ACCT 504 Case Study 1 (Gordon Construction)

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Case Study 1 (Part A)Analyze the impact of business
transactions on accounts; record (journalize and post)
transactions in the books; construct and use a trial
balance) During the first month of operation of Gordon
Construction, Inc

Financial Statements

Today, I will be describing a balance sheet, income

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

Statement of Cash Flow

Statement of Cash Flows provides information
regarding the companys cash receipts. This statement
gives a detailed account of the operating, investing and
financial activities of the company. It also allows
investors a chance to observe how financially stable
the company is so that they can make a choice if they
want to take a risk on investing into the company. Also
the accounting department needs this statement in
order to see if the company has enough money for
payroll uses.

All four of these financial statements are all extremely

important tools to use in the business. Another
statement that was not listed but is often used is called
comparative statements. Comparative statement gives
a side by side comparison of the financial statements
above.

Reference

http:yourdictionary.com /accounting_statements.org
Retrieved 1/28/10
Thomas, Y. 2005-08-27 Accounting 101 pg. 52
Statements
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ACCT 504 Case Study 2 (Williams Oil)

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Case study (Learning Objectives 2, 4: Explain the
components of internal control; evaluate internal
controls) Each of the following situations reveals an
internal control weakness 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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ACCT 504 Case Study 3 (Wang Appliance Store)

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Construct and use a cash budget) Nathan Farmer, chief
financial officer of Wang Appliance Store, is responsible
for the company?s budgeting process. Farmer?s staff is
preparing the Wang cash budget for 2014 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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ACCT 504 Course Project Analysis of Nike, Inc. and Under
Armour, Inc.

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Course Project: A Financial Statement Analysis A
Comparative Analysis of Nike, Inc. and Under Armour,
Inc. Below is the link for the financial statements for
Nike, Inc. for the fiscal year ending 2014. 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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ACCT 504 Course Project Oracle and Microsoft Corporation
(Devry)

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Course Project

Financial Statement Analysis Project -- A Comparative Analysis of

Oracle Corporation and Microsoft Corporation

Here is the link for the financial statements for Oracle Corporation
for the fiscal year ending 2007

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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ACCT 504 Entire Course (Devry)

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ACCT 504 Week 1-7 All Discussion Questions

ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation

ACCT 504 Week 4 Midterm Exam Set 1

Axia College Material

Appendix B

Cash Management Matrix

Directions: Using the matrix, list how each of the principles of

internal control works, and give an example for each. Next, list how
each of the principles of cash management works, and give an
example for each.

Principles of Internal Control How it Works Example

Establishment of responsibility Happens when the company My job, Our
assigns one person to be in is the only o
control of a specific job or a restocking
have authority to make Sales team to
decisions. the customer

Segregation of duties This is when the company has A church- Yo

more than one person to who count th
control a task or job then you hav
writes down
was received

Documentation procedures Evidence or proof of all My job we d

company transactions shingles to o
we make the
to leaving an
customer sig
Delivery fo

Physical, mechanical, and Allows the company to control Our job has
electronic controls assets through physical or Cisco and th
electronic based systems or employees b
programs. lunches. Als
long the CSR
or working.

Physical con
security gua
identification

Independent internal Any information that can be My job has a

verification reviewed , compare, and our inventor
reconciliation by a employee someone say
shorted on th
go back and
 inventory an
numbers in
physical cou
the numbers

Other controls Bonding of employees, Our compan

company protects against recently beca
abuse of assets. the company
card for pers
not work rel

Principles of Cash How it Works Example

Management

Invest idle cash Occurs when any My fathers

excess funds or cash company makes
needs to be invested, wise investments
and it turns around
in his favor

Plan the timing of A company wants to During the

major expenditures make sure that there recession profits
is money set aside dropped lower than
for major cash expected so some
needs companies pulled
from these funds

Delay payment of When a company Ok, when times are

liabilities pays the bills at an tough at home and
appropriate time not bills are due I
late and not too organize the bills by
soon. which bills needs to
be paid the soonest,
because if I pay the
bills too early I will
 cut off my excess
funds that could be
used for something
else

Keep inventory levels Happens when a Sees Chocolate

low company keeps the
inventory low so
that it will continue
to bring profit
factory has to make
sure that they are
not over producing
or making too much
or else the sit and
the company will
lose money

Increase the speed of Money that is owe When a customer

collection on to the company by
receivables other people or
customers is money
that can not be
counted towards the
companies funds
places a order for a
product and has not
paid yet, the
company can not
count the money as
theirs until it is
received.

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ACCT 504 Final Exam (3 different finals) (Devry)

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

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ACCT 504 Midterm Exam (4 Sets, 2017)

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This Tutorial contains 4 Set of Midterm Exam 1.
Question : (TCOs A and E) Your friend, Ellen, has hired
you to evaluate the following internal control
procedures. 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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ACCT 504 Week 1-7 All Discussion Questions (Devry)

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Week 1DQ 1 - Financial Reporting Environment and GAAP

Week 1DQ 2 - Details of Financial Statements and Ratios

Week 2DQ 1 - Accounting EquationAccounting Cycle

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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ACCT 504 Week 2 Homework (E2-17A, E2-18A, E3-22A,
E3-23A)

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This Tutorial contains Excel Files which can be used to
solve for any values (your Question may have different
company name or values, but that can be solved using
Excel file) E2-17A Dr Anna Grayson opened a medical
practice specializing in physical therapy7 How should
mixed costs be classified in CVP analysis? What
approach is used to effect the appropriate
classification?
According to our class materials all mixed cost must be
classified into their fixed and variable and variable
elements. The method that can be used to determine is
called the high/low method. To determine the variable
cost the analysis takes the total cost and divide it with
the low activity level. To get the fixed cost then the
company would have to subtract the total variable with
either the high or low activity level.
9. Cost volume profit CVP analysis is based entirely on
unit costs. Do you agree? Explain.
In my opinion when it comes to making financial
decisions for the company, often times more than one
method is used. Cost volume profit is also based on
Volume or level activities, unit selling prices, variable
cost per unit, total fixed and sales mix.
14. You can find the break point in dollars by drawing a
horizontal line to the vertical axis. I you want to find
the break even point in units it will be a vertical line
from the break even point to the horizontal axis.
-----------------------------------------------------
ACCT 504 Week 3 Case Study 1 (Melvin Plumbing
Corporation) **New**

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MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH
ARE LISTED BELOW. There are 10 sheets in the
Workbook, including this one 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 i

Sales budget Estimate of the The sales
expected sales for the shows dol
 period. All of the units. This
other budgets depend managem
on the sales budget. how many
This is where all the produced
other budgets will period
start from
Production budget A production of units Shows ma
needed to be how many
produced in order to produced
meet the projected budget pe
sales what amo
needed to
inventory
Direct materials Is the estimated Shows ma
budget quantity or cost of the how much
raw materials that is materials
needed in order to already on
produce the units or that ne
required to fulfill ordered to
inventory inventory
Direct labor budget A estimate of cost and Shows how
quantity of direct hours, how
labor needed in order laborers n
to meet production produce t
that budg
Managem
decide wh
the right a
laborers n
the compa
able to me
budget
Manufacturing An estimated This list a
overhead budget expected amount of cost invol
manufacturing cost disbursem
for the budget period quarter
Selling and Anticipated selling Shows are
administrative and administrative expenses
expense budget expenses in the listed othe
budget period manufactu
Expenses
marketing
cost etc fo
period
Budgeted income Estimate of expected Is a very i
statement profitability of tool becau
operations in a the compa
budget period estimated
the budge
Cash budget A projection of Cash budg
expected cash flows managem
in and out of the tally or to
business. cash balan

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ACCT 504 Week 3 Case Study 1 Flower Landscaping
Corporation (Devry)

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The Entire Case Study is due Sunday at Midnight Mountain time at
the end of Week 3.
This Case Study is worth 100 points or 10% of your final course
grade.
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.
-----------------------------------------------------

ACCT 504 Week 3 Quiz

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Q -1 Other comprehensive income A. includes
extraordinary gains and losses. B. affects earnings per
share. C. includes unrealized gains and losses on
available-for-sale investments. D. has no effect on
income tax. Q-2 Use the following data of
TortoiseTortoise Sales, Inc 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.
-----------------------------------------------------
ACCT 504 Week 4 Quiz

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Q -1 Anderson Company had the following information
in 20142014. Accounts receivable 12/31/14. . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . $14,000 Allowance for
uncollectible account 12/31/14 (before 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.
-----------------------------------------------------
ACCT 504 Week 5 Case Study 2 Internal Control - LJB
Company (Devry)

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Case Study 2 - Internal Control- Due by Sunday of week 5

LJB Company, a local distributor, has asked your accounting firm to

evaluate their system of internal controls because they are planning
to go public in the future.

Business Plan

By

Kamilah T. Crooms
 DestinyWear

The name of my business is called DestinyWear. DestinyWear is

a urban fashion clothing company for woman, men and youth.
DestinyWear specializes in making clothing for every occasion. My
name is Kamilah Crooms and I am the owner and CEO of
DestinyWear.My goal is to ensure that my company will be succesfull
in all areas and in each department. In order for me to make sure that
the company was going to begin in the right direction I had to
priortize what was most important in establishing my business plan.
The main priority is that I had to first choose the appropriate
business structure, a high demanding product, and most of all an
outstanding accounting team.

Business Structure
Upon establishing DestinyWear I had to decide which business
struture that I felt was best for me to pursue. I decided that as a
Entreprenuer the best choice for me abd the direction of the company
would be for me to be sole proprietorship. Sole proprietorship
allowed me to be the sole owner of DestinyWear. The first and most
important reason that I wanted sole proprietorship is because it is
much easier to start a business as sole proprietorships. Sole
proprietorship takes all the profit that and doesn't have to split it
between any other owners or corporations. I also want the power to
make and change decisions along the way without having to first
consult anyone else.

DestinyWear Products
DestinyWear products will range from jeans, shirts, accessories and
shoes. The company will first start off with its most profitable product
and that will be the DestinyWear designer jeans line. The jeans line
has over twenty different jeans designs
from straight leg, baggy, cargo, overalls, shorts and much more. The
jeans line will provide services within the United States and Canada
and will eventually service International customers. The DestinyWear
jeans line will have its own building. In this building the bottom floor
will consist of the factory and the top floor will have the different
departments such as management, marketing and most importantly
the accounting department.

DestinyWear Accounting Department

The accounting plays a major role in establishing my company
DestinyWear. The accounting department does more than managing
and reporting the companys financial documents it is the greatest
tool in establishing my business. The key to a powerful accounting
department here at DestinyWear is applying the principles of internal
control. These principles consist of establishment of responsibilities,
segregation of responsibilities, documentation procedures, Physical,
mechanical, and electronic controls, Independent internal verification
and other controls such as Bonding of employees. In order to ensure
that this business plan works DestinyWear has to hire nothing but the
best qualified employees.

DestinyWear Accounting Staff

DestinyWear accounting team of fine employees will all be hired
through the company. There are several requirements that have to be
met in order for myself as the owner and Human Resource
department to even consider the applicant for accounting. We looked
for characteristics, education and work history experience. The first
and far most important qualifying requirements are education. The
applicant has to have a Bachelor BA/BS in accounting degree a plus
if he or she has a masters.
The second requirement is experience. The applicant must have the
minimum of five years of experience working in accounting. He or
She must have knowledge and employment experience of working
with financial statements, cash management and internal control.
Employees must be experienced in Invest idle cash, planning the
timing of major expenditures, delay payment of liabilities keeping
inventory levels low, and increasing the speed of collection on
receivables. In the category of experience we had to hire applicants
according to the position that had to be filled in accounting. For
example, if a position in accounting such as management or
supervisory needed to be filled, then we would look for years of
experience in management or supervisory positions. I personally
prefer that every employee have some type of management
experience.
Last but not least, the employees characteristics. It is a must that
every accounting staff member has and applies professionalism, great
ethic and moral skills, accuracy, and most importantly punctuality,
and reaching company deadlines. These characteristics are very
important to have at DestinyWear.
DestinyWear Accounting Management Team
The DestinyWear accounting management team will be
reporting to me and to the other head staff each week to report
updates and any new changes. The management team is responsible
to have all the different types of budgeting reports that includes Sales,
Labor, etc. Management must follow the responsibility reporting
system for each department. The managers will use the companys
financial information to predict outcomes of the business. I require a
report from each responsibility center, cost center, profit center and
investment center to be reported each month. Management is
responsible to ensure that the company does not over or under budget
and if any changes it must be reported immediately.
Conclusion
DestinyWear will be a very successful team not only because of
the products that we produce but because of having a great
accounting team. With the help of accounting team I DestinyWear
products will be in every wardrobe in America.
REFERENCES
//http:yourdictionary.com /CVP.org Retrieved 3/20/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52 Statements.
March 19, 2010
Drucker, P. Managing in the next society 2002. retrieved march
19,2010
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ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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.
-----------------------------------------------------
 ACCT 504 Week 5 Homework (E7-15A, E7-19A, E8-20A,
E9-23A, E9-29A)

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The units-of-production method tracks the wear and
tear on the van most closely. Requirement 3. Which
method would Tasteful's prefer to use for income tax
purposes? 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.
-----------------------------------------------------
ACCT 504 Week 6 Case Study 3 - Cash Budgeting - LBJ
Company (Devry)
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ACCT504 Case Study 3 on Cash Budgeting
The cash budget was covered during Week 4 when we covered TCO D
and you read Chapter 7. There is also a practice case study to work
on. Your Professor will provide the solution to the practice case study
at the end of Week 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.
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ACCT 504 Week 6 Homework (E10-19A, E10-25A, E12-
16A, E12-20A)

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This Tutorial contains Excel Files which can be used to
solve for any values (your Question may have different
company name or values, but that can be solved using
Excel file) E10-19A Army Navy Sporting Goods is
authorized to issue 10,000 shares of common stock.

Differentiating Depreciation Methods

There is one main difference between straight line

depreciation and accelerated depreciation. Straight line is
decided by taking the cost of the assets, figuring out the
salvage cost when the use of the asset is finished and how
many years of use the asset has. A person then takes the
cost minus salvage and divides the remainder by the
number of years of use. This amount is the depreciation
expense subtracted each year from the cost. The
accelerated depreciation does not have the same amount
of deprecation subtracted each year. It does have the cost
minus salvage value to figure out the amount to use but is
then divided out differently. A person takes the sum of the
years of a products useful life, such as three years is 3 + 2
+ 1 = 6, then a person would divide the depreciation
amount by 3/6 the first year, 2/6 the second and finally 1/6
for the final year. So the amount of depreciation expense is
larger to smaller with accelerated and equal amounts for
straight line.
The advantages of straight line method are it is easier and
faster to figure. The advantage of accelerated method is it
is more accurate when figuring depreciation expense. The
accelerated method has an advantage and disadvantage
concerning taxes. A company can use the accelerated
method to take advantage of bigger tax breaks at the
beginning of an assets life, but since this amount drops
during the lifespan if the company needs added tax breaks
it will not receive them from these assets in the future.
With the straight line method the amount of tax breaks are
even through the life of the product. Most companies
choose this form of depreciation for reporting purpose on
taxes but will use the accelerated method to figure taxable
income.
As mentioned before the advantage of straight line
depreciation is it is easier to figure and uses the same total
each year for deduction of depreciation expense but the
disadvantage is that if use for taxable income and
reporting a company does not get a bigger tax break at the
beginning of the assets life when they have just put out the
cost for the item and may need a bigger tax break.
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ACCT 504 Week 7 Course Project JCP Kohls (Devry)

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ACCT 504 Week 7 Course Project JCP Kohls (Devry)

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.