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Compare and contrast sole proprietorships,
partnerships, and corporations.
Sole proprietorships means that a business that owned
by one person. That includes and not limited to all
profits and losses, debts and unlimited liability, all will
come from the solely one owner and not a group or in
this case a partner or co-owner etc. Partnerships are
seen much differently than sole proprietorships.
Partnerships is a business that owned by more that one
person/s. This is the number one difference from being
a sole proprietorship or sole owner. Basically, two or
more people come together and split the cost, debts,
and liability. Corporations is an business that has
separate entity owned by stockholders. The huge
difference between corporations and the other two is
that they are owned by stockholders. Stockholders
make decisions that is first best for their company,
secondly the company that they have together.
Why would a entrepreneur want to choose one over the
other?
An Entrepreneur is a person that wants to start a
business with their vision and have more power of the
decision making. The best choice for an entrepreneur is
to choose sole proprietorship out of all the three
choices. The first and most important reason 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.
If I was to start a new business which one would I
choose?
In this case it depends on the type of business. My case
I will be opening a hair salon and I would prefer sole
partnerships. i choose that because I want to be in
control and I don't want to split the profit.
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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. For Discussion Question
1: Post your response to the following:
When reviewing a financial report, why should
information be reliable, relevant, consistent, and
comparable?
In other words, why are these accounting
characteristics important?
What kinds of problems could be created if a
financial report is not reliable, relevant, consistent, or
comparable?
It is extremely vital that the company has accurate
financial reporting. This information determines
whether or not to invest in your company's stock. This
information will help them decide if it is profitable to
invest or not to invest in your company based what is
in your financial history. The information must be
relevant because it will help the company, investors
and lenders make decisions. It helps answer questions
like, "how stable is your company", or "what future
does this company have". The information should be
reliable. In other words the information that is reported
must be able to be verified, backed up with truthful
information. Comparable occurs when different
companies use the same accounting principles. This
makes it much easier to compare results between
company's. Consistency happens when the company
uses the same accounting method every year. When
the financial statements are reported each year, it
paints a financial picture of where the company is
headed now and in the future.
What kinds of problems will occur if the information

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

the company but it also to name a few effects the
lenders, creditors, investor's, etc. This will result in the
company not having a faithful representation.
Another response
The main objective of generating financial information
is providing useful information that can be used in
decision-making... only if this information is relevant,
reliable, comparable, and consistent, can it be useful
for decision makers. (Kieso, 2003).
Relevance gives a basis for making decisions that will
impact the future of a business, and it confirms and
corrects expectations from the past. If the information
makes a difference in making decisions, it is relevant.
Reliability means that the information can be depended
on and it can be proven to be free of error, and the
information is factual. The information cannot favor
one set of users over another. CPAs audit financial
statements to ensure reliability.
Comparability is also an important characteristic of
financial reporting... this happens when different
businesses use similar accounting principles, making it
much easier for one to compare companies, and the
method used in a business must be disclosed to the
users of the information to enable the users to convert
the information as accurately as possible.
Consistency simply means that the business uses the
same accounting principles on a yearly basis...
consistently. This helps decision makers analyze a
company's trends. A company can change the
methods used if they can justify the change, showing
that the new method is more useful for analysis. If the
method is changed, it must be disclosed in the notes
that go with the statements to show users a lack of
consistency.
These characteristics are very important to a
business... decisions cannot be made based on
incorrect information, and everyone involved in a
business venture of any kind, whether they be
management, owners, or investors and creditors, as
well as consumers, etc. must be able to rely on the
financial information provided in order to make any
type of decision. Without this information, it is difficult
to imagine any business succeeding, even for a short
time.
Examples of problems that could occur without reliable,
relevant, consistent, or comparable information
includes not being able to get loans or investments;
management could make decisions that cause
irreparable damage to entire operations, consumers
could easily lose faith and cut their ties... the
possibilities are endless for companies that lack these
qualities in their financial reporting.
DQ2
For Discussion Question 2: Post your response to
the following:
How does information from financial reports
influence business decisions?
Why is it important for business managers to
understand the information found on financial reports?
How does information from financial reports influence

business decisions?
Once the information from the financial reports have

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

understand the information found on financial reports?
IT is extremely important for he business managers to

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

we have another New set of Final Exam Guide which could be found
on this link
Financial Statements
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
http://www.investopedia.com/terms/i/intangibleasset.asp
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ACC 291 Final Exam Guide
ACC 291 Final Exam Study Guide
Question 207
On January 1, a machine with a useful life of five years and a
residual value of $40,000 was purchased for $120,000. What is the
depreciation expense for year 2 under the double-declining-balance
method of depreciation?
IFRS Multiple Choice Question 01
Internal Cash Control
By
Kamilah Crooms
Accounting 220
Jess Stern
Internal Cash Control
The accounting department receives from sales

invoices once a month. Most of the information
is missing on the invoices.
The accounting department relies on each
department within the company and all the
information has to be submitted completely and
in a timely matter. In this scenario most of the
information that has been turned in has
information that is missing on the invoices. I
would say that the internal controls that are not
being followed are Documentation procedures.
Company documentation is very important and
must be turned in complete. These documents
show proof of delivery or proof of services to the
customer. Any incomplete documents can be very
costly and can cause a delay in the company
being paid for any services rendered. For
example, one of the requirements in a
transportation department is to make sure that
the drivers verify the load and sign for the load
prior to leaving the yard, these documents says
that the load left in good condition. Well, it so
happened that we allowed a driver to leave
without signing the paperwork. This caused a
delay in accounting because we had to get
signatures from the driver and the customer
which took a month later to complete.
Rob, Sue, and Bob use the same cash register at
the donut shop.
Rob, Sue, and Bob all use one register has often
turned into not the best decision ideally for the
company. It can increase the risk for the drawer
being short and it will be hard for the company
to find out which employee or employees had
shorted the register. The internal controls that
are not being followed are Establishment of
responsibility. Happens when the company
assigns one person to be in control of a specific
job or have authority to make decisions (pg 161
Internal Control and Cash). When the company
signs one person to be responsible over the
register it will allow the company to hold that
one person responsible for any shortages.
Sam does the ordering of materials at the

beginning of every month and pays the bill.
In this case Sam is ordering materials and paying

all the bills. This process is actually known as
related activities (pg 162 Internal Control and
Cash). This occurs when one person is doing two
different responsibilities just like Sam. The
internal Control that is not being applied is
Segregation of Duties. It is better for the two to
be a separate responsibility because it will
minimize the billing errors.
Bank reconciliations are done by the person who
is responsible for all cash responsibilities.
The problem with this scenario is that the same

person is responsible for all cash responsibilities,
why is this person doing the only one that does
this job? Having one person take on such a major
responsibility increases the chances of
embezzlement and thief. The internal control
that is not being applied is rotating employees
duties and requiring employees to take
vacations. One person should not be completely
in control of one job, the company should
encourage vacations or switching positions to
prevent incorrect handling of the companys
valuable information.
New checks came in and are left on the shelf

with other supplies.
This is a tough scenario because there are all
sorts of internal controls that are not being used
in this case. I would say in my opinion that the
first internal control that comes to my mind that
is not being applied is bonding of employees who
handle cash.
Every employee that works near or with

expensive equipment should be held reliable or
responsible for the companys assets. Bonding of
employees who handle cash protects the
company by insuring that the employee is or
isnt a risky applicant (background checks) or
reassuring that the employee that they will be
prosecuted to the fullest extinct if they are found
guilty of thief. For example, I had worked at Mc
Donalds and
there were my shift managers and one employee
that were caught with stealing money from the
company. This situation had happen very
differently. The armor truck dropped off a
deposit that belonged to another company
(armors mistake) but they signed it. Those
employees thought that nothing was going to be
traced back to them but the little did they know,
all evidence traced back to them. They each
received jail time, and felony records.
Everyone has access to the computer system and

the last audit was seven years ago by the former
accountant
This scenario has two things that are going on at
the same time. I will first start off with the
computer system and how everyone has access
to the computer. The internal control that is not
being applied is Physical, Mechanical, and
Electronic Controls. This allows the company to
control assets through physical or electronic
based systems or programs. It is extremely
important for a company to invest in computer or
informational protection for the company and for
their employees. Todays technology age most
companies are investing in a computerized
program. This will help protect from internal
errors and external protection. For example, all
companies invest in a virus protection this will
ensure that the companys information is
protected and not in the wrong hands.
Invest idle cash

Invest idle cash occurs when any excess funds or
cash needs to be invested. The money should be
highly invest and risk free. For example, a major
company should make investments with their
assets into profitably investments and risk free.
Plan the timing of major expenditures
This is when a company sets aside money for

major cash needs. We live in a world that things
happen daily. A good company would set aside
emergency funds. For example, during a terrible
thunderstorm, the winds practically ripped off
the roofing shingles off a commercial business.
The company will be able to use the money for
emergency.
Delay payment of liabilities
Delay payment of liabilities is when a company

pays bills not too soon and not late. This allows
the company to have money available for bills
that that really need to be paid allowing excess
funds to be free for other uses.
Keep inventory levels low

This occurs when the company keeps the
inventory low so that it will bring in more profits.
For example, if the managers at a fast-food over
plan and fix too many hamburgers and the
customers dont buy it, then the food will go bad
and the company will lose profit.
Increase the speed of collection on receivables
This occurs when money is owed to the company,

the company cannot claim these until the funds
have been received. Some companies offer
incentives to encourage customers to pay early
or on time. For example, my job encourages their
customers by letting them know that there will
be a price increase on or after a certain date and
this really works because the customers want to
pay at a lower price.
References:
http:yourdictionary.com
/accounting_statements.org Retrieved 2/13/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52

Statements
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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 Axia College Material
Appendix B
Cash Management Matrix

Directions: Using the matrix, list how each of the
principles of internal control works, and give an
example for each. Next, list how each of the principles
of cash management works, and give an example for
each.
Principles of Internal How it Works Example

Control
Establishment of Happens when the My job, O
responsibility company assigns one departme
person to be in only one
control of a specific waive a r
job or have authority fee. It all
to make decisions. Sales tea
control o
customer
Segregation of duties This is when the A church-
company has more people w
than one person to offering a
control a task or job have som
writes do
in what w
Documentation Evidence or proof of My job w
procedures all company shingles
transactions customer
make the
prior to le
we make
customer
Proof Of
form
Physical, mechanical, Allows the company Our job h
and electronic controls to control assets called Cis
through physical or tracks th
electronic based breaks an
systems or programs. Also, mon
long the
been read
working.
Physical c
would be
guard, th
identifica
entry.
Independent internal Any information that can My job ha
verification be reviewed , compare, tracking
and reconciliation by a and when
employee says that
shorted o
we can go
track the
and comp
numbers
system a
count to
the numb
incorrect
Other controls Bonding of Our comp
employees, company girl just r
protects against because s
abuse of assets. the comp
business
personal
not work
Principles of Cash How it Works Example

Management
Invest idle cash Occurs when any My father
excess funds or cash makes wi
needs to be invested, investme
turns aro
favor
Plan the timing of A company wants to During th
major expenditures make sure that there profits dr
is money set aside for than expe
major cash needs some com
pulled fro
funds
Delay payment of When a company pays Ok, when
liabilities the bills at an tough at
appropriate time not bills are d
late and not too soon. organize
which bill
be paid th
because i
bills too e
cut off my
funds tha
used for s
else
Keep inventory levels Happens when a Sees Cho
low company keeps the factory ha
inventory low so that sure that
it will continue to over prod
bring profit making to
else the s
company
money
Increase the speed of Money that is owe to When a c
collection on the company by other places a o
receivables people or customers product a
is money that can not paid yet,
be counted towards can not c
the companies funds money as
it is recei
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ACC 291 Week 1 Discussion Question 1
How would you describe the entries to record the disposition of
accounts receivables?
Income statement is a financial statement that shows how much

money is coming from product sales and services prior to any
expenses being taken out. Both internal and external users such as
managers and investors are able to access this. For example, if a
investor wanted to see if the company made money or lost money they
would use this financial statement report.
Balance sheet shows what condition the company is currently in.
whereas the other financial statements only came monthly or
annually. For example, what if the management planning team
wanted to see the company's current assets, ownership equity and
liabilities? All they have to do is run the balance sheet report.
CVP income statement or Cost Volume statement reports or monitors
the effects of the changes in cost and volume when it comes to the
company profits. For example, I work at a manufacturing plant for
roofing shingles. The CVP analyst studies the cost which includes but
not limited too, manufacturing, material, labor cost. This financial
statement report would help the management team budget the cost of
manufacturing goods.
Statement of cash flow tracks the movement of cash coming in or out
of the business. This financial statement will show if the company
made cash or not, or if the net income increased or decreased. For
example, the owner or the management department will use this to
determine if the company has earned enough money to be able to for
any expenses.
Retained earnings statements is a percentage that is kept by the
company to be reinvested or to be used to pay debts. For example, if a
company was looking to expand their business by purchasing top of
the line equipment they can use this statement to see how much money
the company has put away.
References:
http://www.investopedia.com/terms/r/retainedearnings.asphttp://finan
cial- Retrieved 2/18/2010
statements.suite101.com/article.cfm/financial_statements_the_p_l.
Retrieved 2/18/2010
--------------------------------------------------

How are bad debts accounted for under the direct write-off method?
Discussion Question 1: Post your response to the following:
How would you describe the difference between financial and

managerial accounting? What are the distinguishing features of
managerial accounting?
There are many differences between financial and managerial
accounting. The financial accounting statements are available to
external users such as employees, stockholders, creditors, investors,
etc. This is available to them so that they can monitor the company's
performances quarterly or annually. Managerial accounting provides
financial information for managers and other internal people or
department. Managerial accounting is confidential so it is only
observed by internal users such as management, owner, and will
provided to external users such as the public. Management uses this
for budgeting purposes or to monitor profit loss/gain within the
company. Managerial accounting can be available to them as often as
needed. Managerial accounting statements is a great way for
management to make decisions based on what has been reported.
Another response
The differences between managerial accounting and financial
accounting are distinct. Managerial accounting reports are for those
in managerial and decision making positions. The managers use the
financial report to answer questions, which would advance the
company and its employees. The manager would want to know if
certain investments should be made and should the company advance
an employee's salary. The manager needs the report to decide if a
factory is built or if a certain stock is brought. The financial
accountant has the job of showing the external users such as creditors
and stockholders a picture of the company's stability.
The manager's purpose is to manage by making stable plans, delegate

duties, motivate the workers, and control the atmosphere.
Distinguishing features of managerial accounting are the fact no cpa
will audit the report, and there is no specific frequency of the report.
The reports are done in a need to know basis and for a specific
reason, which is for business purposes. The reports are detailed and
pertain to specific business decisions. The financial accountant need
only be concerned with the company's finances.
DQ2
Discussion Question 2: Post your response to the following:
Select a management function (planning, directing and
motivating, or controlling) and explain how that function relates to
business as a whole. Next, select a different function listed by a
classmate. Discuss with your classmate how the functions you each
selected complement each other.
The management functions that I choose was controlling.
Controlling job is to make sure that the each
department/person is keeping the company's activities or plans on
track and in order to achieve that they must work closely with
Management planning function. Controlling continually compares the
company's performance to make sure that the planned standards
are being met. In my opinion this is known as the "dirty work".
Controlling operations have to know what to look for and how to keep
track of all the company's activities. They have to take actions and
quickly correct any errors and make sure that the company goals are
being achieved in a timely matter or the time that it was planned. If
there are errors it is job of the controlling operations to take quick
action. The controlling operations not only correct errors after it
happens but they also are in charge of foreseeing any potential errors
and act quickly to get that resolved.
Another response
I chose Controlling as part of the management function. The
controlling function relates to business as a whole because it helps
monitoring the firms performance to make sure the planned goals are
being met. Managers need to pay attention to costs versus
performance of the organization. let say, if the company has a goal of
increasing sales by 10% over the next two months, the manager may
check the progress toward the goal at the end of month one. If they
are not reaching the goal the manager must decide what changes are
needed to get back on track.
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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

Cost, Volume, and Profit Formulas

By

Kamilah Crooms

Due February 28, 2010

Explain the components of cost-volume-profit analysis.
The components of cost volume-profit analysis consist of Level or volume of activity,

Unit Selling Price, Variable Cost per unit, total fixed costs, and Sales mix.

What does each of the components mean?
Level or volume of activity is the activity that causes change or behavior when it
comes to the cost. Unit selling Price is the cost for the product basically how much
each unit is selling for. The Variable Cost per unit is something that can change
depending on the activity. The total fixed cost does stay the same as activities change
but differ per unit. The Sales mix is basically what the name says. Its a mixture of
sale items when more than one product sold the sales will remain the consistent.
Based on the formulas you have reviewed, what happens to contribution margin
per unit when unit selling prices increase?
Contribution margin is the amount of revenue left over after subtracting the variable
cost. So basically Unit sales price subtracting or minus variable cost.
Illustrate your explanation with an example from a fictitious company of how an

increase in unit selling prices might affect contribution margin.
Kellys Sweetheart Flowers
The owner of Kellys Sweetheart Flowers is selling their bouquet of flowers for
$10 per unit. The Variable Cost per unit is $4.00. The contribution margin will be
($10-$4) = $6. If the sells price increases to say $15, then the contribution margin
will be ($15-$6) = $9 per unit.
When fixed costs decrease, what does this do for sales? Illustrate your
explanation with an example from a fictitious company.
Kellys Sweetheart Flowers

When the fixed cost decreases, the contribution margin ratio the net income and sales
will increase.
For example,
The flowers are $10 per unit. The variable cost per unit is $4.00. The
contribution margin will be ($10-$4) = $6. The fixed cost is $3. We subtract
Contribution margin Fixed Cost= Net income. The net income is $3.00.
Define contribution ratios
The contribution margin ratio is the contribution margin per unit margin divided by
the unit selling price.
What happens to contribution ratios as one of the components changes?
Shown in the example above, if one or more of the components changes is will cause
the net income to increase or decrease.
Reference
statements.suite101.com/article.cfm/cost_volume_profits*the_p_l. Retrieved
2/28/2010
//http:yourdictionary.com /CVP.org Retrieved 2/26/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52 Statements
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ACC 291 Week 2 - Fordyce and Atwater (New)

P10-5A
Fordyce Electronics issues a $400,000, 8%, 10-year mortgage note

on December 31, 2007. The proceeds from the note are to be used in
financing a new research laboratory. The terms of the note provide
for semiannualinstallment payments, exclusive of real estate taxes
and insurance, of $29,433. Payments are due June 30 and December
31.
Axia College Material

Appendix C
Budgets Matrix
Directions: Using the matrix, define each of the budgets listed and
briefly describe its uses.
Budget Definition Describe its u
Sales budget Estimate of the expected sales The sales bud

for the period. All of the other and units. Th
budgets depend on the sales management
budget. This is where all the units will be p
other budgets will start from period
Production budget A production of units needed Shows manag

to be produced in order to meet units will be p
the projected sales each budget p
amount is nee
inventory dem
Direct materials budget Is the estimated quantity or Shows manag

cost of the raw materials that raw materials
is needed in order to produce hand and or t
the units required to fulfill ordered to me
inventory demands.
Direct labor budget A estimate of cost and quantity Shows how m

of direct labor needed in order many laborer
to meet production produce the u
budget period
will decide wh
right amount
needed and if
be able to me
Manufacturing overhead An estimated expected amount This list all o

budget of manufacturing cost for the involving cas
budget period a quarter
Selling and administrative Anticipated selling and Shows area o

expense budget administrative expenses in the that are not li
budget period manufacturin
as marketing
etc for the bu
Budgeted income statement Estimate of expected Is a very impo

profitability of operations in a because it sho
budget period estimated pro
period.
Cash budget A projection of expected cash Cash budget

flows in and out of the management
business. total of all ca
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ACC 291 Week 2 Assignment Financial Reporting Problem,

Apple Inc
Purpose of Assignment The purpose of this assignment
is to help you understand the basics of financial
statement analysis related to the assets section of the
balance sheet, data interpretation, and how financial
information is obtained to understand how a company
accounts for its long-lived assets. Assignment Steps
Resources: Financial Accounting Discussion Question
1: Post your response to the following:
You know how important it is to create budgets
for your household. How does budgeting help
management make good business decisions?
Budgeting is a very important skill that can be applied
to everyday life and also when it comes to making
good business decisions. I really like the way our class
resources says about Budgeting. Budgeting is used as
a planning tool used by management to make good
decision for the company. If a company is successful
than more than likely that means that the management
team is very good at managing the company finances.
Budgeting helps management plan ahead, defines
what is most important, shows warning signs, reach a
company target without over or under budgeting and
etc.
Another response
In a business, a budget helps a business make good
decisions because they are used by the company to
plan for future events and coordinate the events and
duties in the company. They also gives objectives used
to evaluate the performance of the company on each
level which can help to make future decisions that will
not hurt the company based on the projected
objectives. It can also be used to alert the company of
possible problems or negative trends in the company
that need to be addressed so that there is a clear
picture of the overall health of the company before
decisions are made. The budget helps the company to
be able to make an informed decision when making
one. It is there in order to make sure that making a
decision like taking on another company will not hurt
the company and is something that the compnay can
sustain based on the budget.
DQ2
Discussion Question 2: Post your response to the
following:
What are some of the different types of
budgets?
Describe in detail one type of budget covered in
the text.
Describe what the budget is used for and what
information it provides a business.
Then, as you respond to your classmates,
discuss how the budget you described relates to the
budgets they described.
Discuss how a business benefits from each of
the budgets.
There are many different types of budgetting. For

example, there sales budget which allows management
to see how many units that need to be produced,
production budget which will allows everyone to see
how many units are going to be produced in or needed
to be produced in order to meet the inventory for that
budget period. One budget that I can describe in detail
is called the direct labor budget and this budget shows
how many people, hours is needed in order to meet the
required budget for that period. This will give
management an idea of how much money is needed
such as paying the cost of labor. The company benefits
by each of these budgets because it will help manage
just how much money it will cost the company during
this period. Management can also see if there are
different ways to cost the company out of pocket cost
down during this period.
Another response
I chose to write about the Production Budget. The
Production Budget shows the cost of each unit needed
to produce an item or manufacture a product. The
formula used by the Production Budget :
Budget sales units + Desired ending finished goods

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

Bronx loads up on Hot Cross Buns. My mother and
grandmother would buy these tasty sweet breads,and
eat them for breakfast. I personally would like to eat
them every week but, they are only sold during the
Easter season. Maybe, it has something to do with the
glazed cross on the top.
Every Easter Holiday, there appears these Hot Cross

Buns and the bakeries production department allows
for the purchases for items needed to make the buns.
After Easter has gone, Hot Cross Buns are not included
in the budget.
--------------------------------------------------
What are the differences among valuation, depreciation, amortization,
and depletion?
What is a Flexible budget?
A Flexible budget is a budget that change or is flexible during

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

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

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

evaluation performances. The flexible budget can be used for monthly
comparison purposes. Also during the process that management is
identifying the activity index and the range of activity it will allow
them to see the cost of direct labor hours for that budget period.
--------------------------------------------------

What types of industries have unearned revenue?
Why is unearned revenue considered a liability?
Capstone Discussion Question: Post your response to the following:
Think back over what you have studied and learned in this
course. Do you have a new perception of or appreciation for the field
of accounting and how it contributes to business? Explain.
To be perfectly honest with you I truly had no clue what accounting

did for a company and how important it was. I always thought that
accounting only dealt with payroll. In fact accounting does much
more that just payroll and monitor company supplies (coffee, paper,
pens & pencils). The accounting sets budgets for the entire company,
monitors outflow and inflow of profits, plans budgets for each
department, and much more. When I first begun this class I was
really nervous, I truly thought that I was going to have a hard time
understanding the accounting but I happy to say that I was wrong. I
understood every part of this course.
On a personal note I would like to thank you Jess. If it wasn't for your
pep talk I probably would had gave up. You are truly a
great instructor. I wish you all the best! God Bless
Another response
Accounting has taken a whole new meaning to me in my vocabulary.
Prior to this course, I just took accounting as a calculator and
crunching numbers. I now have a new respect for accounting and all
the aspects that are involved. I never once took into consideration
profit, sales, revenue, and balance sheets also being included with
accounting. There is so much more involved with accounting, and
had I not taken this course I would have never known. Accounting is
a very important part of running a business. I feel that it is imperative
to all people thinking of opening a business should take some type of
accounting class to become more aware of how to run the accounting
part of a business.
--------------------------------------------------
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
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
--------------------------------------------------
ACC 291 Week 2 IndividualWileyPLUS PracticeCh 8,9,10

Quiz
Resource:WileyPLUS
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.
--------------------------------------------------
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.
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 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.

Lucent Technologies
Axia College of University of Phoenix
Lucent Technologies is a company based on networking for service
providers, government, and enterprises worldwide (Lucent Technologies,
n.d., Para 1). The products and services they work with are separated into
three categories; service and maintenance, wireless mobility networking,
and wire line networking. Lucent Technologies is backed by Bell Labs,
which does research and development in networking technologies.
During the years of 2001 to 2003 this company has experienced a
decrease in demand because of other companies loss or capital used
toward spending. This is mainly due to a downturn in the economy. As an
investor this information is necessary to know because it explains the
decrease or increase in sections of the balance sheet. In order to compare
the growth or decline of the companys profit, an investor must change a
balance sheet into a common-size balance sheet. First when looking at the
balance sheet an investor will see that the amount of paid in capital has
increased from the year of 2003 to 2004, the assets have increased, but
the liabilities have decreased. When running a debt/asset ratio it is noticed
that this ratio drops from 1.2 in 2003 to 1.0 in 2004. This shows the
companys risk is low when concerning financial leverage, usually when
the debt ratio is less than one percent it is financed mainly by company
equity, so this company is close to being debt free from creditors.
After changing the balance sheet to a common-size balance sheet there
are several factors an investor will look at. The current assets have
dropped to .48 from .49 in 2004. This does not show harm to the company
because only the accounts receivable dropped while the rest of the current
assets increased. This means the company is not in as much danger of
default on money owed to it. It does have a rise in marketable securities.
The one concern in the assets is the increase of prepaid cost of pensions
and goodwill. Goodwill can be used for tax breaks but prepaid pensions
cannot benefit the company.
When looking at the liabilities section an investor will see a drop in
pension and liabilities and an increase in long term debt, both of these
could be affected because of the drop in the economy. Long term liabilities
are often increased to help a company control interest rate increases so as
an investor cutting back on pension liabilities cuts back cost to the
company and watching interest rate increase show the company is
concerned with its earning and investors. This would be encouraging or an
investor. The stockholders deficit shows a drop in accumulated deficits
from -1.43 to -1.22 and total deficits of -.26 to -.08. This shows the
company is working to control any money loss and turning it to the
companys advantage. Overall it shows the company is still earning a
profit although small. With an increase of assets and a drop in liabilities
the company is showing it is working in a low risk capital.
After reviewing this information, a creditor or investor must be able to
compare this company to the industry totals. By comparing how this
company compares to other companies similar to it, a person can see if it
is competitive and worth taking a risk. Running ratios will also show if the
company is capable of paying off any debts it has or if it can acquire the
needed cash in case of emergencies. Overall as an investor, I would say
this company would be worth investing in.
Reference
Axia College. (2007). Understanding Financial Statements. Retrieved May
10, 2010 from Axia College, Week 2 Assignment, ACC/230.
--------------------------------------------------
ACC 291 Week 3 Assignment The Liabilities Section of

OBrians Balance Sheet
Purpose of Assignment The purpose of this
assignment 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
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.
--------------------------------------------------
Why does a company choose to form as a corporation?
Preparing an Income Statement
The companies net income is profitable when the sales exceed

the cost of goods sold. In this, the gross profit is $761k. This is
beneficial to the company. Though we took the cost of goods
away from the net sales there are still other areas which need to
take a piece of the pie. For this company, once the SG&A and
depreciation are taken out, the company still contains a profit of
$290k. But the buck does not stop there. Once the interest
income and interest expense are adjusted the balance before
earnings and taxes is $290k. After taxes are taken out, the
company is left with a net profit of $174k.
In this case I think the company has achieved success with a net
profit of $174k. If the company were unable to be profitable, the
company would eventually go out of business. We would be able
to tell if the company was not profitable by looking at each
section individually. The cost of goods sold is what stands out
for me. If we pay more to make the product then we are actually
selling it for, there is no profit to be made. So, I think it should
all start there.
--------------------------------------------------
Why is preferred stock referred to as preferred?
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/dividendpay
outratio.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&s
ubmit=Search
--------------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Assignment
we have another New set of week 3 Willeyplus assignment
which could be found on this link

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/aa04090
4_2.htm
Mladjenovic, P. (2009). Stock Investing for Dummies. Dummies.
--------------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Practice Quiz

Ch. 11,12
Resource:WileyPLUS
Analyzing an Income Statement
The net income of Kodak has decreased a bit;

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

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

bit in dollars, but on the percentage level the
companys percentage has gone up. I believe
this is because the company issued $104k
more shares in 2004 than in 2003. The
company has the same amount of shares
outstanding in 2004 that it did in 2003 as
well. Retained earnings on the stock have
gone up in 2004 as well. I believe this is
contributed by the more shares that have
been issued.
I believe the profitability of the company is

under good standings. They appear to be
making the necessary adjustments in the
company to stay with in a profitable income.
--------------------------------------------------
Discuss the objectives for Week Three. Your
comfortable with, any topics you struggled with,
and how the weekly topics relate to application in
your field.
Cash Flow Statement Analysis
Cash Flow Statement Analysis
The cash flow statement is important

financial statement of the corporation. The
cash flow statement states from where cash
has come and where cash has been gone.
Thus the cash flow statement makes a
relationship between beginning balance and
ending balance of cash. The cash flow
statement is prepaid on the basis of income
statement and balance sheet of the
company. The Little Bit Incs beginning cash
balance including marketable securities was
$24000. On the other hand, the ending cash
balance including marketable securities of
the company was $40000 (Weygandt, Kimmel
& Kieso, 2009).
The net income of the company was $5500

during 2009. The company generated cash
inflow from operating activity is less as
compared cash out flow from operating
activities. The company generated $9000
negative cash balance in operating activity
section of the cash flow statement. On the
other hand, in the investment section, the
firm has also negative cash balance. The firm
has $7000 negative balance in investment
section of the cash flow statement. The Little
Bit Inc made investment during the year
instead of selling of assets. Last section of
the cash flow statement is financing activity
section. In which, all finance related
activities come. The corporation sold some
shares and borrowed some money from
outside lenders therefore the company has
positive case balance by $32000 in financing
activity section.
Reference
Weygandt, J.J.,Kimmel, P.D. & Kieso, D.E.

(2009). Managerial Accounting: Tools for
Business Decision Making. John Wiley and
Sons.
--------------------------------------------------
ACC 291 Week 3 Wileyplus Assignment P9-7A, E10-5,

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

Week 5 DQ 1
Due Tuesday, Day 2

In what ways does the statement of cash flows relate to the balance sheet and
income statement?
It is important to understand what we are doing with the

numbers and the results these numbers give us because the
result is the information that will be available to us from
financial statements. Although some want to see the income
statement and ignore the other statements we need to use
them together to see the total picture of what is happening
to our business. The relationship between the numbers on
the financial statements shows us everything we need to
know about the business.
The income statement shows income and expenses for a
period of time and if we are making or loosing money. The
balance sheet compares the assets to liabilities and shows
how much money the business would have if everything is
sold today.
The statement of cash flow might be the most critical
statement because there is plenty of information we can
gain form it. This statement relates with the income
statement on operating activities to see if they are
generating cash or not. It is related to the balance sheet on
how much cash is used in investing activities. In relationship
with the balance sheet the cash flow statement shows what
cash is provided or used by financing activities. It will tell us
how much debt has been paid and will indicated if we are
using more debt or have paid down the credit line.
When the business makes a sale or receives payment for a
sale on credit that is an inflow. A sale shows up as income on
the profit and loss statement and as an inflow on the cash
flow statement. It also shows up either as cash or accounts
receivable on the balance sheet. Also, how quickly we can
collect on accounts receivable will play a big role in the cash
flow. When the business spends money, it shows up as an
expense in the profit and loss statement and as an outflow
on the cash flow statement. It also shows up on the balance
sheet as a decrease in cash, or an increase or decrease in
liabilities, depending on what the expense represents.
Response 2
In what ways does the statement of cash flows relate to the balance sheet and income
statement?
The cash flow statement relates to the income statement and balance
sheet. The net income from the income statement is listed on the
statement of cash flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement reconciles the net
income to the actual cash the company received from or used during
operations. The second section of the statement of cash Flows is the cash
flow from investing activities which include purchase or sale of assets. The
last section in the Statement of Cash Flows is the cash flows from
financing activities that includes raising cash by selling stocks/bonds or
borrowing from backs; or cash out flows from paying back loans. The
balance sheet shows the different account balances at the end of the
accounting period. The statement of cash flows reflects changes in the
accounts listed on the balance sheet between accounting periods. The net
cash from operating, financing, and investing activities are added up to
calculate the net change in cash.
Week 5 DQ 2
Due Thursday, Day 4
Discuss how the statement of cash flows is utilized by investors. If you were an
investor reviewing a statement of cash flows, what section might interest you most?
Why? Discuss the circumstances in which other sections of the statement might be
important to an investor.
Prior to making an investment in a company, one would want to

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

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

--------------------------------------------------
What are some common ratios used to analyze financial
information? Which are the most important?
Candela Corporation
Candela Corporation
Candela Corporation and Subsidiaries have been working

for over 34 years developing and commercialize aesthetic laser
systems that allow physicians and personal care providers to
treat a variety of cosmetic and medical conditions such as
removal of spider veins, scars, stretch marks, warts, as well as
hair removal and age spots, freckles and tattoos. Other skin
treatments such as psoriasis and acne and acne scars are also
treated. (Axia College, 2007)
Going from top to bottom on The Candela Corporation and
Subsidiaries Consolidated Statement of Cash Flows; for the
operating activities, 2002 shows an alarming loss in the net
income while 2003 and 2004 for the company are showing a
significant and steady climb in the net income. In 2004 there
was a new category added called Provision for the disposal of
discontinued operations and the category has caused an
increased the account for 2004. Loss from discontinued
operations grew from 2002 to 2003 but had a significant decline
for 2004. Depreciation has increased over the last 3 years as
well. Provision for bad debts increased significantly too, but an
increase in bad dept is expected as revenue increases. The
provision for deferred taxes shows the company went from a
loss in 2002 and 2003 to show there was no tax loss in 2004.
The tax benefit from exercised stock options has practically
doubled sense 2003. The changes in assets and liabilities for
the last 3 years have been up and down. Receivables have
increased, notes receivable decreased, and inventories have
increased. Other current assets, other assets have also
increased. Accounts payable has made a significant decrease in
the last 3 years as well as accrued payroll expenses. The
accrued payroll decreasing could mean that the amount of
employees over the years has decreased as well. The accrued
warranty costs have increased as well; this could mean that the
company renewed equipment warranties. The net cash provided
by operating activities looks to have gone from a loss in 2002 to
a large profit in 2003 and then a decrease, yet still a profit for
2004. It appears on the operations level that management needs
to do more to regulate the companys finances so there is not an
up and down variance each year.
The cash flow from investing activities shows me that in the

last three years they had large amount of investments in 2002
and 2003 but now they are letting them decrease.
The cash flow from financing activities states that the

proceeds from issuance of common stock have increased
significantly from 2002 to 2003 and rose a little more in 2004.
The repurchases of stock has not happened sense 2002 and the
principle payment of long-term debt grew in 2003 from 2002
and shows no activity for 2004. Same goes for the net borrowing
on line of credit; it appears that Candela Corporation is current
on payments to line of credit. So, the net cash from financial
activities looks great for 2004. The cash and cash equivalents
for each year have increased steadily.
After reviewing the consolidated statement of cash flows for

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

14, 2010 from Axia
College, Week Six, ACC 230.
--------------------------------------------------
ACC 291 Week 4 Individual WileyPLUS Assignment
we have another New set of week 4 Willeyplus assignment
Analyzing Statements of Cash Flows
4.8. Research Problem
Choose five companies from different industries and locate their

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

operating, investing, and financing activities, as well as the
overall increase or decrease in cash.
(b) Create a second table for each company comparing this

same information for each of the three years presented in that
companys statement of cash flows. Include an additional
column that looks at the combined cash flows for all three years.
(c) Write a short analysis of the information gathered. Your

discussion should address, among other things, whether cash
flow from operating activities is large enough to cover investing
and financing activities, and if not, how the company is
financing its activities. Discuss differences and similarities
between the companies you have chosen.
(a) Create a table to compare the dollars provided or used by

operating, investing, and financing activities, as well as the
overall increase or decrease in cash.

STATEMENT OF CASH FLOW ANALYSIS
HARE
STAR LY
BUCK DAVI RITE
S DSON AID
2008 2008 2008
NET
INCOME / $
STARTING $ $ (1,079.
LINE 315.5 - 0)
$
OPERATING 1,258. $ $
ACTIVITIES 7 (684.7) 79.4
$ $
INVESTING (1,086. $ (2,933.
ACTIVITES 6) (393.3) 7)
$ $
FINANCING $ 1,293. 2,904.
ACTIVITIES (184.5) 4 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
2 2
0 0
0 20 0
8 07 6
5
3 6
1 67 4.
5. 2. 2
Net Income/Starting Line 5 64 6
1 1
2 1
5 13 3
8. 31 1.
Cash from Operating 7 .2 6
Activities 0 2 3
-
1 -
0 - 8
8 12 4
6. 01 1.
Cash from Investing 6 .9 0
Activities 0 5 4
Cash from Financing - - -

Activities 1 17 1
8 1. 5
4. 89 5.
5 3
0 3
- 1
1 - 3
1. 31 8.
5 .3 8
Net Change in Cash 0 5 0
2 1
8 7
1. 31 3.
Net Cash - Beginning 3 2. 8
Balance 0 61 1
2 3
6 1
9. 28 2.
Net Cash - Ending 8 1. 6
Balance 0 26 1
HARLEY
DAVIDSON
2 2 2
0 0 0
0 0 0
8 7 6
Net 0 9 1
Income/Starti 3 0
ng Line 3 4
3
. .
8 1
4 5
-
6 7 7
8 9 6
4 8 1
Cash from . . .
Operating 6 1 7
Activities 5 5 8
-
3 3 -
9 9 3
3 1 5
Cash from . . .
Investing 2 2 2
Activities 5 1 6
-
1 1 -
2 0 6
9 3 3
3 7 7
Cash from . . .
Financing 3 8 0
Activities 9 0 2
1 1
9 6 9
0 4 7
. . .
Net Change 7 4 4
in Cash 0 6 2
Net Cash - 4 2 1
0 3 4
2 8 0
. . .
Beginning 8 4 9
Balance 5 0 8
5 4
9 0 2
3 2 3
Net Cash - . . 8
Ending 5 8 .
Balance 6 5 4
RITE AID
2 2 2
0 0 0
0 0 0
8 7 6

-
1 1
0 2
7 2 7
8 6 3
Net . . .
Income/Startin 9 8 0
g Line 9 3 1
3 4
7 0 1
9 9 7
Cash from . . .
Operating 3 1 1
Activities 7 5 7
-
2 - -
9 3 2
3 1 3
3 2 1
Cash from . . .
Investing 7 7 0
Activities 4 8 8
2 -
9 2
0 3 7
3 3 2
Cash from . . .
Financing 9 7 8
Activities 9 2 4
Net Change in 4 3 -
Cash 9 0 8
. . 6
6 0 .
1 8 7
5
1 1
0 7 6
6 6 2
Net Cash - . . .
Beginning 1 0 8
Balance 5 7 2
1 1
5 0 7
5 6 6
. . .
Net Cash - 7 1 0
Ending Balance 6 5 7
(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
previously was doing well. The net loss in cash at end of year is decreasi
gain.
Harley Davidson's operating cash flow has significantly decreased from 2

decrease in cash from operating activities is probable from the lack of inf
many people buying at this point could have an effect on why the net inco
reflect a positive gain.
Rite Aid's operating cash flow has taken a significant decrease as well fro
from financing, the net change in cash is better than it has been in previo
in medical supplies. This also could reflect the expansion of the company

--------------------------------------------------
ACC 291 Week 4 IndividualWileyPLUS Practice
Resource:WileyPLUS
Findwhat.com Case - CheckPoint
ACC 230
Findwhat.com has recorded the 135 percent

increase in the revenue which is mainly due
to the business acquired of Espotting during
the year. The different accounting policies
are present for the acquiring firm and the
acquired firm. The company has recorded
certain premature revenues for the amount
which advertisers had made only the
advance deposit. As result, the company is
recognizing the vendor financing as revenue.
In some places, the gross revenue has been
recognized while in another, the net revenue
has been recognized. The network click
revenue is recognized at gross level while
the private level revenue is taken at net
level. Some of the revenue expenditures
have been recognized as the capital
expenditures.
Revenue for set up network fee is treated as

deferred revenue and is recognized over a
period of time. The company is very
inconsistent with regards to its accounting
policies in terms of recognition of revenue.
The provision and treatment of amount for
doubtful debt is also not satisfactory. When a
customer clicks on a sponsored
advertisement, the whole of the revenue due
to him is recognized. The company is having
a very high amount of doubtful debt balance
at the end of the year ending December 31,
2004.
--------------------------------------------------
Discuss the objectives for Week Four. Your
your field.
Week 7 DQ 1
Due Tuesday, Day 2
Post your answer to Study Question 5.2 on p.

180 (Ch. 5). As you read your classmates
responses, consider the following scenario: If
you compared two different companies that
utilized two different valuation methods, how
might the quality of the results differ? Also,
comment on the difficulty of making
comparisons between two firms that use
different valuation methods.
Understanding the different inventory

methods is crucial. First the person that
establishes the inventory needs to determine
which method to use. LIFO, or FIFO. LIFO
means Last in First Out. This means that
when a purchase is made, and sales are
recorded the newest product is used first. So
if I bought 10 combs at $2 on December 1st,
and then I buy 5 combs at $2.50 on
December 10th. When sales are made I am
going to record sales using the $2.50 until I
sell through the 5 combs that were
purchased on the 10th, and then the cost will
go to the previous purchase price of $2 until
those 10 combs are sold through. FIFO is
just the opposite. Meaning that goods are
used in the order that they are received. The
first items ordered, are the first items
sold. Either method will pass an audit. It is
important to note though that managers
can't switch back and forth between the two
methods. Profit will vary depending on
which method is being used. Say you sold
only 6 combs at $3 each. Using the LIFO
method this would equal $3.50 profit. If you
used the FIFO method, this would result in a
$6.00 profit.
Response 2
Post your answer to Study Question 5.2 on

p. 180 (Ch. 5). As you read your classmates
responses, consider the following scenario: If
you compared two different companies that
utilized two different valuation methods, how
might the quality of the results differ? Also,
comment on the difficulty of making
comparisons between two firms that use
different valuation methods.
It is very important to understand which

inventory valuation method is being used to
determine the profit numbers quality. The
balance sheet, statement of cash flow and
income statement can be directly impacted
by the valuation method that used to
determine the costs of inventory. The three
methods that are used are FIFO, LIFO and
Average Cost. The valuation ratios can be
dramatically affected depending on the
inventory valuation that is being used over a
long-term period; especially because prices
are likely to rise. When using FIFO you can
increase net income, but then at the same
time raise the amount taxes that business is
obligated to pay. When using LIFO the
inventory can be obsolete because they are
old this will result in lower net revenue
because the products pricing is higher. The
Average Cost results usually fall between
LIFO and FIFO. The bottom line can be
affected mainly by the inventory analysis and
the ratio results that are formed from that
analysis. It is easier to compare companies
that are in the same line of business, so I
believe that quality of results would differ
tremendously if different valuation methods
were used. If you use LIFO that company
may seem unattractive but they are
performing well, as for FIFO it may look good
as for profit, but may not be performing well.
DQ 2
Week 7 DQ 2
Due Thursday, Day 4
Post your answer to Study Question 5.6 on

p. 180 (Ch. 5). Discuss the consequences of
poor quality reporting. What has the U.S.
government done to improve the quality of
reporting after recent financial scandals such
as Enron?
I think that the significance is that the

analysts only see this one HUGE
transaction. The events that actually led up
to this large transaction actually took place
over a 2 year period. These items should
have been written off as they occurred. Wall
Street would not have known that the
executives refused to write off these
accounts when they should have. Wall Street
only see's the one large transaction. If the
company would have been more honest in
their reporting they would have seen (more
than likely) that there were many accounts
over a two year period that should have been
written off at different periods. So the
analysts would not have seen a pattern of
recurring write-offs. If the analysts only see
the one transaction they are less likely to be
able to paint an accurate picture of the
financial standing of the business for
investors, or potential investors. If the
investors could see that there were many
accounts that had to be written off maybe
their investing decisions would have been
different. The regulation of the accounting
field has grown by leaps and bounds since
the Enron scandal. The government has
implemented several agencies and
regulations to ensure honesty in accounting
practices. SOX is one example of an agency
that has been put into place to ensure
honesty in accounting. SOX implements
things like internal controls, and
accountability for CEO's and CFO's.
Response 2
I believe the impact and importance of this

write-off event is a very big matter. It is
obvious how they handled it that it was a
scandal from the start. I think that everyone
involved had a big role in how things played
out. To me I think of the investors as a really
big hit to this but also feel that audit
committees have to be held responsible as
well. It has been shown over many examples
that adit oversights are happening to
financial reporting. Although I do feel they
are getting better and tighter due to
conforming tightly with the GAAP requests. I
feel over time the accounts receivable should
have been written off in smaller increments
and not all taken by $405 million at once.
Maybe that isn't correct but it would have
been easier I would think to take the
receivables over time.
Response 3
Wall Street should have read the footnotes

and seen that the write off was for accounts
receivables and should have been reported
in the allowance for doubtful accounts. Every
company that allow sales on credit face
doubtful accounts; therefore, the write off
may reoccur. The significance of this
transaction is that WorldCom want to cover
up the $405 million dollars that it was unable
to collect from its customers, but WorldCom
wrote off a large sum of money rather
recording the write-off as needed and the
analyst over looked it. Depending on how the
company policy is for writing off accounts,
from 1998 to the 3rd quarter in 2000 is 11
quarters. If the company wrote off bad
accounts quarterly it should have wrote off
36,818,181.82 per quarter. Investors would
not want to continue to invest into a
company that has poor collection skills, or
poor management. Unusual items are simply
for those items that are not recurring
operating expenses. Bad debts do not fall
under this category. Since the Enron and
WorldCom scandals many rules and
regulations have been put in place by the
government such as SOX. More people are
being held accountable for their actions and
consequences follow poor quality reporting
such as fudging the books.
--------------------------------------------------
ACC 291 WEEK 4 Stockholders Equity Section of the

Balance Sheet (Lachlin Corporation Balance Sheet)
Purpose of Assignment The purpose of this
assignment is to help you become familiar with
examining the stockholders' equity section of the
balance sheet. Assignment Steps Resources:
Financial Accounting: Tools for Business Decision
Making Answer the following questions in 1,050
words using the Lachlin Corporation Balance Sheet
(partial) below: How many shares of common
stock are outstanding?
Presenting to Stakeholders
Presenting to Stakeholders
Financial statements provide insight into the
companys current status and lead to the
development of policies and strategies for the
future (Axia, 2007). Financial statements and
notes to the financial statements should be used to
analyze the company. For instance, what do the
financial statements reveal about why the
company has requested a loan or purchased items
on credit? What is the firms capital structure and
what does the firm have outstanding? How well
can the company pay back debt? What recourses
are used to pay debt? What is the companys
performance record and are there any future
expansions? What are the expected returns and
how successful is the company compared to
industry averages? Which areas of operations
contributed to the companys success, and what
are the strengths and weaknesses of the
company? What changes can be made to improve
the future performance of the company?
Key financial ratios will assist in determining the

information requested. Liquid ratios measure a
firms ability to meet cash needs as they arise. The
current ratio is a good tool to use because it
measures the ability the firm has to pay debts
when due. The current ratio for REC is at 2.4 times
for 2007, although it is down from 2006 the
company is still able to pay current debt when due.
Cash flow ratio considers cash flow from operating
activities has increased from 2006, and this
indicates an improvement in short-run solvency.
Average collection period has gone down 5 days
within the last year. The cash conversion cycle
gives in-site on why the cash flow has improved or
decreased, in this case the conversion period for
REC has improved by 26 days.
Activity ratios measure the liquidity of specific

assets and the efficiency of managing assets.
Accounts payable turnover is up seven times from
the prior year and inventory turnover is also up .25
from last year. Accounts payable turnover is down
9.05 from 12.10 in 2006. This means that the
company is taking longer to repay payables. The
fixed asset turnover and total asset turnover ratios
are used to assess managements skills in
generating sales from investments in assets. The
fixed asset turnover has dropped slightly, but the
total asset turnover has risen slightly. The increase
in total asset turnover comes from improvements
in inventory and accounts receivable turnover.
Leverage ratios measure the extent of a firms

financings with debt relative to equity and its
ability to cover interest and other fixed charges
(Axia, 2007). Debt ratio, long-term debt to total
capitalization and dept to equity have all raised
slightly implying a slightly riskier capital structure.
The times interest earned and the cash interest
coverage have increased since 2006. The interest
payments can be covered 7.4 times this year. The
cash interest has improved due to the operating
profits and cash from operations. The fixed
coverage ratio is also important in cases where
companies use operating leases. In this case, the
fixed charges have increased slightly.
Profitability ratios are used to measure the overall

performance of a firm and its efficiency in
managing assets, liabilities, and equity. The ratios
used are the gross profit margin, operating profit
margin and net profit margin. All of which have
improved for REC. As well as the cash flow
margin, return on total assets, return on equity
and cash return on assets. Over all the company
seems to be in well financial standings and looking
toward a profitable year.
Reference
Axia College. (2007). The Analysis of Financial

Statements. Retrieved June 28, 2010,
from Axia College, Week Eight, ACC 230.

--------------------------------------------------
ACC 291 Week 4 Wileyplus Assignment Do It! 11-1,

E11-5, E11-7, BYP11-1, BYP11-2, P11-5A, P11-8A
(New)
Do It! 11-1, E11-5, E11-7, BYP11-1, BYP11-2,
P11-5A, P11-8A.
Do It! 11-1
Exercise 11-5 Garcia Corporation

Analysis of Scenarios:
Debt Scenario would increase the debt ratios from to 50%. Equity
Scenario would reduce the debt ratio to 40%. With Debt option, earnings
per share would be higher. Interest declines to 2.86 times with the Debt
option while times interest earned increases to 3.75 times with the Equity
option. Either option exhibits a good use of financial leverage because for
both, the financial leverage index being greater than 1. However, it is
higher using the Debt option.
--------------------------------------------------

Why do corporations buy back their own stock?
What does it tell you about the corporation?
Interpreting Financial Ratios
Luna Lighting, a retail firm, has experienced modest sales

growth over the past three years
but has had difficulty translating the expansion of sales into
improved profitability. Using
three years financial statements, you have developed the
following ratio calculations and
industry comparisons. Based on this information, suggest
possible reasons for Lunas profitability problems.
Industry
2009 2008 2007 2009

Current 2.3X 2.3X 2.2X 2.1X
Average collection period 45 days 46 days 47 days
50 days
Inventory turnover 8.3X 8.2X 8.1X
8.3X
Fixed asset turnover 2.7X 3.0X 3.3X
3.5X
Total asset turnover 1.1X 1.2X 1.3X
1.5X
Debt ratio 50% 50% 50% 54%
Times interest earned 8.1X 8.2X 8.1X
7.2X
Fixed charge coverage 4.0X 4.5X 5.5X
5.1X
Gross profit margin 43% 43% 43%
40%
Operating profit margin 6.3% 7.2%
8.0% 7.5%
Net profit margin 3.5% 4.0%
4.3% 4.2%
Return on assets 3.7% 5.0%
5.7% 6.4%
Return on equity 7.4% 9.9%
11.4% 11.8%
Based on this information, some possible reasons for Lunas

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

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

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

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

about the process of analyzing financial
statements?
I have learned that there is a lot more to

analyzing financial statements than I
thought. This class has made me question
my decision to go into the accounting field. I
feel inadequate after taking this class. I am
not an articulate, or analytical person. I tend
to get confused easily and do better at
putting the information together than I am at
figuring out what it all means. This is my
last block of classes before my Bachelor
program starts, and I don't know if I am
ready, or if I even want to
continue. Analyzing financial statements
takes a very detail oriented mind, and one
that is great at problem solving. It is critical
to understand the financial statements, and
how they relate to one another. There is a
lot of information that is not as obvious as it
would seem. Looking at the bottom line will
not give a good picture of how a company is
doing financially. It is important to know the
how and why the bottom line looks the way
that it does.
Response 2
I have learned that it takes someone that has
the patience, tenacity, and motivation to
truly analyze the statements. If you go about
it not wanting to do the work you wont give a
good analysis. I found that you have to be
willing to dig deeper than most would to get
a full picture of the company. I found that it
is not an easy task to complete. For me the
process is a tedious one. I don't think I would
want to go into that type of accounting
where I have to analyze the statements of a
company. I think for me I would be better in
specialized accounting like A/P or A/R. I am
better at figuring out problems and figuring
out ways to make them better. I am better at
specific tasks so for me I wouldn't want to
analyze the statements. I am glad to have
learned how, because at some point I am
sure it will come in handy.
Response 3
All financial statements are essential

documents because they tell what has
happened to a business over a period of time
but most users of financial statement are
more concerned about what will happen in
the future. Stockholders and creditors are
concerned with future earnings and
dividends and company's future ability to
repay its debts. Management is concerned
with the company's ability to finance future
expansion.
Working as a bookkeeper I do all the steps in
monthly cycles consisting of entering
transactions into the journals, working with
A/R, A/P, payroll and preparing the reports,
but I have not been able to analyze the
reports the way I learned in this class. I
learned how important is to monitor and
interpret the results. I learned how to
compare financial statements of a company
with a company from the same industry and
point out the differences and similarities.
This class taught me the importance of
analyzing the Income Statement, Balance
Sheet, Cash Flow Statement and
Stockholders Equity each one individually. I
learned how essential is the quality reporting
and how useful this quality is in business
decision making. I learned about key
financial ratios: liquidity ratios, activity
ratios, leverage ratios, and profitability
ratios. All these ratios are valuable as
analytical tools and will help me indicate the
areas of strength and weakness in a
business. Even though I learned the
information step by step in this class I tent
to go over every single chapter all over again
to better absorb the material. This class
taught us the potential of some management
manipulations of financial statements, thus
following the general accounting rules, being
honest, ethical and professional are the ways
on leading to safe and profitable decisions.
--------------------------------------------------
ACC 291 Week 5 Individual WileyPLUSAssignment
we have another New set of week 5 Willyplus assignment
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)
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.
uating Financial Health 6
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.appl
e.at.34pc.world.market.share/
Hardware Marketplace. (2010). Computer Hardware.

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

2010 from
http://moneycentral.msn.com/investor/invsub/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.

http://onlyhardwareblog.com/?p=2107
--------------------------------------------------
ACC 291 Week 5 Learning Team Ratio Analysis Memo
Resource:Virtual Organizations
Click the Virtual Organization link on the

student website to access the Virtual
Organizations.
Select one of the Virtual Organizations as the

basis for the assignment.
Financial Analysis
Wal-Mart Stores Incorporated operates chain

of retail stores in USA as well as outside the
USA. The first Wal-Mart store was opened by
Sam Walton in Arkansas in USA in 1962.
Within a span of five years; he opened more
stores and he number increased to 24 stores
across Arkansas. The incorporation of Wal-
Mart Stores Incorporated was done in 1969.
Wal-Mart grew in the United States of
America by opening of more stores in to the
country. The company not only opened the
stores across Arkansas but also across the
United States of America (Wal-Mart
Corporate, 2010).
Wal-Mart was opposed by the unorganized

retail business holders in the USA as their
business was affected by opening Wal-Mart
stores. The company also opened its first
store outside the USA in South America in
1995. Wal-Mart wanted to spread itself not
only to the USA, but in other countries as
well. In 2006, the company was having 3800
stores in USA and more than 2980 stores
outside USA making it one of the largest
retail chains in the world. This corporation
was also having a vision to establish itself in
to a global entity. Wal-Mart was one of the
first companies to operate in the organized
retail sector (Fishman, 2006). The modes of
entry used by the company were different for
different countries. Wal-Mart used the mode
of entry in to various countries according to
the rules and regulations prevailing in to
that country (Wal-Mart Stores Inc: Financial
Statement, 2010).
The sales of the company for the financial
year ending in January 2010 are 413.8 billion
dollars and income for the same period is
14.7 billion dollars. The quarterly sales
growth for the company has been 5.90%,
while the industry average is 6.80 %. The
five-year annual growth in the sales of the
company has been recorded at 7.50 % while
five year annual growth of income is 6.58 %.
By analyzing the financial statements of 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.
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/statemnt.
aspx?Symbol=WMT
Wal-Mart Stores Inc. (WMT) (2010). Retrieved

May 31, 2010, from http://finance.yahoo.com/q/co?
s=WMT+Competitors
--------------------------------------------------
Discuss the objectives for Week Five. Your
your field.
For this week's checkpoint we had to look up

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

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

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