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ACCT 504 Case Study 1 (Gordon Construction)
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Case Study 1 (Part A)Analyze the impact of business
transactions on accounts; record (journalize and post)
transactions in the books; construct and use a trial
balance) During the first month of operation of Gordon
Construction, Inc., completed the following
transactions:
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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ACCT 504 Case Study 2 (Williams Oil)

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Case study (Learning Objectives 2, 4: Explain the
components of internal control; evaluate internal
controls) Each of the following situations reveals an
internal control weakness: Situation a. In evaluating the
internal control over inventory for the Williams Oil
Services Company, an auditor learns that the
warehouse receiving clerk is responsible for ordering
parts for supply inventory use in drilling services,
counts the inventory when received at the dock,
records the receipts into the inventory ledger, and
takes the annual inventory, No supervisor reviews the
receiving clerks work.
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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ACCT 504 Case Study 3 (Wang Appliance Store)
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Construct and use a cash budget) Nathan Farmer, chief
financial officer of Wang Appliance Store, is responsible
for the company?s budgeting process. Farmer?s staff is
preparing the Wang cash budget for 2014. A key input
to the budgeting process is last year?s statement of
cash flows, which follows (amounts in thousands):
Wang Appliance Store
Statement of Cash Flows
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/divi
dendpayoutratio.asp
Response 2
Explain what can be found on a statement of
stockholders equity.
The major elements of stockholders' equity include

capital stock, paid-in capital, retained earnings,
treasury stock, unrealized loss on long-term
investments, and foreign currency translation gains
and losses.
How might the information contained within the

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

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

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

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

Manufacturing Co. exaggerated in recording their
inventory value which allowed them in acquiring loans
from six banks totaling to about $130 million using it as
collateral. At the same time, they reported $3 million in
net income for the period, but in actuality they lost
$6.5 million.
This company showed a higher net income by reporting

fake inventory in which its value was overstated and
transferred over to their income statement. When the
banks assessed their financial statements, it was
enough to sway them into lending the loans they
needed.
Reference:
Investopedia. (2010). Spotting Creative Accounting On

The Balance Sheet. Retrieved
fromhttp://www.investopedia.com/search/searchresults.
aspx?
q=Spotting+Creative+Accounting+On+The+Balance+
Sheet&submit=Search
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ACCT 504 Course Project Analysis of Nike, Inc. and Under
Armour, Inc.
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Course Project: A Financial Statement Analysis A
Comparative Analysis of Nike, Inc. and Under Armour,
Inc. Below is the link for the financial statements for
Nike, Inc. for the fiscal year ending 2014. First, select
2014using the drop-down arrow labeled Year, and then
select Annual Filings using the drop-down arrow labeled
All. You should select the 10k dated 7/15/2014,and
choose to download in PDF, Word, or Excel format.
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.
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ACCT 504 Course Project Oracle and Microsoft Corporation

(Devry)
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Course Project
Financial Statement Analysis Project -- A Comparative Analysis of

Oracle Corporation and Microsoft Corporation
Here is the link for the financial statements for Oracle Corporation
for the fiscal year ending 2007. First, select 2007 using the drop-
down arrow labeled for Year on the right-hand side of the page, and
then select Annual Reports using the drop-down arrow labeled Filing
Type on the left-hand side of the page.
You should select the 10k dated 6/29/2007 and choose to download in
PDF, Word, or Excel format.
Analyzing an Income Statement
The net income of Kodak has decreased a bit; it appears that the
company is more profitable. By conducting a side by side analysis
from 2004 to 2003 the company has increased in current assets and
decreased in total assets. It appears that the company went down in
property, plant and equipment net as well as discontinued operations.
So, despite the decrease in total assets it looks like the company has
made a good decision.
The company has also decreased its total liabilities by about 4%. I
believe this to be good because the short term borrowings and long
term debt has decreased. To me, this means that the company is
tightening their belt and paying off old debt.
Total shareholders equity has down a little bit in dollars, but on the
percentage level the companys percentage has gone up. I believe this
is because the company issued $104k more shares in 2004 than in
2003. The company has the same amount of shares outstanding in
2004 that it did in 2003 as well. Retained earnings on the stock have
gone up in 2004 as well. I believe this is contributed by the more
shares that have been issued.
I believe the profitability of the company is under good standings.

They appear to be making the necessary adjustments in the company
to stay with in a profitable income.
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ACCT 504 Entire Course (Devry)
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ACCT 504 Week 1-7 All Discussion Questions
ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation
ACCT 504 Week 4 Midterm Exam Set 1
ACCT 504 Week 4 Midterm Set 2
Cash Flow Statement Analysis
Cash Flow Statement Analysis
The cash flow statement is important financial statement of the

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

Accounting: Tools for Business Decision Making. John Wiley and
Sons.
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ACCT 504 Final Exam (3 different finals) (Devry)

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1. (TCO A) Which one of the following is an advantage of
corporations relative to partnerships and sole proprietorships?
(Points : 5)
Reduced legal liability for investors

Harder to transfer ownership
Lower taxes
Most common form of organization
2. (TCO A) When a corporation distributes a dividend, _____. (Points

: 5)
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.
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ACCT 504 Midterm Exam (4 Sets, 2017)
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This Tutorial contains 4 Set of Midterm Exam 1.
Question : (TCOs A and E) Your friend, Ellen, has hired
you to evaluate the following internal control
procedures. Explain to your friend whether each of the
numbered items below is an internal control strength or
weakness. You must also state which internal control
procedure relates to each of the internal controls. For
the weaknesses, you also need to state a
recommendation for improvement. (1) The cashier
counts the total receipts and reconciles the receipts
with the cash register total
Candela Corporation
Axia College of University of Phoenix
Candela Corporation
Candela Corporation and Subsidiaries have been
working for over 34 years developing and
commercialize aesthetic laser systems that allow
physicians and personal care providers to treat a
variety of cosmetic and medical conditions such as
removal of spider veins, scars, stretch marks, warts, as
well as hair removal and age spots, freckles and
tattoos. Other skin treatments such as psoriasis and
acne and acne scars are also treated. (Axia College,
2007)
Going from top to bottom on The Candela
Corporation and Subsidiaries Consolidated Statement
of Cash Flows; for the operating activities, 2002 shows
an alarming loss in the net income while 2003 and
2004 for the company are showing a significant and
steady climb in the net income. In 2004 there was a
new category added called Provision for the disposal of
discontinued operations and the category has caused
an increased the account for 2004. Loss from
discontinued operations grew from 2002 to 2003 but
had a significant decline for 2004. Depreciation has
increased over the last 3 years as well. Provision for
bad debts increased significantly too, but an increase
in bad dept is expected as revenue increases. The
provision for deferred taxes shows the company went
from a loss in 2002 and 2003 to show there was no tax
loss in 2004. The tax benefit from exercised stock
options has practically doubled sense 2003. The
changes in assets and liabilities for the last 3 years
have been up and down. Receivables have increased,
notes receivable decreased, and inventories have
increased. Other current assets, other assets have also
increased. Accounts payable has made a significant
decrease in the last 3 years as well as accrued payroll
expenses. The accrued payroll decreasing could mean
that the amount of employees over the years has
decreased as well. The accrued warranty costs have
increased as well; this could mean that the company
renewed equipment warranties. The net cash provided
by operating activities looks to have gone from a loss in
2002 to a large profit in 2003 and then a decrease, yet
still a profit for 2004. It appears on the operations level
that management needs to do more to regulate the
companys finances so there is not an up and down
variance each year.
The cash flow from investing activities shows me
that in the last three years they had large amount of
investments in 2002 and 2003 but now they are letting
them decrease.
The cash flow from financing activities states that
the proceeds from issuance of common stock have
increased significantly from 2002 to 2003 and rose a
little more in 2004. The repurchases of stock has not
happened sense 2002 and the principle payment of
long-term debt grew in 2003 from 2002 and shows no
activity for 2004. Same goes for the net borrowing on
line of credit; it appears that Candela Corporation is
current on payments to line of credit. So, the net cash
from financial activities looks great for 2004. The cash
and cash equivalents for each year have increased
steadily.
After reviewing the consolidated statement of cash
flows for Candela Corporation, I believe the company is
making a profit, but perhaps need some control over
their operating activities.
Reference
Axia College. (2007). Statement of Cash Flows.

Retrieved June 14, 2010 from Axia
College, Week Six, ACC 230.
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ACCT 504 Week 1-7 All Discussion Questions (Devry)
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Week 1DQ 1 - Financial Reporting Environment and GAAP
Week 1DQ 2 - Details of Financial Statements and Ratios
Week 2DQ 1 - Accounting EquationAccounting Cycle
Week 2DQ 2 - Accrual Accounting and Adjusting Entries
Week 3DQ 1 - Merchandising Operations and Income Statements
Analyzing Statements of Cash Flows
4.8. Research Problem
Choose five companies from different industries and locate their

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

operating, investing, and financing activities, as well as the overall
increase or decrease in cash.
(b) Create a second table for each company comparing this same
information for each of the three years presented in that companys
statement of cash flows. Include an additional column that looks at
the combined cash flows for all three years.
(c) Write a short analysis of the information gathered. Your
discussion should address, among other things, whether cash flow
from operating activities is large enough to cover investing and
financing activities, and if not, how the company is financing its
activities. Discuss differences and similarities between the companies
you have chosen.
(a) Create a table to compare the dollars provided or used by

operating, investing, and financing activities, as well as the overall
increase or decrease in cash.
STATEMENT OF CASH FLOW ANALYSIS
STARBUCKS HARELY DAVIDSON RITE AID
2008 2008 2008
NET INCOME / STARTING LINE $ 315.5 $

- $ (1,079.0)
OPERATING ACTIVITIES $ 1,258.7 $ (684.7)

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

$ (2,933.7)
FINANCING ACTIVITIES $ (184.5) $ 1,293.4

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

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

Cash from Operating Activities -684.65 798.15 761.78
Cash from Investing Activities -393.25 391.21 -35.26
Cash from Financing Activities 1293.39 -1037.80 -637.02
Net Change in Cash 190.70 164.46 97.42
RITE AID
2008 2007 2006
Net Income/Starting Line -1078.99 26.83 1273.01
Cash from Operating Activities 79.37 309.15 417.17
Cash from Investing Activities -2933.74 -312.78 -231.08
Cash from Financing Activities 2903.99 33.72 -272.84
Net Change in Cash 49.61 30.08 -86.75

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

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

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

well from previous years. Although, after taking in cash from
investing and cash from financing, the net change in cash is better
than it has been in previous years. Rite Aids net gain in cash could
be from the ever growing needs in medical supplies. This also could
reflect the expansion of the company.
-----------------------------------------------------
ACCT 504 Week 2 Homework (E2-17A, E2-18A, E3-22A,

E3-23A)
www.acct504mart.com
This Tutorial contains Excel Files which can be used to
solve for any values (your Question may have different
company name or values, but that can be solved using
Excel file) E2-17A Dr Anna Grayson opened a medical
practice specializing in physical therapy. During the
first month of operation (May), the business, titled.
Anna Grayson, Professional Corporation (P.C.),
experienced the following events 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.
-----------------------------------------------------
ACCT 504 Week 3 Case Study 1 (Melvin Plumbing

Corporation) **New**
www.acct504mart.com
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH
ARE LISTED BELOW. There are 10 sheets in the
Workbook, including this one. All of the information
that you need for the project is located in this
Workbook. Requirement #1: During its first month of
operation, the Melvin Plumbing Corporation, which
specializes in residential plumbing, completed the
following transactions. 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
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

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.
-----------------------------------------------------
ACCT 504 Week 3 Case Study 1 Flower Landscaping

Corporation (Devry)
www.acct504mart.com
The Entire Case Study is due Sunday at Midnight Mountain time at
the end of Week 3.
This Case Study is worth 100 points or 10% of your final course
grade.
This Case Study relates to TCO's D and E and Chapters 3 and 4.
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE
LISTED BELOW.
There are 10 Sheets in the Workbook including this one.
All of the Information you need for the Project is located in this
Workbook.
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.
-----------------------------------------------------
ACCT 504 Week 3 Quiz
www.acct504mart.com
Q -1 Other comprehensive income A. includes
extraordinary gains and losses. B. affects earnings per
share. C. includes unrealized gains and losses on
available-for-sale investments. D. has no effect on
income tax. Q-2 Use the following data of
TortoiseTortoise Sales, Inc 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.
-----------------------------------------------------
ACCT 504 Week 4 Quiz
www.acct504mart.com
Q -1 Anderson Company had the following information
in 20142014. Accounts receivable 12/31/14. . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . $14,000 Allowance for
uncollectible account 12/31/14 (before adjustment). . . .
. . . 850 Credit sales during
2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,000
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.
-----------------------------------------------------
ACCT 504 Week 5 Case Study 2 Internal Control - LJB

Company (Devry)
www.acct504mart.com
Case Study 2 - Internal Control- Due by Sunday of week 5
LJB Company, a local distributor, has asked your accounting firm to

evaluate their system of internal controls because they are planning
to go public in the future. The President wants to be aware of any new
regulations required of his company if they go public so he met with a
colleague of yours at a local restaurant. The President of the
company explained the current system of internal controls to your
colleague. 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.
-----------------------------------------------------
ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)
www.acct504mart.com
ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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
-----------------------------------------------------
ACCT 504 Week 5 Homework (E7-15A, E7-19A, E8-20A,

E9-23A, E9-29A)
www.acct504mart.com
The units-of-production method tracks the wear and
tear on the van most closely. Requirement 3. Which
method would Tasteful's prefer to use for income tax
purposes? Explain in detail why Tasteful's prefers this
method. For income tax purposes, Tasteful's would
prefer the double-declining-balance method because it
provides the most depreciation, and thus, the largest
tax deductions in the early life of the asset.
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
-----------------------------------------------------
ACCT 504 Week 6 Case Study 3 - Cash Budgeting - LBJ

Company (Devry)
www.acct504mart.com
ACCT504 Case Study 3 on Cash Budgeting
The cash budget was covered during Week 4 when we covered TCO D
and you read Chapter 7. There is also a practice case study to work
on. Your Professor will provide the solution to the practice case study
at the end of Week 5. This case study should be uploaded by 11:59PM
Mountain time of the Sunday ending Week 6 to the Week 6 Assignment
Dropbox. You are encouraged to use the Excel template file provided
in Doc Sharing. 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.
-----------------------------------------------------
ACCT 504 Week 6 Homework (E10-19A, E10-25A, E12-

16A, E12-20A)
www.acct504mart.com
This Tutorial contains Excel Files which can be used to
solve for any values (your Question may have different
company name or values, but that can be solved using
Excel file) E10-19A Army Navy Sporting Goods is
authorized to issue 10,000 shares of common stock. During
a two-month period, Army Navy completed these stock-
issuance transactions: 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.
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.
Discussion Question 2:
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.
-----------------------------------------------------
ACCT 504 Week 7 Course Project JCP Kohls (Devry)
www.acct504mart.com
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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