Look for indicators like liquidity or solvency to answer
this discussion question.
An example that demonstrates the situation is Enron. Enrons

financial statements did not show all the expenses and costs.
Instead of showing them on the income statement they made
entries so the cost and expenses would post in the balance sheet.
The same was done with the revenues. This way it would be less
expenses and the net profit appeared good. Many debts and
losses were not reported in the financial statements. From the
third quarter of 2000 through the third quarter of 2001, the
directors fraudulently used reserve accounts within Enron
Wholesale to mask the extent and volatility of its windfall trading
profits, particularly its profits from theCalifornia energy markets;
avoid reporting large losses in other areas of its business; and
preserve the earnings for use in later quarters. By early 2001,
Enron Wholesale's undisclosed reserve accounts contained over
$1 billion in earnings. The head of the company improperly used
hundreds of millions of dollars of these reserves to ensure that
analysts' expectations were met. In addition, Skilling and others
improperly used the reserves to conceal hundreds of millions of
dollars in losses within Enron's EES business unit from the
investing public.This would show the creditors that Enron was
making profits and its position was solid.
The net income is not necessarily a good indicator of a firms
financial success because the income statement only shows the
profit or loss at a period of time and does not show the whole
picture of the company. The Balance Sheet, Statement of cash
flow, Statement of shareholders equity and the Income
Statement all together give the real picture of the business. Each
one of them shows different aspects of the business. These
statements show where the income is actually coming from; is it
from sales or from loans the company is borrowing? If the
company is selling a building or any other asset but that does not
mean that it is selling more products and making profit. Looking
at the Income Statements the company might be making profit
but at the same time it is extremely leveraged.
Response 2
A companys net income is not the whole picture, just part of it. There are lots of things that
contribute to the net income that may not be significative to the companys success. If the
value of a dollar has a sudden change that can affect the bottom line if the company
happens to hold the medium of exchange that can benefit by the change that might occur.
The company can falsely inflate the bottom line. A companys net income is coupled with
liabilities, cash flow, and selects financial ratios. Looking at it this way is a much better way
of seeing what the companys success is like. A company can change up many things to
make it look like their income is better. These things that can be changed are single sales
events, cash infusion, or false financial statements. Some things like debt that a company
has, the companys cash on hand, their capital assets conditions, or even their sales trends.
To figure the success of the company, you must look at the whole picture. One thing cannot
tell you all the facts of the companys affairs. You cannot tell the net income of the company
just from the bottom line. Look at all the financial records.
Response 3
Provide an example from the text or the Internet that demonstrates a situation in which a companys
net profits appeared good in the statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the following question, addressed in
Problem 3.6 on p. 109 (Ch. 3): Why is the bottom-line figure, net income, not necessarily a good
indicator of a firms financial success? Look for indicators like liquidity or solvency to answer this
discussion question.
Net income is not necessarily a good indicator of a firms financial

success because they have ways to manipulate it by increasing
their revenues or hiding some of their expenses. For investors
trying to decide where to invest their money, they need to look
more into assessing how the company came up with the numbers
they presented.
An example of this situation is when Laribee Wire Manufacturing

Co. exaggerated in recording their inventory value which allowed
them in acquiring loans from six banks totaling to about $130
million using it as collateral. At the same time, they reported $3
million in net income for the period, but in actuality they lost $6.5
million.
This company showed a higher net income by reporting fake
inventory in which its value was overstated and transferred over
to their income statement. When the banks assessed their
financial statements, it was enough to sway them into lending the
loans they needed.
Reference:
Investopedia. (2010). Spotting Creative Accounting On The

Balance Sheet. Retrieved
fromhttp://www.investopedia.com/search/searchresults.aspx?
q=Spotting+Creative+Accounting+On+The+Balance+Sheet&submit=Search
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ACC 291 Week 3 Individual WileyPLUS Assignment
STOCK DIVIDEND
University of Phoenix
Stock Dividend
In the present time, the stock dividend has become important

concept. When dividend is given in form of stock, it is called stock
dividend. In this form of dividend, the cash does not use. It is
important, when the corporation declares stock dividend, the market
value of the share decreases because the number of stock increases.
The many companies prefer stock dividend due to the tax benefit. If
the individual gets stock dividend, he does not pay any tax on stock
dividend. Thus the stock dividend reduces tax burden. On the other
hand, the ownership of investors also spurs up in the company
because the number of holding share increases. There is also
disadvantage of stock dividend. The market value of the share
decreases, so the market value of holding also decreases (Kennon,
2009).
The ABC Company is leading company in its industry. The number

of outstanding share of the company is one million. On the other
hand, the number of investors is five millions. The value of market
capitalization is $100 million. The management declares 20% stock
dividend. Thus the 200000 shares will be distributed as a stock
dividend. The number of outstanding share will be increased by
200000 and the new total number of outstanding stock will be 1.2
million. On the other hand, the new value per share in the market
will be $83.33 (100 million/1.2 million). This example is taken from
below mentioned link:
Stock Split
The stock split is also an important concept. When the management

wants to increases number of shares, the management follows this
method. In this method, the face value of the share is split and
number of share gets increased. Due to increment in number of
outstanding share, the market value of per share also gets affected
but the total market capitalization of the company does not affect.
Both stock split and stock dividend increase number of outstanding
shares but both are different due to the accounting treatment. In the
stock split, the investors do not get any real benefit. It is also known
as non-cash distribution of dividend. The motto behind stock split is
to increase trading of the shares in the market (Baker, 2009)
For example, the face value of per share is $100 and the total
outstanding shares are 100 million. If the management of the
company announces stock split in ratio of 1:2, the total outstanding
shares will be increased by 100 million, thus the new total number
of the share will be 200 million. On the other hand, the face value
of the share will reduce by 50%. So the new face value of the share
will be $50. Due to effect of stock split, the holding share of the
investor will also increase in the prorate basis. If the investor has 10
shares, now he will have 20 shares. It is important thing that the
total issued capital will not be changed. The illustration of stock
split has been got from following link:
Reverse Stock Split
The reverse stock split is just opposite of stock split. In this process,
the management reduces the number of outstanding shares. The
company increase face value of the share. In this method
corporation decides a ratio such as 2:1. Thus the company
accumulates two shares in one share. In this method, the total
market value of company does not change. Due to reverse stock
split, the earning per share and face value of per share rises. Thus
the reverse stock split provides just opposite result from stock split.
It is important question, why company selects this method. When
the management seems that the face value of the share is less as
compared to competitors then the company goes for this method to
make its share value to equal to competitors shares face value. It is
also a sound strategy to increase treading of shares. If the face
value of share is too cheap in comparison to competitors, the
investors will be discouraged for investment. For increasing the
confidence of investors, the management uses this method
(Mladjenovic, 2009).
For example, an investor holds 100 shares of XYZ Company and

the face value per share is $50. If the management go for reverse
stock split option and declares one share for 10 shares then the
holding of the individual will reduce 9 shares for every 10 shares.
Thus the new holding of the investor will be 10 (100/10) shares but
the face value per share will be $500. It is also important that the
total market capitalization will remain as same as before reverse
split. The example of the reverse split is take form below mentioned
link: http://www.sec.gov/answers/reversesplit.htm.
References
Baker, H. K. (2009). Dividends and Dividend Policy. John Wiley

and Sons.
Kennon, J. (2009). All About Dividends. Retrieved May 31, 2010,

from
http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_2.
htm
Mladjenovic, P. (2009). Stock Investing for Dummies. Dummies.

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ACC 291 Week 3 Individual WileyPLUS Practice Quiz Ch.

11,12
Resource:WileyPLUS
Analyzing an Income Statement

The net income of Kodak has decreased a bit; it
appears that the company is more profitable. By
conducting a side by side analysis from 2004 to
2003 the company has increased in current
assets and decreased in total assets. It appears
that the company went down in property, plant
and equipment net as well as discontinued
operations. So, despite the decrease in total
assets it looks like the company has made a good
decision.
The company has also decreased its total

liabilities by about 4%. I believe this to be good
because the short term borrowings and long
term debt has decreased. To me, this means that
the company is tightening their belt and paying
off old debt.
Total shareholders equity has down a little bit in

dollars, but on the percentage level the
companys percentage has gone up. I believe this
is because the company issued $104k more
shares in 2004 than in 2003. The company has
the same amount of shares outstanding in 2004
that it did in 2003 as well. Retained earnings on
the stock have gone up in 2004 as well. I believe
this is contributed by the more shares that have
been issued.
I believe the profitability of the company is
under good standings. They appear to be making
the necessary adjustments in the company to
stay with in a profitable income.
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Discuss the objectives for Week Three. Your discussion
should include the topics you feel comfortable with,
any topics you struggled with, and how the weekly
topics relate to application in your field.
Cash Flow Statement Analysis
Cash Flow Statement Analysis

The cash flow statement is important financial
statement of the corporation. The cash flow
statement states from where cash has come and
where cash has been gone. Thus the cash flow
statement makes a relationship between
beginning balance and ending balance of cash.
The cash flow statement is prepaid on the basis
of income statement and balance sheet of the
company. The Little Bit Incs beginning cash
balance including marketable securities was
$24000. On the other hand, the ending cash
balance including marketable securities of the
company was $40000 (Weygandt, Kimmel &
Kieso, 2009).
The net income of the company was $5500
during 2009. The company generated cash inflow
from operating activity is less as compared cash
out flow from operating activities. The company
generated $9000 negative cash balance in
operating activity section of the cash flow
statement. On the other hand, in the investment
section, the firm has also negative cash balance.
The firm has $7000 negative balance in
investment section of the cash flow statement.
The Little Bit Inc made investment during the
year instead of selling of assets. Last section of
the cash flow statement is financing activity
section. In which, all finance related activities
come. The corporation sold some shares and
borrowed some money from outside lenders
therefore the company has positive case balance
by $32000 in financing activity section.
Reference
Weygandt, J.J.,Kimmel, P.D. & Kieso, D.E. (2009).
Managerial Accounting: Tools for Business
Decision Making. John Wiley and Sons.
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ACC 291 Week 3 Wileyplus Assignment P9-7A, E10-5, E10-

8, E10-13, E10-22, E10-24, BYP10, P10-9A, P10-13A,
IFRS10-4 (New)
P9-7A, E10-5, E10-8, E10-13, E10-22, E10-24,
BYP10, P10-9A, P10-13A, IFRS10-4.
Exercise 10-5: Olinger Company
Exercise 10-8: Ortega Company
Exercise 10-13: Romine Company

Exercise 10-22: Cole Corporation
Week 5 DQ 1
Due Tuesday, Day 2
In what ways does the statement of cash flows relate to the balance sheet and
income statement?
It is important to understand what we are doing with the

numbers and the results these numbers give us because the
result is the information that will be available to us from
financial statements. Although some want to see the income
statement and ignore the other statements we need to use
them together to see the total picture of what is happening
to our business. The relationship between the numbers on
the financial statements shows us everything we need to
know about the business.
The income statement shows income and expenses for a
period of time and if we are making or loosing money. The
balance sheet compares the assets to liabilities and shows
how much money the business would have if everything is
sold today.
The statement of cash flow might be the most critical
statement because there is plenty of information we can
gain form it. This statement relates with the income
statement on operating activities to see if they are
generating cash or not. It is related to the balance sheet on
how much cash is used in investing activities. In relationship
with the balance sheet the cash flow statement shows what
cash is provided or used by financing activities. It will tell us
how much debt has been paid and will indicated if we are
using more debt or have paid down the credit line.
When the business makes a sale or receives payment for a
sale on credit that is an inflow. A sale shows up as income on
the profit and loss statement and as an inflow on the cash
flow statement. It also shows up either as cash or accounts
receivable on the balance sheet. Also, how quickly we can
collect on accounts receivable will play a big role in the cash
flow. When the business spends money, it shows up as an
expense in the profit and loss statement and as an outflow
on the cash flow statement. It also shows up on the balance
sheet as a decrease in cash, or an increase or decrease in
liabilities, depending on what the expense represents.

Response 2
In what ways does the statement of cash flows relate to the balance sheet and income
statement?
The cash flow statement relates to the income statement and balance
sheet. The net income from the income statement is listed on the
statement of cash flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement reconciles the net
income to the actual cash the company received from or used during
operations. The second section of the statement of cash Flows is the cash
flow from investing activities which include purchase or sale of assets. The
last section in the Statement of Cash Flows is the cash flows from
financing activities that includes raising cash by selling stocks/bonds or
borrowing from backs; or cash out flows from paying back loans. The
balance sheet shows the different account balances at the end of the
accounting period. The statement of cash flows reflects changes in the
accounts listed on the balance sheet between accounting periods. The net
cash from operating, financing, and investing activities are added up to
calculate the net change in cash.
Week 5 DQ 2
Due Thursday, Day 4
Discuss how the statement of cash flows is utilized by investors. If you were an
investor reviewing a statement of cash flows, what section might interest you most?
Why? Discuss the circumstances in which other sections of the statement might be
important to an investor.
Prior to making an investment in a company, one would want to

understand the decisions the owners are making to fund the
operations of the company daily. Maintaining sufficient cash to
acquire new product, pay overhead, and satisfy generated sales
would be the predominant need of the company. Second need would
be for the company to have sufficient cash to remain competitive.
This may require cash to invest in research and development,
increase inventory as new product introduction, improve efficiency in
plant and equipment, or cash to satisfy prior borrowing obligations.
By reviewing the statement of cash flow, the investor can determine if
the company is generating sufficient cash internally to fund
operations or are they requiring outside injection of cash to finance
the short fall in cash needed to operate the company. Last, the
investor can review the statement of cash flow to better understand
the leverage of the company and the requirement for repayment of
debt, or dividends to reward prior investments.
Response 2
Discuss how the statement of cash flows is utilized by investors. If you were an investor
reviewing a statement of cash flows, what section might interest you most? Why? Discuss the
circumstances in which other sections of the statement might be important to an investor.

The statement of cash flow is utilized by investors because it has all
information integrated from the balance sheet and the income
statement. The statement of cash flow is used by an investor to see if the
operating activities are greater than the net income to have earnings that
are called high quality. If operating activities are less, then a red flag will
be raised as to why the net income is not becoming cash. Another reason
would be investors believe cash is the best. The statement shows all cash
coming and going from the business. If the company generates additional
cash than what is being used, then the company can reduce their debt,
acquire another business, or buy some of the stock back. The last reason
why would be that financial models are based upon the statement of cash
flow.
If I was an investor reviewing a statement of cash flows the section that
might interest me the most would be the operating activities. I would like
to know how the company was doing and what areas need to be improved
to have more cash generated in the business. All the sections are
important to an investor so they can see the complete big picture of their
investment.

------------------------------------------------------------------
Why are companies required to prepare a statement of cash flows?
Why is the statement of cash flows divided into three sections?
Differentiating Depreciation Methods

There is one main difference between straight line depreciation and
accelerated depreciation. Straight line is decided by taking the cost of
the assets, figuring out the salvage cost when the use of the asset is
finished and how many years of use the asset has. A person then takes
the cost minus salvage and divides the remainder by the number of
years of use. This amount is the depreciation expense subtracted each
year from the cost. The accelerated depreciation does not have the
same amount of deprecation subtracted each year. It does have the
cost minus salvage value to figure out the amount to use but is then
divided out differently. A person takes the sum of the years of a
products useful life, such as three years is 3 + 2 + 1 = 6, then a
person would divide the depreciation amount by 3/6 the first year, 2/6
the second and finally 1/6 for the final year. So the amount of
depreciation expense is larger to smaller with accelerated and equal
amounts for straight line.
The advantages of straight line method are it is easier and faster to

figure. The advantage of accelerated method is it is more accurate
when figuring depreciation expense. The accelerated method has an
advantage and disadvantage concerning taxes. A company can use
the accelerated method to take advantage of bigger tax breaks at the
beginning of an assets life, but since this amount drops during the
lifespan if the company needs added tax breaks it will not receive
them from these assets in the future. With the straight line method the
amount of tax breaks are even through the life of the product. Most
companies choose this form of depreciation for reporting purpose on
taxes but will use the accelerated method to figure taxable income.
As mentioned before the advantage of straight line depreciation is it is

easier to figure and uses the same total each year for deduction of
depreciation expense but the disadvantage is that if use for taxable
income and reporting a company does not get a bigger tax break at
the beginning of the assets life when they have just put out the cost for
the item and may need a bigger tax break.
------------------------------------------------------------------
What are some common ratios used to analyze financial information?
Which are the most important?
Candela Corporation

Candela Corporation
Candela Corporation and Subsidiaries have been working for

over 34 years developing and commercialize aesthetic laser systems
that allow physicians and personal care providers to treat a variety of
cosmetic and medical conditions such as removal of spider veins,
scars, stretch marks, warts, as well as hair removal and age spots,
freckles and tattoos. Other skin treatments such as psoriasis and acne
and acne scars are also treated. (Axia College, 2007)
Going from top to bottom on The Candela Corporation and

Subsidiaries Consolidated Statement of Cash Flows; for the operating
activities, 2002 shows an alarming loss in the net income while 2003
and 2004 for the company are showing a significant and steady climb
in the net income. In 2004 there was a new category added called
Provision for the disposal of discontinued operations and the
category has caused an increased the account for 2004. Loss from
discontinued operations grew from 2002 to 2003 but had a significant
decline for 2004. Depreciation has increased over the last 3 years as
well. Provision for bad debts increased significantly too, but an
increase in bad dept is expected as revenue increases. The provision
for deferred taxes shows the company went from a loss in 2002 and
2003 to show there was no tax loss in 2004. The tax benefit from
exercised stock options has practically doubled sense 2003. The
changes in assets and liabilities for the last 3 years have been up and
down. Receivables have increased, notes receivable decreased, and
inventories have increased. Other current assets, other assets have
also increased. Accounts payable has made a significant decrease in
the last 3 years as well as accrued payroll expenses. The accrued
payroll decreasing could mean that the amount of employees over the
years has decreased as well. The accrued warranty costs have
increased as well; this could mean that the company renewed
equipment warranties. The net cash provided by operating activities
looks to have gone from a loss in 2002 to a large profit in 2003 and
then a decrease, yet still a profit for 2004. It appears on the
operations level that management needs to do more to regulate the
companys finances so there is not an up and down variance each
year.
The cash flow from investing activities shows me that in the last
three years they had large amount of investments in 2002 and 2003
but now they are letting them decrease.
The cash flow from financing activities states that the proceeds
from issuance of common stock have increased significantly from
2002 to 2003 and rose a little more in 2004. The repurchases of stock
has not happened sense 2002 and the principle payment of long-term
debt grew in 2003 from 2002 and shows no activity for 2004. Same
goes for the net borrowing on line of credit; it appears that Candela
Corporation is current on payments to line of credit. So, the net cash
from financial activities looks great for 2004. The cash and cash
equivalents for each year have increased steadily.
After reviewing the consolidated statement of cash flows for

Candela Corporation, I believe the company is making a profit, but
perhaps need some control over their operating activities.
Reference
Axia College. (2007). Statement of Cash Flows. Retrieved June 14,

2010 from Axia
College, Week Six, ACC 230.

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ACC 291 Week 4 Individual WileyPLUS Assignment

Analyzing Statements of Cash Flows
4.8. Research Problem
Choose five companies from different industries and locate their

statements of cash flows
for the most recent year.
(a) Create a table to compare the dollars provided or used by

operating, investing, and financing activities, as well as the overall
increase or decrease in cash.
(b) Create a second table for each company comparing this same
information for each of the three years presented in that companys
statement of cash flows. Include an additional column that looks at
the combined cash flows for all three years.
(c) Write a short analysis of the information gathered. Your

discussion should address, among other things, whether cash flow
from operating activities is large enough to cover investing and
financing activities, and if not, how the company is financing its
activities. Discuss differences and similarities between the
companies you have chosen.
(a) Create a table to compare the dollars provided or used by
operating, investing, and financing activities, as well as the overall
increase or decrease in cash.
STATEMENT OF CASH FLOW ANALYSIS
STARBUCKS HARELY DAVIDSON RITE AID
2008 2008 2008
NET INCOME / STARTING LINE $ 315.5 $

- $ (1,079.0)
OPERATING ACTIVITIES $ 1,258.7 $

(684.7) $ 79.4
INVESTING ACTIVITES $ (1,086.6) $ (393.3)

$ (2,933.7)
FINANCING ACTIVITIES $ (184.5) $

1,293.4 $ 2,904.0
CASH $ (11.5) $ 190.7 $

49.9
(b) Create a second table for each company comparing this same
information for each of the three years presented in that companys
statement of cash flows. Include an additional column that looks at
the combined cash flows for all three years.
STARBUCKS
2008 2007 2006
Net Income/Starting Line 315.5 672.64 564.26
Cash from Operating Activities 1258.70 1331.22 1131.63
Cash from Investing Activities -1086.60 -1201.95 -841.04
Cash from Financing Activities -184.50 -171.89 -155.33
Net Change in Cash -11.50 -31.35 138.80
Net Cash - Beginning Balance 281.30 312.61 173.81
Net Cash - Ending Balance 269.80 281.26 312.61
HARLEY DAVIDSON
2008 2007 2006
Net Income/Starting Line 0 933.84 1043.15
Cash from Operating Activities -684.65 798.15 761.78
Cash from Investing Activities -393.25 391.21 -35.26
Cash from Financing Activities 1293.39 -1037.80 -637.02
Net Change in Cash 190.70 164.46 97.42

RITE AID
2008 2007 2006
Net Income/Starting Line -1078.99 26.83 1273.01
Cash from Operating Activities 79.37 309.15 417.17
Cash from Investing Activities -2933.74 -312.78 -231.08
Cash from Financing Activities 2903.99 33.72 -272.84
Net Change in Cash 49.61 30.08 -86.75
(c) Write a short analysis of the information gathered. Your

discussion should address, among other things, whether cash flow
from operating activities is large enough to cover investing and
financing activities, and if not, how the company is financing its
activities. Discuss differences and similarities between the
companies you have chosen.
Starbucks operating cash flow has gone up in 2007 and decreased a

little in 2008. The net change in cash for Starbucks looks a on the
down side but previously was doing well. The net loss in cash at
end of year is decreasing from the previous year. This could mean
that this year there can be a gain.
Harley Davidson's operating cash flow has significantly decreased

from 2007. It appears the company was on an upward cycle from
2006. The decrease in cash from operating activities is probable
from the lack of information supplied for net income. With the
economy the way it is and not many people buying at this point
could have an effect on why the net income is decreasing. With a
bounced back economy in the coming year could reflect a positive
gain.
Rite Aid's operating cash flow has taken a significant decrease as

well from previous years. Although, after taking in cash from
investing and cash from financing, the net change in cash is better
than it has been in previous years. Rite Aids net gain in cash could
be from the ever growing needs in medical supplies. This also could
reflect the expansion of the company
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ACC 291 Week 4 IndividualWileyPLUS Practice

Findwhat.com Case - CheckPoint

ACC 230
Findwhat.com has recorded the 135 percent

increase in the revenue which is mainly due to
the business acquired of Espotting during the
year. The different accounting policies are
present for the acquiring firm and the acquired
firm. The company has recorded certain
premature revenues for the amount which
advertisers had made only the advance deposit.
As result, the company is recognizing the vendor
financing as revenue. In some places, the gross
revenue has been recognized while in another,
the net revenue has been recognized. The
network click revenue is recognized at gross
level while the private level revenue is taken at
net level. Some of the revenue expenditures
have been recognized as the capital
expenditures.
Revenue for set up network fee is treated as
deferred revenue and is recognized over a period
of time. The company is very inconsistent with
regards to its accounting policies in terms of
recognition of revenue. The provision and
treatment of amount for doubtful debt is also not
satisfactory. When a customer clicks on a
sponsored advertisement, the whole of the
revenue due to him is recognized. The company
is having a very high amount of doubtful debt
balance at the end of the year ending December
31, 2004.
------------------------------------------------------------------
Discuss the objectives for Week Four. Your discussion

Week 7 DQ 1
Due Tuesday, Day 2
Post your answer to Study Question 5.2 on p. 180
(Ch. 5). As you read your classmates responses,
consider the following scenario: If you compared
two different companies that utilized two
different valuation methods, how might the
quality of the results differ? Also, comment on
the difficulty of making comparisons between
two firms that use different valuation methods.
Understanding the different inventory

methods is crucial. First the person that
establishes the inventory needs to determine
which method to use. LIFO, or FIFO. LIFO means
Last in First Out. This means that when a
purchase is made, and sales are recorded the
newest product is used first. So if I bought 10
combs at $2 on December 1st, and then I buy 5
combs at $2.50 on December 10th. When sales
are made I am going to record sales using the
$2.50 until I sell through the 5 combs that were
purchased on the 10th, and then the cost will go
to the previous purchase price of $2 until those
10 combs are sold through. FIFO is just the
opposite. Meaning that goods are used in the
order that they are received. The first items
ordered, are the first items sold. Either method
will pass an audit. It is important to note though
that managers can't switch back and forth
between the two methods. Profit will vary
depending on which method is being used. Say
you sold only 6 combs at $3 each. Using the
LIFO method this would equal $3.50 profit. If
you used the FIFO method, this would result in a
$6.00 profit.
Response 2
Post your answer to Study Question 5.2 on p.
180 (Ch. 5). As you read your classmates
responses, consider the following scenario: If
you compared two different companies that
utilized two different valuation methods, how
might the quality of the results differ? Also,
comment on the difficulty of making comparisons
between two firms that use different valuation
methods.
It is very important to understand which
inventory valuation method is being used to
determine the profit numbers quality. The
balance sheet, statement of cash flow and
income statement can be directly impacted by
the valuation method that used to determine the
costs of inventory. The three methods that are
used are FIFO, LIFO and Average Cost. The
valuation ratios can be dramatically affected
depending on the inventory valuation that is
being used over a long-term period; especially
because prices are likely to rise. When using
FIFO you can increase net income, but then at
the same time raise the amount taxes that
business is obligated to pay. When using LIFO
the inventory can be obsolete because they are
old this will result in lower net revenue because
the products pricing is higher. The Average Cost
results usually fall between LIFO and FIFO. The
bottom line can be affected mainly by the
inventory analysis and the ratio results that are
formed from that analysis. It is easier to compare
companies that are in the same line of business,
so I believe that quality of results would differ
tremendously if different valuation methods
were used. If you use LIFO that company may
seem unattractive but they are performing well,
as for FIFO it may look good as for profit, but
may not be performing well.
DQ 2
Week 7 DQ 2
Due Thursday, Day 4
Post your answer to Study Question 5.6 on p.
180 (Ch. 5). Discuss the consequences of poor
quality reporting. What has the U.S. government
done to improve the quality of reporting after
recent financial scandals such as Enron?
I think that the significance is that the analysts

only see this one HUGE transaction. The events
that actually led up to this large transaction
actually took place over a 2 year period. These
items should have been written off as they
occurred. Wall Street would not have known that
the executives refused to write off these
accounts when they should have. Wall Street
only see's the one large transaction. If the
company would have been more honest in their
reporting they would have seen (more than
likely) that there were many accounts over a two
year period that should have been written off at
different periods. So the analysts would not
have seen a pattern of recurring write-offs. If
the analysts only see the one transaction they
are less likely to be able to paint an accurate
picture of the financial standing of the business
for investors, or potential investors. If the
investors could see that there were many
accounts that had to be written off maybe their
investing decisions would have been different.
The regulation of the accounting field has grown
by leaps and bounds since the Enron scandal.
The government has implemented several
agencies and regulations to ensure honesty in
accounting practices. SOX is one example of an
agency that has been put into place to ensure
honesty in accounting. SOX implements things
like internal controls, and accountability for
CEO's and CFO's.
Response 2
I believe the impact and importance of this write-
off event is a very big matter. It is obvious how
they handled it that it was a scandal from the
start. I think that everyone involved had a big
role in how things played out. To me I think of
the investors as a really big hit to this but also
feel that audit committees have to be held
responsible as well. It has been shown over
many examples that adit oversights are
happening to financial reporting. Although I do
feel they are getting better and tighter due to
conforming tightly with the GAAP requests. I
feel over time the accounts receivable should
have been written off in smaller increments and
not all taken by $405 million at once. Maybe that
isn't correct but it would have been easier I
would think to take the receivables over time.
Response 3
Wall Street should have read the footnotes and
seen that the write off was for accounts
receivables and should have been reported in the
allowance for doubtful accounts. Every company
that allow sales on credit face doubtful accounts;
therefore, the write off may reoccur. The
significance of this transaction is that WorldCom
want to cover up the $405 million dollars that it
was unable to collect from its customers, but
WorldCom wrote off a large sum of money rather
recording the write-off as needed and the
analyst over looked it. Depending on how the
company policy is for writing off accounts, from
1998 to the 3rd quarter in 2000 is 11 quarters. If
the company wrote off bad accounts quarterly it
should have wrote off 36,818,181.82 per quarter.
Investors would not want to continue to invest
into a company that has poor collection skills, or
poor management. Unusual items are simply for
those items that are not recurring operating
expenses. Bad debts do not fall under this
category. Since the Enron and WorldCom
scandals many rules and regulations have been
put in place by the government such as SOX.
More people are being held accountable for their
actions and consequences follow poor quality
reporting such as fudging the books.
------------------------------------------------------------------
ACC 291 WEEK 4 Stockholders Equity Section of the

Balance Sheet (Lachlin Corporation Balance Sheet)
Presenting to Stakeholders
Presenting to Stakeholders
Financial statements provide insight into the
companys current status and lead to the development
of policies and strategies for the future (Axia, 2007).
Financial statements and notes to the financial
statements should be used to analyze the company.
For instance, what do the financial statements reveal
about why the company has requested a loan or
purchased items on credit? What is the firms capital
structure and what does the firm have outstanding?
How well can the company pay back debt? What
recourses are used to pay debt? What is the companys
performance record and are there any future
expansions? What are the expected returns and how
successful is the company compared to industry
averages? Which areas of operations contributed to the
companys success, and what are the strengths and
weaknesses of the company? What changes can be
made to improve the future performance of the
company?
Key financial ratios will assist in determining the
information requested. Liquid ratios measure a firms
ability to meet cash needs as they arise. The current
ratio is a good tool to use because it measures the
ability the firm has to pay debts when due. The current
ratio for REC is at 2.4 times for 2007, although it is
down from 2006 the company is still able to pay
current debt when due. Cash flow ratio considers cash
flow from operating activities has increased from 2006,
and this indicates an improvement in short-run
solvency. Average collection period has gone down 5
days within the last year. The cash conversion cycle
gives in-site on why the cash flow has improved or
decreased, in this case the conversion period for REC
has improved by 26 days.
Activity ratios measure the liquidity of specific assets

and the efficiency of managing assets. Accounts
payable turnover is up seven times from the prior year
and inventory turnover is also up .25 from last year.
Accounts payable turnover is down 9.05 from 12.10 in
2006. This means that the company is taking longer to
repay payables. The fixed asset turnover and total
asset turnover ratios are used to assess managements
skills in generating sales from investments in assets.
The fixed asset turnover has dropped slightly, but the
total asset turnover has risen slightly. The increase in
total asset turnover comes from improvements in
inventory and accounts receivable turnover.
Leverage ratios measure the extent of a firms
financings with debt relative to equity and its ability to
cover interest and other fixed charges (Axia, 2007).
Debt ratio, long-term debt to total capitalization and
dept to equity have all raised slightly implying a slightly
riskier capital structure. The times interest earned and
the cash interest coverage have increased since 2006.
The interest payments can be covered 7.4 times this
year. The cash interest has improved due to the
operating profits and cash from operations. The fixed
coverage ratio is also important in cases where
companies use operating leases. In this case, the fixed
charges have increased slightly.
Profitability ratios are used to measure the overall
performance of a firm and its efficiency in managing
assets, liabilities, and equity. The ratios used are the
gross profit margin, operating profit margin and net
profit margin. All of which have improved for REC. As
well as the cash flow margin, return on total assets,
return on equity and cash return on assets. Over all the
company seems to be in well financial standings and
looking toward a profitable year.
Reference
Axia College. (2007). The Analysis of Financial
Statements. Retrieved June 28, 2010,
from Axia College, Week Eight, ACC 230.
------------------------------------------------------------------
ACC 291 Week 4 Wileyplus Assignment Do It! 11-1, E11-5,

E11-7, BYP11-1, BYP11-2, P11-5A, P11-8A (New)
Do It! 11-1, E11-5, E11-7, BYP11-1, BYP11-2,
P11-5A, P11-8A.
Do It! 11-1
Exercise 11-5 Garcia Corporation
Exercise 11-7 Pele Company
Broadening Your Perspective 11-1 Tootsie Roll

Analysis of Scenarios:
Debt Scenario would increase the debt ratios from to 50%. Equity Scenario
would reduce the debt ratio to 40%. With Debt option, earnings per share would
be higher. Interest declines to 2.86 times with the Debt option while times
interest earned increases to 3.75 times with the Equity option. Either option
exhibits a good use of financial leverage because for both, the financial leverage
index being greater than 1. However, it is higher using the Debt option.
------------------------------------------------------------------
Why do corporations buy back their own stock?
What does it tell you about the corporation?

Interpreting Financial Ratios
Luna Lighting, a retail firm, has experienced modest sales growth

over the past three years
but has had difficulty translating the expansion of sales into improved
profitability. Using
three years financial statements, you have developed the following

ratio calculations and
industry comparisons. Based on this information, suggest possible

reasons for Lunas profitability problems.
Industry
2009 2008 2007 2009
Current 2.3X 2.3X 2.2X 2.1X
Average collection period 45 days 46 days 47 days 50

days
Inventory turnover 8.3X 8.2X 8.1X 8.3X
Fixed asset turnover 2.7X 3.0X 3.3X 3.5X
Total asset turnover 1.1X 1.2X 1.3X 1.5X
Debt ratio 50% 50% 50% 54%

Times interest earned 8.1X 8.2X 8.1X 7.2X
Fixed charge coverage 4.0X 4.5X 5.5X 5.1X
Gross profit margin 43% 43% 43% 40%
Operating profit margin 6.3% 7.2% 8.0%

7.5%
Net profit margin 3.5% 4.0% 4.3%

4.2%
Return on assets 3.7% 5.0% 5.7%

6.4%
Return on equity 7.4% 9.9% 11.4%

11.8%
Based on this information, some possible reasons for Lunas

profitability problems are suggested as under:
a) Net Profit margin of the company has degraded and this might
be due to decrease in the net income of the company due to increase
in expenses. This needs to be improved upon by cost control and cost
reduction.
b) Return on equity of the company has degraded further and this

also indicates that there is a decrease in the net income of the
company due to increase in expenses. This needs to be improved upon
by cost control and cost reduction.
c) Fixed charge coverage has fallen, which means that the debt
payment along with interest might have increased and this will also
lead to decrease in the net income of the company and thus degrading
the profitability position of the company.
d) Operating profit margin has dropped even though gross profit
margin has remained constant. It means that the operating expenses
are higher and need to e controlled to improve the profitability of the
company.
e) The fixed assets turnover and the return on assets have also
degraded; this also indicates decrease in the net income of the
company.
------------------------------------------------------------------
ACC 291 Week 5 Individual Effect of Unethical Behavior

Article Analysis
Write a 350- to 700-word article analysis in which you
identify situations that might lead to unethical
practices and behavior in accounting.
Capstone Discussion Question

Due Tuesday, Day 2
What have you learned in this course

about the process of analyzing financial
statements?
I have learned that there is a lot more to
analyzing financial statements than I thought.
This class has made me question my decision to
go into the accounting field. I feel inadequate
after taking this class. I am not an articulate, or
analytical person. I tend to get confused easily
and do better at putting the information
together than I am at figuring out what it all
means. This is my last block of classes before
my Bachelor program starts, and I don't know if I
am ready, or if I even want to continue.
Analyzing financial statements takes a very
detail oriented mind, and one that is great at
problem solving. It is critical to understand the
financial statements, and how they relate to one
another. There is a lot of information that is not
as obvious as it would seem. Looking at the
bottom line will not give a good picture of how a
company is doing financially. It is important to
know the how and why the bottom line looks the
way that it does.
Response 2
I have learned that it takes someone that has the
patience, tenacity, and motivation to truly
analyze the statements. If you go about it not
wanting to do the work you wont give a good
analysis. I found that you have to be willing to
dig deeper than most would to get a full picture
of the company. I found that it is not an easy
task to complete. For me the process is a tedious
one. I don't think I would want to go into that
type of accounting where I have to analyze the
statements of a company. I think for me I would
be better in specialized accounting like A/P or
A/R. I am better at figuring out problems and
figuring out ways to make them better. I am
better at specific tasks so for me I wouldn't want
to analyze the statements. I am glad to have
learned how, because at some point I am sure it
will come in handy.
Response 3
All financial statements are essential documents
because they tell what has happened to a
business over a period of time but most users of
financial statement are more concerned about
what will happen in the future. Stockholders and
creditors are concerned with future earnings
and dividends and company's future ability to
repay its debts. Management is concerned with
the company's ability to finance future
expansion.
Working as a bookkeeper I do all the steps in
monthly cycles consisting of entering
transactions into the journals, working with A/R,
A/P, payroll and preparing the reports, but I have
not been able to analyze the reports the way I
learned in this class. I learned how important is
to monitor and interpret the results. I learned
how to compare financial statements of a
company with a company from the same industry
and point out the differences and similarities.
This class taught me the importance of analyzing
the Income Statement, Balance Sheet, Cash Flow
Statement and Stockholders Equity each one
individually. I learned how essential is the quality
reporting and how useful this quality is in
business decision making. I learned about key
financial ratios: liquidity ratios, activity ratios,
leverage ratios, and profitability ratios. All these
ratios are valuable as analytical tools and will
help me indicate the areas of strength and
weakness in a business. Even though I learned
the information step by step in this class I tent
to go over every single chapter all over again to
better absorb the material. This class taught us
the potential of some management
manipulations of financial statements, thus
following the general accounting rules, being
honest, ethical and professional are the ways on
leading to safe and profitable decisions.
------------------------------------------------------------------
ACC 291 Week 5 Individual WileyPLUSAssignment
we have another New set of week 5 Willyplus assignment which
ACC 291 Week 5 Wileyplus Assignment E7-3, E12-1, E12-8, P12-

9A, P12-10A, E13-3, E13-4, IFRS13-1, P13-2A (New)
Resource:WileyPLUS
Complete the following Week Five WileyPLUSExercises and

Problems:
Evaluating Financial Health 1
Evaluating Financial Health
Apple Inc. (AAPL)
Apple Inc. (AAPL)
Apple is one of the strong market participants of

computer industry. It also involve in manufacturing
of telecom devices, software and other
peripherals. It enjoys full advantage of USA as
home country, as it has a strong retail network of
273 physical stores whose majority is in USA,
beside the E-retail outlet around the globe. The
diversified product portfolio empowers the apple to
strive in tough competition against Dell, HP &
Compaq (Electronista, 2010). Amongst its
competitor Apples outclass profitability is
witnessed of its effective diversification efficient
reach of product to customer and state of an art
Research and Development.
Managements Strategy
It is clear from the financial and the strategic

analysis of the Apple Inc. that the management of
the company believes in continued research,
innovation and product development. It may be
the sole reason that why the firm avoids the cash
dividend and rely over the stock options. Besides
the hardware business of computer the apple is
also focus on developing application software
operating system, and all such software
application which added the value of its product.
The management is of the view that R&D,
integrated marketing channels and its product
diversification is the source of competitive edge
against rivals of its industry. Management is aware
of the need of the investment in the promotion and
advertisement activities; it increases the brand
equity, brand loyalty and awareness about the
products. Management also considers focusing on
the retail store as it is the source to remain in
contact with customer and a way to market the
product directly; it is also a way to cross sell the
market to customer.
Financial returns in Comparison to Industry

An investor is always keen to know about the
profitability. Hence we start with the assessment of
profitability. Apple Inc. has shown a tremendous
improvement in net sales and profitability since
2005 to 2009. In 2008 the net income increases
75.07% and in 2009 increases 34.58% shown that
Apple cop. is continuously enhancing its profit.
Company earning P\S is also at increasing trend. In
2009 basic EPS is 9.22 from 6.94 last year, and it
was 4.04 in 2007. It should be noted that no cash
dividend is announced since 2005, although stock
base benefit and compensation is given. An
increase in return on asset has been observed in
2009 i.e.26.96% against 19.33% last year while
industries average is 19.8. Hence Apple is leading
the Industry from this angle. Return on equity is
18.92% into 2009 lower than 33.40% of industry
benchmark, meaning apple is at lower leverage
with a roe increase of 4.03% this year (Hardware
Marketplace, 2010).
Financial Risk and Industry
At this stage of our analysis we extend our findings

to assessment of risk associated with the
investment opportunities in APPLE Inc. Analyzing
the liquidity we observed that Apple has a sound
ability to meet its short term obligation. It is
revealed by the healthy current ratio of 2.74 for
the year 2009; it is improved from 2.46 of the last
year 2008. If we had a glace on the industry it
reflects a standard of 2.5. In the computer
equipment industry a very low inventory has been
observed. That is why the acid test ratio fall lightly
below the current ratio i.e. acid test ratio is 2.70
for the year 209 in comparison to 2008, which
were 2.43. If we compare the acid test of 2009 i.e.
2.70 with industry average, which is 2.5 (msn.com,
2010). On the liquidity
situation it is stated that the risk avoider will be

glad to look at the satisfactory liquidity position.
As far as the solvency risk is concern in the

long run the debt equity ratio is 0.11 for the year
2009, which is increased from 0.08 of 2008. Here it
is important to refer to the industry average of
0.07 (OnlyHardwareBlog, 2010). Hence it is
apparent that though the APPLE Inc. is more risky
in the long run, but it does not sound like the
alarm.
Cash Flow Analysis
Due to the increase in sale the operation of

the firm expanded, and hence besides other
assets, the requirement of the cash also increases
in 2009. $1.11 billion is generated from operations,
which is 5.87% higher than the last year. The
deferred tax expense in 2009 is v1040 million this
noon cash expense last year it was 39 million and
78 million in 2007 (Electronista, 2010).
The company actively invests in marketable

securities that not only improve its liquidity, but
rather give a room to meet hazardous need of raw
inventory at any point of time. Investing activities
gives negative balance $ 17.434 billion. It is also
clear from the cash flow that firm does not
announce any dividend in cash, rather it takes a
tax benefit form stock base benefit; secondly, firm
keeps healthy cash in hand.
Apple and its Main Competitor
When comparing the Apple with its major

competitor like Dell & HP, Apple marks higher price
earning ratio of 19.10 times that is greater than
Dell and HP, which is 16 times and
18.3 times respectively. We analyze the share

price to book value it is 5.71 times; again higher
than 4.1 times of Dell and 1.38 times of HP. Cause
of higher market price is the retention of profit and
stock base benefits. Apple also has high
capitalization; the date is $ 250.0 billion
(Electronista, 2010).
Apples Performance and Economy
Global economic recession is on the way to

recovery, although Europe and America needs
some more time to normalize. However,
reasonable growth is observed in emerging market
like Brazil, Malaysia, India and China. Triad block
recorded a poor growth. What is going to be with
the world economic outlook is the global economy
is going to revive with the V shape pattern or its
recovery would be like expanded U as some
economist say growth will be slow. I am of the view
that Apple Inc. should more focus on the emerging
market like India, China, South Pacific region
countries. So Apple needs to exploit more and
more opportunities outside the USA. I am
optimistic that the idea of direct marketing will
work out side the USA as well. Hence Apple needs
to introduce maximum retail store outside the
USA.
It is important to look at trend analysis and

industry comparisons as a means of determining if
it is the best time to expand or stay put and to see
how its future products will be accepted by the
public.
References
Electronista. (2010). Apple only US computer

builder to outgrow industry average. Retrieved
July 2, 2010, from

http://www.electronista.com/articles/10/06/04/isup
pli.sees.apple.at.34pc.world.market.share/
Hardware Marketplace. (2010). Computer

Hardware. Retrieved July 2, 2010 from
http://www.hardwaremarketplace.com/computer-
hardware/
msn.com. (2010). Apple Inc: Key Ratios. Retrieved

July 2, 2010 from
http://moneycentral.msn.com/investor/invsub/resul
ts/compare.asp?Page=PriceRatios&Sy
mbol=AAPL
OnlyHarwareBlog. (2010). Highest debt to equity

ratio in the computer hardware industry
detected in shares of international business

machines. Retrieved July 2, 2010 from
http://onlyhardwareblog.com/?p=2107
------------------------------------------------------------------
ACC 291 Week 5 Learning Team Ratio Analysis Memo
Resource:Virtual Organizations
Click the Virtual Organization link on the student
website to access the Virtual Organizations.
Select one of the Virtual Organizations as the basis for
the assignment.
Financial Analysis
Wal-Mart Stores Incorporated operates chain of

retail stores in USA as well as outside the USA.
The first Wal-Mart store was opened by Sam
Walton in Arkansas in USA in 1962. Within a
span of five years; he opened more stores and he
number increased to 24 stores across Arkansas.
The incorporation of Wal-Mart Stores
Incorporated was done in 1969. Wal-Mart grew in
the United States of America by opening of more
stores in to the country. The company not only
opened the stores across Arkansas but also
across the United States of America (Wal-Mart
Corporate, 2010).
Wal-Mart was opposed by the unorganized retail
business holders in the USA as their business
was affected by opening Wal-Mart stores. The
company also opened its first store outside the
USA in South America in 1995. Wal-Mart wanted
to spread itself not only to the USA, but in other
countries as well. In 2006, the company was
having 3800 stores in USA and more than 2980
stores outside USA making it one of the largest
retail chains in the world. This corporation was
also having a vision to establish itself in to a
global entity. Wal-Mart was one of the first
companies to operate in the organized retail
sector (Fishman, 2006). The modes of entry
used by the company were different for different
countries. Wal-Mart used the mode of entry in to
various countries according to the rules and
regulations prevailing in to that country (Wal-
Mart Stores Inc: Financial Statement, 2010).
The sales of the company for the financial year
ending in January 2010 are 413.8 billion dollars
and income for the same period is 14.7 billion
dollars. The quarterly sales growth for the
company has been 5.90%, while the industry
average is 6.80 %. The five-year annual growth
in the sales of the company has been recorded at
7.50 % while five year annual growth of income
is 6.58 %. By analyzing the financial statements
of WalMart Incorporated, we find that debt
equity ratio of Wal-Mart is 0.71 on 31st January
2010, which is 0.68 for the industry. It means
the proportion of debt of the company in its
capital structure is lesser than the equity. The
company is less leveraged so the interest burden
on the company is minimal. Wal-Mart has
capacity to borrow from the market for its CAPEX
in the future. The interest coverage ratio is 13
times in January 2010, which is 21.9 for the
industry. Wal-Mart needs to improve profitability
to improve interest coverage ratio for the
reduction of risk of the lenders of the company
(Wal-Mart Stores Inc: Financial Statement, 2010).
The total revenues received by the organization
in the year ending January 2010 were $408.2
billion whereas revenues in the year ending
January 2009 were $404.3 billion dollars. The
revenues in the year ending January 2008 stood
at $377 billion dollars. Thus, it can be easily
analyzed that the total revenues of the
organization has grown over the years steadily.
This has also impacted the net income of the
organization and thus, increments could also be
seen in the net income of the organization. Net
Income, which stood in the year ending 2008 at
$12.7 billion, increased to $13.4 billion for the
year ending 2009 and again increased to $14.3
billion in the year ending 2010 (Wal-Mart Stores
Inc: Financial Statement, 2010).
Again if cash flow statement of the organization
is analyzed it can easily be viewed that the cash
flow from operating activities have always
increased from the last three years. The cash
flow from operating activities stood at $20.6
billion in the year ending 2008 has increased to
$23.1 billion for the year ending 2009 and too
further increased to $26.2 billion for the year
ending 2010. But the cash flow from investing
and financing activities has seen positive and
negative fluctuations both. Here where net cash
outflow from investing activities has decreased
first and increased later again. For the year
ending 2008, it stood at $15.6 billion which
decreased to $10.7 billion but again increased to
$11.6 billion. Again the net cash outflow from
financing activities increased constantly since at
the end of year 2008, it stood at $7.4 billion
which further for the year ending 2009 increased
to $9.9 billion and further increased to $14.1
billion for the year ending 2010 (Wal-Mart Stores
Inc: Financial Statement, 2010).
Wal-Marts return on equity has improved in the
last three years, which is a good sign for the
shareholders of the company. It was 19.9% in
January 2008, which increased to 20.3 % in 2009
and then again marginally increased to 20.4 % in
2010. The return on asset has also shown the
same trends in the last three years. In 2008 the
return on asset was 7.9 %. It increased to 8.1 %
in 2009 and then further increased to 8.4 % in
2010. It shows the increase in the efficiency in
the utilization of the assets of the company. The
net profit margins have been almost the same in
the last three years in the company. It was 3.4 %
in 2008, 3.3 % in 2009 and 3.5 % in 2010 (Wal-
Mart Stores Inc: Financial Statement, 2010).
The price to sales ratio and price to book value
ratio have shown negative trends in the last
three years, which shows that the stock of the
company is available at cheap price as compare
to the price it was carrying three years back. The
price to sales ratio, which was 0.55 in 2008, was
decreased to 0.46 in 2009 and then improved to
0.51 in 2010. Similarly, price to book value ratio
reduced from 3.12 in 2008 to 2.83 in 2009 and
then improved marginally to 2.86 in 2010. This
represents the better opportunity available for
the shareholders to invest in to the stock of the
company. The book value per share of the
company has also increased in the last three
years. It was 16.26 dollars per share in 2008,
which increased to 16.63 dollars per share in
2009 and further improved to 18.69 dollars per
share in 2010. This represents the increase in
the retained earnings of the shareholders in the
company (Shim & Siegel, 2007).
Wal-Marts current assets level has shown
stability in the last three years for the company,
which shows the lesser investment in current
assets for the company even with the increased
sales. In 2008 the cash and marketable securities
available with the company was 48020 million
dollars, which increased to 48949 million dollars
in 2009 and then decreased to 48331 million
dollars in 2010.
Quantitative Analysis holds huge significance
while evaluating the financial health of the
organization. Three types of techniques are used
for quantitative analysis. The three techniques
are trend analysis, common-size analysis and
ratio analysis. Trend analysis is one of the
significant quantitative analysis tools that assist
in analyzing the financial health of the company
as compared to its previous years. The year on
year trends in the financial statements are
studied to analyze whether organization is
improving upon its past performance or it is
further going down (Brigham & Houston, 2007).
Common-Size analysis is another quantitive
analysis tool again one of another tool that helps
in making evaluation of the financial health of
the company as against its competitors. The
financial statements of the company and its
industry competitors are compared by taking a
common base and then performance is analyzed
as against the competitors. It helps in knowing
whether the organization is performing better
than its competitors or not. Ratio analysis is also
used to evaluate the financial statements of an
organization. This analysis is used to interpret
the performance shown in the financial
statements of the organization. The ratio
analysis helps the organization compare
performance over the years or in the same year
(Brigham & Houston, 2007).
Quantitative Analysis is used by the company
and its stakeholders to analyze the financial
performance of the organization. Trend analysis
is used by the company, the shareholders and
the investors to analyze the performance of the
company over the years. Common-Size analysis
is used by the competitors, management, and
investors to evaluate the organization that is
performing better whereas ratio analysis is used
specifically by all the stakeholders to interpret
clear and well defined results shown in the
financial statements of the company (Brigham &
Houston, 2007).
These techniques help to evaluate the liquidity
or short-term solvency. By using current ratio,
one can analyze the effectiveness of the liquidity
position of the organization. Profitability of the
organization is also analyzed through
profitability ratios, common-size analysis, as it
helps to know the organizations profits earned
by the company as compared to others. Trend
analysis and ratio analysis with the help of
different asset turnover ratios and trends could
easily analyze that assets are effectively used or
not (Brigham & Houston, 2007).
Wal-Marts current stock price is 50.56 dollars.
The stock has gone up as high as 56.27 dollars,
and as low as 47.35 dollars in the last year. The
earnings per share of the company which was
3.16 dollars per share in 2008, was increased to
3.35 dollars in 2009. Earnings per share further
increased to 3.76 dollars in 2010. The analysis
shows the improvement in the earnings of the
company in the last three year. The current price
earnings ratio of the company is 13.2 which is
less than the industry average of P/E ratio of 15
times (Wal-Mart Stores Inc (WMT), 2010).
Analyzing the stock of the company from the
investment point of view, we can estimates that
the fundamentals of the company are very
strong. The stock has return on equity, return on
assets better than the industry average of 22.9
% and 9.1 % respectively. The company has given
a better annual average return on asset and
return on equity in the last five years as
compared to the industry. The company has a
debt equity ratio and net profit margin, which is
less than the industry. However, Wal-Mart is
improving on the efficiency front. As a result,
Wal-Mart stock is recommended for investment.
References
Brigham, E.F. & Houston, J.F. (2007).
Fundamentals of Financial Management. (11th
ed.). Cengage Learning.
Fishman, C. (2006). The Wal-Mart Effect: How the
World Most Powerful Company Really Works--
and How it's Transforming the American
Economy. Penguin Group
Shim, J.K. & Siegel, J.G. (2007). Schaum's Outline
of Financial Management. (3rd ed.). McGraw-Hill
Professional.
Wal-Mart Corporate. (2010). History. Retrieved
July 25, 2010 from
http://walmartstores.com/AboutUs/297.aspx
Wal-Mart Stores Inc: Financial Statement (2010).
Retrieved May 31, 2010, from
http://moneycentral.msn.com/investor/invsub/res
ults/statemnt.aspx?Symbol=WMT
Wal-Mart Stores Inc. (WMT) (2010). Retrieved
May 31, 2010, from
http://finance.yahoo.com/q/co?
s=WMT+Competitors
------------------------------------------------------------------
Discuss the objectives for Week Five. Your discussion
For this week's checkpoint we had to look up

three job postings in the field of accounting. I'm
glad that I got this opportunity because it
actually opened my eyes and expanded my
knowledge in the accounting field. The three job
positions are listed below. The first job title was
Senior Internal Auditor. A Senior Internal Auditor
responsibilities is to plan and perform financial,
operational audits, and identify business process
risk. This job position only specified that the pay
was well over 100k a year!!!! Qualifications
BA/BS, and minimum of 3-4 years public
accounting. The second job posting was a Tax
Manager. Tax Manager is responsible for
conducting basic tax research, maintain tax
records and ensure proper tax accounting. This
position requires a BA in Accounting, and a
minimum of 7-8 years of expereience.The job pay
is listed as 120k!!! The third job posting was
Assistant Corporate Controller- SR Management.
Assistant Corporate Controller- SR Management
position Inventory Accounting for North America,
Credit management for North America and
Corporate accounting for Latin America,
responsible for assuring accuracy of inventory
and sales and works closely with external
auditors on receivable audits. The requirements
for this position is as follows, BA/BS, public
accounting experience preferred, Strong verbal
and written communication. For the Assistant
Corporate Controller- SR Management the salary
pay starts at 110k-130k with bonus and benefits.
I didn't know that Accounting career actually

paid this much. I might think about changing my
careers.

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