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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
march 19,2010
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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?
Accounting plays many important roles especially when
it comes to business operations. Accounting is mainly
responsible for almost all of the financial needs of the
business. It keeps track of all spending, profit and loss
that the company inquires.
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:
Net Income
$1,300,000
$1,250,000
$1,200,000
$1,150,000 Net Income
$1,100,000
$1,050,000
$1,000,000
$950,000
2006 2007 2008
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:
Debt ratio as percent of total asset

55.80%
55.70%
55.60%
55.50% Debt ratio as percent
55.40% of total asset
55.30%
55.20%
55.10%
55.00%
54.90%
2007 2008
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:

Debt as percent of total equity
127.00%
126.50%
126.00%
125.50% Debt as percent of
125.00% total equity
124.50%
124.00%
123.50%
123.00%
122.50%
2007 2008
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 Final Exam Guide
we have another New set of Final Exam Guide which could be found
on this link
Financial Statements
Today, I will be describing a balance sheet, income statement,
retained earnings statement, and statement of cash flows and how a
company uses these financial statements as a tool to make future
decisions for the company.
Balance Sheet
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.
Statements
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 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 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.
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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
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.
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ACC 291 Week 1 Discussion Question 1
How would you describe the entries to record the disposition of
accounts receivables?
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.
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How are bad debts accounted for under the direct write-off method?
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/dividendpayoutrat
io.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&submi
t=Search
-----------------------------------------------------
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

STOCK DIVIDEND
Stock Split
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.
-----------------------------------------------------
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.
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.
-----------------------------------------------------
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: 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.
-----------------------------------------------------
What are the differences among valuation, depreciation, amortization,
and depletion?
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.
-----------------------------------------------------
What types of industries have unearned revenue?
Why is unearned revenue considered a liability?
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.
? -----------------------------------------------------
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:

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
STARBUC HARELY
KS 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

Net Cash - Beginning
Balance 402.85 238.40 140.98
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
Net Cash - Beginning Balance 106.15 76.07 162.82
(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 c
The net loss in cash at end of year is decreasing from the previous year. This could mean th
Harley Davidson's operating cash flow has significantly decreased from 2007. It appears the
activities is probable from the lack of information supplied for net income. With the econom
the net income is decreasing. With a bounced back economy in the coming year could refle
Rite Aid's operating cash flow has taken a significant decrease as well from previous years.
in cash is better than it has been in previous years. Rite Aids net gain in cash could be from
the company.
-----------------------------------------------------
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 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.
-----------------------------------------------------
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.
Lucent Technologies
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.
-----------------------------------------------------
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

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.

-----------------------------------------------------
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
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 does a company choose to form as a corporation?
What are the steps required to become a corporation?
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
-----------------------------------------------------
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?
STOCK DIVIDEND
Stock Split
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.
-----------------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Assignment
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.
-----------------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Practice Quiz Ch.

11,12
Resource:WileyPLUS
Complete the WileyPLUS Week Three Practice Quizzes
for chapters 11 and 12.
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.
-----------------------------------------------------

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.
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.
-----------------------------------------------------
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
Exercise 10-24: Nance, Co.

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.

-----------------------------------------------------
Why are companies required to prepare a statement of cash flows?
Why is the statement of cash flows divided into three sections?
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
-----------------------------------------------------
What are some common ratios used to analyze financial information?
Which are the most important?

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.
-----------------------------------------------------
ACC 291 Week 4 Individual WileyPLUS Assignment
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 IndividualWileyPLUS Practice
Resource:WileyPLUS
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.
-----------------------------------------------------
Discuss the objectives for Week Four. Your discussion
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.
-----------------------------------------------------
ACC 291 WEEK 4 Stockholders Equity Section of the

Balance Sheet (Lachlin Corporation Balance Sheet)
is to help you become familiar with examining the
stockholders' equity section of the balance sheet.
Assignment Steps Resources: Financial Accounting:
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 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

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.
-----------------------------------------------------

Why do corporations buy back their own stock?
What does it tell you about the corporation?
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/isuppli.sees.apple.at.34
pc.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/results/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 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.
Examine the effect of the Sarbanes-Oxley Act of 2002

on financial statements.
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 Wal
Mart 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/results/st
atemnt.aspx?Symbol=WMT
Wal-Mart Stores Inc. (WMT) (2010). Retrieved May 31,
2010, from http://finance.yahoo.com/q/co?
s=WMT+Competitors
-----------------------------------------------------
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)
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.
-----------------------------------------------------
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.
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?
Accounting plays many important roles especially
when it comes to business operations.
Accounting is mainly responsible for almost all of
the financial needs of the business. It keeps
track of all spending, profit and loss that the
company inquires.
The business is very dependent on it accounting
department. Accounting department is
responsible for monitoring more than the cash
flow, it also works closely with IRS, government
to make sure that everything is being done
correctly (payroll, taxes, etc). The accounting
side of the business can be considered to be the
lungs of the company next to the heart.
Why are ethics so important in the field of

accounting?
Wow where should I start? First of all the when
dealing with accounting there must be consistent
clear communication between the business and
the accounting department. Honesty is always
the best policy. Good ethnics keeps the business
running at its top level. The company's personal
information, employee information could be
given to the wrong hands and it can destroy the
company. A good accounting department has
way too much to lose and they will not want to
risk a horrible reputation in the field.
Another response
People bring all their financial information to an
accountant who in turn looks through all of it
with a fine tooth comb. People need to know
that they can trust this person with all of their
personal information. Most licensed
professionals swear to a code of ethics, whether
they follow them or not is up to that
professional. Unfortunately there are many out
there that do not and they ruin the trust for
other professionals. Accountants really need to
have the trust of their clients being that they
work with peoples taxes and finances and need
much information from their clients.
Another response
Ethics are important in the field of accounting for
several reasons. Ethics mean different things to
differnt depending on the role of the accountant.
If an accountant is hired by an individual or a
business, that accountant is trusted with the
finances of the person or business. The
accountant is trusted to give an honest account
of finances and not to defraud or jeopardize that
individuals or companies relationship with the
government, creditors of financiers. Individuals
and businesses also trust the ethics of
accountants insofar that they do not disclose
their information to those that do not have a
right to it. Finally, In the accounting profession,
much like many other professional service
professions, an accountants reputation is the
continuing source of employment. If they are
knows to have a bad or even flexible ethical code
then they can develop a bad reputation and
experience a loss of business.
-----------------------------------------------------
Discuss the objectives for Week Five. Your discussion
Financial Statements
Today, I will be describing a balance sheet,

income statement, retained earnings statement,
and statement of cash flows and how a company
uses these financial statements as a tool to make
future decisions for the company.
Balance Sheet
A balance sheet a statement sheet that reports
the companys financial balances of the
business. This sheet includes the companys
total of assets and liabilities. It is used for all
three types of business sole proprietorship,
business partnership and corporate business
companys. Creditors rely on this financial sheet
to determine if the company will be able to
repay.
Income Statement
An Income Statement is a financial statement
that shows the companys profit and losses. It
basically shows all the companys gains and
losses that were made during a period of time.
After the company deducts the expenses from
the revenue then you will get a total net income.
This is a great statement to use especially
because this will show investors how much net
income is the company bringing in, or how
financially stable the company truly is.
Retained Earnings Statements
Retained Earnings Statements reports the
changes to the retained earnings (net income in
a corporation) during a certain time period. This
financial statement shows dividends, profits and
loses. Investors and Lenders monitor the
retained Earning Statements especially when it
comes to monitoring dividends. Some invest use
this tool to see if the company is paying high/low
dividends. Retained Earnings Statement is part
of the balance sheet under Stockholders equity.
Statement of Cash Flow

Statement of Cash Flows provides information
regarding the companys cash receipts. This
statement gives a detailed account of the
operating, investing and financial activities of
the company. It also allows investors a chance to
observe how financially stable the company is so
that they can make a choice if they want to take
a risk on investing into the company. Also the
accounting department needs this statement in
order to see if the company has enough money
for payroll uses.
All four of these financial statements are all
extremely important tools to use in the business.
Another statement that was not listed but is
often used is called comparative statements.
Comparative statement gives a side by side
comparison of the financial statements above.
Reference
http:yourdictionary.com
/accounting_statements.org Retrieved 1/28/10
Thomas, Y. 2005-08-27 Accounting 101 pg. 52
Statements

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ACC 291 Entire Course and Final Guide

FOR MORE CLASSES VISIT

ACC 291 is a online tutorial store we provides ACC 291

The accounting plays a major role in establishing my company DestinyWear. The

DestinyWear Accounting Staff

DestinyWear Accounting Management Team

The DestinyWear accounting management team will be reporting to me and to the

//http:yourdictionary.com /CVP.org Retrieved 3/20/2010

Thomas, Y. 2005-08-27 Accounting 101 pg. 52

ACC 291 Final Exam Guide (New)

FOR MORE CLASSES VISIT

Based on what you know about accounting, what role

it comes to business operations. Accounting is mainly

responsible for almost all of the financial needs of the

business. It keeps track of all spending, profit and loss

that the company inquires.

Costco Wholesale Corporation

company is financially strong. Its strength are:

reduce its expenses.

the short term investment i.e. in non operating activity.

Debt ratio as a percentage of total assets:

Debt ratio as percent of total asset

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:

correct anything for the company.

ACC 291 Final Exam Guide

FOR MORE CLASSES VISIT

Due Tuesday, Day 2

Go to the U.S. Securities and Exchange Commissions Web site at

According to the SEC website their mission is to protect investors,

According to the FASB website the mission of the FASB is to establish

Go to the U.S. Securities and Exchange Commissions Web site at

U.S. Securities and Exchange Commission (SEC)

According to the SECs website The mission of the U.S. Securities

Financial Accounting Standards Board (FASB)

According to the FASBs website The mission of the FASB is to

The main activities of the FASB are to identify financial reporting

Financial Accounting Standards Board. (n.d.). Facts about FASB.

U.S. Securities and Exchange Commission. (2010, May 3). The

Due Thursday, Day 4

The Sarbanes-Oxley act has many provisions to give companies

Another provision pertains to the "management assessment of

The Sarbanes-Oxley act is designed to help companies promote

The law prohibits falsifying information, failing to notify of material

ACC 291 Final Exam Guide

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IFRS Multiple Choice Question 01 Lucent Technologies

Axia College of University of Phoenix

Lucent Technologies is a company based on networking for service

After changing the balance sheet to a common-size balance sheet

After reviewing this information, a creditor or investor must be able

Axia College. (2007). Understanding Financial Statements. Retrieved

ACC 291 Week 1 Assignment Comparative Analysis Problem

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Differentiating Depreciation Methods

There is one main difference between straight line

ACC 291 Week 1 Discussion Question 1

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Preparing an Income Statement

ACC 291 Week 1 Discussion Question 2

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Due Tuesday, Day 2