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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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Discussion Question 1:

Based on what you know about accounting, what role


do you see it playing in business operations? How
dependent do you think a business is on its accounting
department? Why?
Accounting plays many important roles especially when
it comes to business operations. Accounting is mainly
responsible for almost all of the financial needs of the
business. It keeps track of all spending, profit and loss
that the company inquires.
The business is very dependent on it accounting
department. Accounting department is responsible for
monitoring more than the cash flow, it also works
closely with IRS, government to make sure that
everything is being done correctly (payroll, taxes, etc).
The accounting side of the business can be considered
to be the lungs of the company next to the heart.

Discussion Question 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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Financial Statements

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 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? 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
ACC 291 Week 1 Assignment Comparative Analysis Problem

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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 receivable7 How should mixed costs
be classified in CVP analysis? What approach is used to
effect the appropriate classification?
According to our class materials all mixed cost must be
classified into their fixed and variable and variable
elements. The method that can be used to determine is
called the high/low method. To determine the variable
cost the analysis takes the total cost and divide it with
the low activity level. To get the fixed cost then the
company would have to subtract the total variable with
either the high or low activity level.
9. Cost volume profit CVP analysis is based entirely on
unit costs. Do you agree? Explain.
In my opinion when it comes to making financial
decisions for the company, often times more than one
method is used. Cost volume profit is also based on
Volume or level activities, unit selling prices, variable
cost per unit, total fixed and sales mix.
14. You can find the break point in dollars by drawing a
horizontal line to the vertical axis. I you want to find
the break even point in units it will be a vertical line
from the break even point to the horizontal axis.
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How would you describe the entries to record the disposition of
accounts receivables?

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.
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How are bad debts accounted for under the direct write-off method?

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.
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ACC 291 Week 1 Wileyplus Assignment E8-4, E8-11, BYP8-
1, and BYP8-2 (New)

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Wiley Plus Assignment Week 1
E8-4, E8-11, BYP8-1, and BYP8-2 in MS Excel

Capstone Discussion Question: Post your


response to the following:

Think back over what you have studied and


learned in this course. Do you have a new
perception of or appreciation for the field of
accounting and how it contributes to business?
Explain.

To be perfectly honest with you I truly had no clue


what accounting did for a company and how
important it was. I always thought that accounting
only dealt with payroll. In fact accounting does
much more that just payroll and monitor company
supplies (coffee, paper, pens & pencils). The
accounting sets budgets for the entire company,
monitors outflow and inflow of profits,
plans budgets for each department, and much
more. When I first begun this class I was really
nervous, I truly thought that I was going to have a
hard time understanding the accounting but I
happy to say that I was wrong. I understood
every part of this course.

On a personal note I would like to thank you Jess.


If it wasn't for your pep talk I probably would had
gave up. You are truly a great instructor. I wish you
all the best! God Bless

Another response

Accounting has taken a whole new meaning to me


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

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ACC 291 Week 2 - Fordyce and Atwater (New)
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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.

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 Assignment Financial Reporting Problem,
Apple Inc

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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 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 2 Discussion Question 1

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What are the differences among valuation, depreciation, amortization,
and depletion?

Differentiating Depreciation Methods

There is one main difference between straight line depreciation and


accelerated depreciation. Straight line is decided by taking the cost of
the assets, figuring out the salvage cost when the use of the asset is
finished and how many years of use the asset has. A person then takes
the cost minus salvage and divides the remainder by the number of
years of use. This amount is the depreciation expense subtracted each
year from the cost. The accelerated depreciation does not have the
same amount of deprecation subtracted each year. It does have the
cost minus salvage value to figure out the amount to use but is then
divided out differently. A person takes the sum of the years of a
products useful life, such as three years is 3 + 2 + 1 = 6, then a
person would divide the depreciation amount by 3/6 the first year, 2/6
the second and finally 1/6 for the final year. So the amount of
depreciation expense is larger to smaller with accelerated and equal
amounts for straight line.
The advantages of straight line method are it is easier and faster to
figure. The advantage of accelerated method is it is more accurate
when figuring depreciation expense. The accelerated method has an
advantage and disadvantage concerning taxes. A company can use
the accelerated method to take advantage of bigger tax breaks at the
beginning of an assets life, but since this amount drops during the
lifespan if the company needs added tax breaks it will not receive
them from these assets in the future. With the straight line method the
amount of tax breaks are even through the life of the product. Most
companies choose this form of depreciation for reporting purpose on
taxes but will use the accelerated method to figure taxable income.
As mentioned before the advantage of straight line depreciation is it is
easier to figure and uses the same total each year for deduction of
depreciation expense but the disadvantage is that if use for taxable
income and reporting a company does not get a bigger tax break at
the beginning of the assets life when they have just put out the cost for
the item and may need a bigger tax break.
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ACC 291 Week 2 Discussion Question 2

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What types of industries have unearned revenue?
Why is unearned revenue considered a liability?
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.

----------------------------------------------
ACC 291 Week 2 Individual WileyPLUS Assignment Week
Two

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we have another New set of week 2 Willeyplus assignment which
could be found on this link

Resource:WileyPLUS

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/dividendpayoutr
atio.asp

Response 2
Explain what can be found on a statement of stockholders equity.

The major elements of stockholders' equity include capital stock,


paid-in capital, retained earnings, treasury stock, unrealized loss on
long-term investments, and foreign currency translation gains and
losses.

How might the information contained within the stockholder equity


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

Management may look at the stockholders equity statement


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

DQ 2
Week 3 DQ 2
Due Thursday, Day 4

Provide an example from the text or the Internet that demonstrates


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

An example that demonstrates the situation is Enron. Enrons


financial statements did not show all the expenses and costs.
Instead of showing them on the income statement they made entries
so the cost and expenses would post in the balance sheet. The same
was done with the revenues. This way it would be less expenses and
the net profit appeared good. Many debts and losses were not
reported in the financial statements. From the third quarter of 2000
through the third quarter of 2001, the directors fraudulently used
reserve accounts within Enron Wholesale to mask the extent and
volatility of its windfall trading profits, particularly its profits from
theCalifornia energy markets; avoid reporting large losses in other
areas of its business; and preserve the earnings for use in later
quarters. By early 2001, Enron Wholesale's undisclosed reserve
accounts contained over $1 billion in earnings. The head of the
company improperly used hundreds of millions of dollars of these
reserves to ensure that analysts' expectations were met. In addition,
Skilling and others improperly used the reserves to conceal
hundreds of millions of dollars in losses within Enron's EES
business unit from the investing public.This would show the
creditors that Enron was making profits and its position was solid.

The net income is not necessarily a good indicator of a firms


financial success because the income statement only shows the
profit or loss at a period of time and does not show the whole
picture of the company. The Balance Sheet, Statement of cash flow,
Statement of shareholders equity and the Income Statement all
together give the real picture of the business. Each one of them
shows different aspects of the business. These statements show
where the income is actually coming from; is it from sales or from
loans the company is borrowing? If the company is selling a
building or any other asset but that does not mean that it is selling
more products and making profit. Looking at the Income
Statements the company might be making profit but at the same
time it is extremely leveraged.

Response 2
A companys net income is not the whole picture, just part of it.
There are lots of things that contribute to the net income that may
not be significative to the companys success. If the value of a dollar
has a sudden change that can affect the bottom line if the company
happens to hold the medium of exchange that can benefit by the
change that might occur. The company can falsely inflate the
bottom line. A companys net income is coupled with liabilities, cash
flow, and selects financial ratios. Looking at it this way is a much
better way of seeing what the companys success is like. A company
can change up many things to make it look like their income is
better. These things that can be changed are single sales events,
cash infusion, or false financial statements. Some things like debt
that a company has, the companys cash on hand, their capital
assets conditions, or even their sales trends. To figure the success of
the company, you must look at the whole picture. One thing cannot
tell you all the facts of the companys affairs. You cannot tell the net
income of the company just from the bottom line. Look at all the
financial records.
Response 3
Provide an example from the text or the Internet that demonstrates
a situation in which a companys net profits appeared good in the
statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the
following question, addressed in Problem 3.6 on p. 109 (Ch. 3):
Why is the bottom-line figure, net income, not necessarily a good
indicator of a firms financial success? Look for indicators like
liquidity or solvency to answer this discussion question.
Net income is not necessarily a good indicator of a firms financial
success because they have ways to manipulate it by increasing their
revenues or hiding some of their expenses. For investors trying to
decide where to invest their money, they need to look more into
assessing how the company came up with the numbers they
presented.

An example of this situation is when Laribee Wire Manufacturing


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

This company showed a higher net income by reporting fake


inventory in which its value was overstated and transferred over to
their income statement. When the banks assessed their financial
statements, it was enough to sway them into lending the loans they
needed.

Reference:

Investopedia. (2010). Spotting Creative Accounting On The Balance


Sheet. Retrieved
fromhttp://www.investopedia.com/search/searchresults.aspx?
q=Spotting+Creative+Accounting+On+The+Balance+Sheet&submi
t=Search

----------------------------------------------
ACC 291 Week 2 IndividualWileyPLUS PracticeCh 8,9,10
Quiz

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Resource:WileyPLUS

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 Learning Team Weekly Reflection

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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.
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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ACC 291 Week 2 Wileyplus Assignment P8-3A, BE9-11,
DI9-5, E9-7, E9-8, BYP9, P9-2A (New)

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P8-3A, BE9-11, DI9-5, E9-7, E9-8, BYP9, P9-2A.

Problem 8-3A: Bosworth Company

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:

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.

The operating cost of the company is increasing


because the company is able to reduce its
expenses.

Cash from operating activity has increased for the


company.

Apart from this strength the company also has


some weakness in its financial statement:
Increasing inventory indicates that the company
inventory conversion period is increasing.

The cash from investing activity shows that the


company cash outflow is more in the short term
investment i.e. in non operating activity.

The overall has for the year 2008 has declined for
the company.

Net Income:

If we look at the trend in net income of the


company we can find that the company net
income looks fluctuating but it has improved it net
income in 2008 as compared to 2007.

Debt ratio as a percentage of total assets:


If we look at the debt ratio as percent of total asset


we can find that the debt ratio is declining in 2008
as compared to 2007 i.e. the company is
increasing equity to finance debt.

Debt as a percentage of total equity:

As we can see that the debt as percent of total


equity is declining in 2008 as compared to 2007
i.e. the company is increasing equity in its capital
structure.

As we can see that there is nothing negative in


2008 for the company and this is the reason it has
positive trend as compared to 2007. Hence there is
no need to correct anything for the company.

----------------------------------------------
ACC 291 Week 3 Assignment The Liabilities Section of
OBrians Balance Sheet

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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:
STOCK DIVIDEND

Stock Split
University of Phoenix

Stock Dividend
In the present time, the stock dividend has become
important concept. When dividend is given in form of
stock, it is called stock dividend. In this form of
dividend, the cash does not use. It is important, when
the corporation declares stock dividend, the market
value of the share decreases because the number of
stock increases. The many companies prefer stock
dividend due to the tax benefit. If the individual gets
stock dividend, he does not pay any tax on stock
dividend. Thus the stock dividend reduces tax burden.
On the other hand, the ownership of investors also
spurs up in the company because the number of
holding share increases. There is also disadvantage of
stock dividend. The market value of the share
decreases, so the market value of holding also
decreases (Kennon, 2009).
The ABC Company is leading company in its industry.
The number of outstanding share of the company is
one million. On the other hand, the number of investors
is five millions. The value of market capitalization is
$100 million. The management declares 20% stock
dividend. Thus the 200000 shares will be distributed as
a stock dividend. The number of outstanding share will
be increased by 200000 and the new total number of
outstanding stock will be 1.2 million. On the other
hand, the new value per share in the market will be
$83.33 (100 million/1.2 million). This example is taken
from below mentioned link:
Stock Split
The stock split is also an important concept. When the
management wants to increases number of shares, the
management follows this method. In this method, the
face value of the share is split and number of share
gets increased. Due to increment in number of
outstanding share, the market value of per share also
gets affected but the total market capitalization of the
company does not affect. Both stock split and stock
dividend increase number of outstanding shares but
both are different due to the accounting treatment. In
the stock split, the investors do not get any real
benefit. It is also known as non-cash distribution of
dividend. The motto behind stock split is to increase
trading of the shares in the market (Baker, 2009)
For example, the face value of per share is $100
and the total outstanding shares are 100 million. If the
management of the company announces stock split in
ratio of 1:2, the total outstanding shares will be
increased by 100 million, thus the new total number of
the share will be 200 million. On the other hand, the
face value of the share will reduce by 50%. So the new
face value of the share will be $50. Due to effect of
stock split, the holding share of the investor will also
increase in the prorate basis. If the investor has 10
shares, now he will have 20 shares. It is important
thing that the total issued capital will not be changed.
The illustration of stock split has been got from
following link:
Reverse Stock Split
The reverse stock split is just opposite of stock split. In
this process, the management reduces the number of
outstanding shares. The company increase face value
of the share. In this method corporation decides a ratio
such as 2:1. Thus the company accumulates two shares
in one share. In this method, the total market value of
company does not change. Due to reverse stock split,
the earning per share and face value of per share rises.
Thus the reverse stock split provides just opposite
result from stock split. It is important question, why
company selects this method. When the management
seems that the face value of the share is less as
compared to competitors then the company goes for
this method to make its share value to equal to
competitors shares face value. It is also a sound
strategy to increase treading of shares. If the face
value of share is too cheap in comparison to
competitors, the investors will be discouraged for
investment. For increasing the confidence of investors,
the management uses this method (Mladjenovic,
2009).
For example, an investor holds 100 shares of XYZ
Company and the face value per share is $50. If the
management go for reverse stock split option and
declares one share for 10 shares then the holding of
the individual will reduce 9 shares for every 10 shares.
Thus the new holding of the investor will be 10
(100/10) shares but the face value per share will be
$500. It is also important that the total market
capitalization will remain as same as before reverse
split. The example of the reverse split is take form
below mentioned link:
http://www.sec.gov/answers/reversesplit.htm.
References
Baker, H. K. (2009). Dividends and Dividend Policy. John
Wiley and Sons.
Kennon, J. (2009). All About Dividends. Retrieved May
31, 2010, from
http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_2.h
tm
Mladjenovic, P. (2009). Stock Investing for Dummies.
Dummies.

----------------------------------------------
ACC 291 Week 3 Discussion Question 1

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Why does a company choose to form as a corporation?

Analyzing an Income Statement

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

The company has also decreased its total liabilities by about 4%. I
believe this to be good because the short term borrowings and long
term debt has decreased. To me, this means that the company is
tightening their belt and paying off old debt.

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

I believe the profitability of the company is under good standings.


They appear to be making the necessary adjustments in the company
to stay with in a profitable income.

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ACC 291 Week 3 Discussion Question 2

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Why is preferred stock referred to as preferred?
Cash Flow Statement Analysis

Cash Flow Statement Analysis

The cash flow statement is important financial statement of the


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

The net income of the company was $5500 during 2009. The company
generated cash inflow from operating activity is less as compared
cash out flow from operating activities. The company generated
$9000 negative cash balance in operating activity section of the cash
flow statement. On the other hand, in the investment section, the firm
has also negative cash balance. The firm has $7000 negative balance
in investment section of the cash flow statement. The Little Bit Inc
made investment during the year instead of selling of assets. Last
section of the cash flow statement is financing activity section. In
which, all finance related activities come. The corporation sold some
shares and borrowed some money from outside lenders therefore the
company has positive case balance by $32000 in financing activity
section.
Reference

Weygandt, J.J.,Kimmel, P.D. & Kieso, D.E. (2009). Managerial


Accounting: Tools for Business Decision Making. John Wiley and
Sons.

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Week 5 DQ 1
Due Tuesday, Day 2

In what ways does the statement of cash flows relate to the balance
sheet and income statement?
It is important to understand what we are doing with the numbers and
the results these numbers give us because the result is the information
that will be available to us from financial statements. Although some
want to see the income statement and ignore the other statements we
need to use them together to see the total picture of what is happening
to our business. The relationship between the numbers on the
financial statements shows us everything we need to know about the
business.

The income statement shows income and expenses for a period of


time and if we are making or loosing money. The balance sheet
compares the assets to liabilities and shows how much money the
business would have if everything is sold today.

The statement of cash flow might be the most critical statement


because there is plenty of information we can gain form it. This
statement relates with the income statement on operating activities to
see if they are generating cash or not. It is related to the balance
sheet on how much cash is used in investing activities. In relationship
with the balance sheet the cash flow statement shows what cash is
provided or used by financing activities. It will tell us how much debt
has been paid and will indicated if we are using more debt or have
paid down the credit line.

When the business makes a sale or receives payment for a sale on


credit that is an inflow. A sale shows up as income on the profit and
loss statement and as an inflow on the cash flow statement. It also
shows up either as cash or accounts receivable on the balance sheet.
Also, how quickly we can collect on accounts receivable will play a
big role in the cash flow. When the business spends money, it shows
up as an expense in the profit and loss statement and as an outflow on
the cash flow statement. It also shows up on the balance sheet as a
decrease in cash, or an increase or decrease in liabilities, depending
on what the expense represents.
Response 2
In what ways does the statement of cash flows relate to the
balance sheet and income statement?
The cash flow statement relates to the income statement and balance
sheet. The net income from the income statement is listed on the
statement of cash flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement reconciles the
net income to the actual cash the company received from or used
during operations. The second section of the statement of cash Flows
is the cash flow from investing activities which include purchase or
sale of assets. The last section in the Statement of Cash Flows is the
cash flows from financing activities that includes raising cash by
selling stocks/bonds or borrowing from backs; or cash out flows from
paying back loans. The balance sheet shows the different account
balances at the end of the accounting period. The statement of cash
flows reflects changes in the accounts listed on the balance sheet
between accounting periods. The net cash from operating, financing,
and investing activities are added up to calculate the net change in
cash.

Week 5 DQ 2
Due Thursday, Day 4

Discuss how the statement of cash flows is utilized by investors. If you


were an investor reviewing a statement of cash flows, what section
might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.

Prior to making an investment in a company, one would want to


understand the decisions the owners are making to fund the
operations of the company daily. Maintaining sufficient cash to
acquire new product, pay overhead, and satisfy generated sales would
be the predominant need of the company. Second need would be for
the company to have sufficient cash to remain competitive. This may
require cash to invest in research and development, increase
inventory as new product introduction, improve efficiency in plant
and equipment, or cash to satisfy prior borrowing obligations. By
reviewing the statement of cash flow, the investor can determine if the
company is generating sufficient cash internally to fund operations or
are they requiring outside injection of cash to finance the short fall in
cash needed to operate the company. Last, the investor can review
the statement of cash flow to better understand the leverage of the
company and the requirement for repayment of debt, or dividends to
reward prior investments.

Response 2
Discuss how the statement of cash flows is utilized by investors. If you
were an investor reviewing a statement of cash flows, what section
might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.

The statement of cash flow is utilized by investors because it has all


information integrated from the balance sheet and the income
statement. The statement of cash flow is used by an investor to see if
the operating activities are greater than the net income to have
earnings that are called high quality. If operating activities are
less, then a red flag will be raised as to why the net income is not
becoming cash. Another reason would be investors believe cash is the
best. The statement shows all cash coming and going from the
business. If the company generates additional cash than what is being
used, then the company can reduce their debt, acquire another
business, or buy some of the stock back. The last reason why would be
that financial models are based upon the statement of cash flow.
If I was an investor reviewing a statement of cash flows the section
that might interest me the most would be the operating activities. I
would like to know how the company was doing and what areas need
to be improved to have more cash generated in the business. All the
sections are important to an investor so they can see the complete big
picture of their investment.
----------------------------------------------
ACC 291 Week 3 Individual WileyPLUS Practice Quiz Ch.
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Resource:WileyPLUS

Candela Corporation
Axia College of University of Phoenix

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

Axia College. (2007). Statement of Cash Flows.


Retrieved June 14, 2010 from Axia
College, Week Six, ACC 230.
----------------------------------------------
ACC 291 Week 3 Learning Team Weekly Reflection

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Discuss the objectives for Week Three. Your discussion
should include the topics you feel comfortable with,
any topics you struggled with, and how the weekly
topics relate to application in your field.

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

HARELY
STARBU DAVIDSO
CKS N RITE AID
2008 2008 2008

NET INCOME /
STARTING $ $ $
LINE 315.5 - (1,079.0)
OPERATING $ $ $
ACTIVITIES 1,258.7 (684.7) 79.4
$
INVESTING (1,086. $ $
ACTIVITES 6) (393.3) (2,933.7)
FINANCING $ $ $
ACTIVITIES (184.5) 1,293.4 2,904.0
$ $ $
CASH (11.5) 190.7 49.9
(b) Create a second table for each company
comparing this same information for each of the
three years presented in that companys
statement of cash flows. Include an additional
column that looks at the combined cash flows for
all three years.
STARBUCKS

2008 2007 2006

Net Income/Starting 315. 672.6 564.


Line 5 4 26
Cash from Operating 1258 1331. 1131
Activities .70 22 .63
- - -
Cash from Investing 1086 1201. 841.
Activities .60 95 04
- - -
Cash from Financing 184. 171.8 155.
Activities 50 9 33
-
11.5 - 138.
Net Change in Cash 0 31.35 80
Net Cash - Beginning 281. 312.6 173.
Balance 30 1 81
Net Cash - Ending 269. 281.2 312.
Balance 80 6 61
HARLEY
DAVIDSON

2008 2007 2006

Net
Income/Starti 933. 1043
ng Line 0 84 .15
Cash from -
Operating 684. 798. 761.
Activities 65 15 78
Cash from - -
Investing 393. 391. 35.2
Activities 25 21 6
Cash from - -
Financing 1293 1037 637.
Activities .39 .80 02
Net Change in 190. 164. 97.4
Cash 70 46 2
Net Cash -
Beginning 402. 238. 140.
Balance 85 40 98
Net Cash -
Ending 593. 402. 238.
Balance 56 85 4
RITE AID

200 200
8 7 2006

Net -
Income/Startin 107 26. 1273
g Line 8.99 83 .01
Cash from
Operating 79.3 309 417.
Activities 7 .15 17
Cash from - - -
Investing 293 312 231.
Activities 3.74 .78 08
Cash from -
Financing 290 33. 272.
Activities 3.99 72 84
-
Net Change in 49.6 30. 86.7
Cash 1 08 5
Net Cash -
Beginning 106. 76. 162.
Balance 15 07 82
Net Cash - 155. 106 76.0
Ending Balance 76 .15 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


Starbucks looks a on the down side but previously was d
decreasing from the previous year. This could mean tha

Harley Davidson's operating cash flow has significantly


on an upward cycle from 2006. The decrease in cash fro
information supplied for net income. With the economy
point could have an effect on why the net income is dec
coming year could reflect a positive gain.

Rite Aid's operating cash flow has taken a significant de


taking in cash from investing and cash from financing, t
previous years. Rite Aids net gain in cash could be from
also could reflect the expansion of the company.

----------------------------------------------

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)

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P9-7A, E10-5, E10-8, E10-13, E10-22, E10-24,
BYP10, P10-9A, P10-13A, IFRS10-4.
Exercise 10-5: Olinger Company
Findwhat.com Case - CheckPoint

ACC 230

Findwhat.com has recorded the 135 percent increase in the revenue which is mainly

due to the business acquired of Espotting during the year. The different accounting

policies are present for the acquiring firm and the acquired firm. The company has

recorded certain premature revenues for the amount which advertisers had made only

the advance deposit. As result, the company is recognizing the vendor financing as

revenue. In some places, the gross revenue has been recognized while in another, the

net revenue has been recognized. The network click revenue is recognized at gross

level while the private level revenue is taken at net level. Some of the revenue

expenditures have been recognized as the capital expenditures.

Revenue for set up network fee is treated as deferred revenue and is recognized over

a period of time. The company is very inconsistent with regards to its accounting

policies in terms of recognition of revenue. The provision and treatment of amount for

doubtful debt is also not satisfactory. When a customer clicks on a sponsored

advertisement, the whole of the revenue due to him is recognized. The company is

having a very high amount of doubtful debt balance at the end of the year ending

December 31, 2004.

----------------------------------------------
ACC 291 Week 4 Discussion Question 1

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Why are companies required to prepare a statement of cash flows?

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.
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ACC 291 Week 4 Discussion Question 2

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What are some common ratios used to analyze financial information?
Which are the most important?

Presenting to Stakeholders

Axia College of University of Phoenix

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.


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ACC 291 Week 4 Individual WileyPLUS Assignment

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we have another New set of week 4 Willeyplus assignment which
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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.

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ACC 291 Week 4 IndividualWileyPLUS Practice

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Resource:WileyPLUS
Interpreting Financial Ratios

Luna Lighting, a retail firm, has experienced


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

Industry

2009 2008 2007 2009


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

Based on this information, some possible


reasons for Lunas profitability problems are
suggested as under:
a) Net Profit margin of the company has
degraded and this might be due to decrease
in the net income of the company due to
increase in expenses. This needs to be
improved upon by cost control and cost
reduction.
b) Return on equity of the company has
degraded further and this also indicates that
there is a decrease in the net income of the
company due to increase in expenses. This
needs to be improved upon by cost control
and cost reduction.
c)Fixed charge coverage has fallen, which
means that the debt payment along with
interest might have increased and this will
also lead to decrease in the net income of
the company and thus degrading the
profitability position of the company.
d) Operating profit margin has dropped
even though gross profit margin has
remained constant. It means that the
operating expenses are higher and need to e
controlled to improve the profitability of the
company.
e) The fixed assets turnover and the return
on assets have also degraded; this also
indicates decrease in the net income of the
company.

----------------------------------------------
ACC 291 Week 4 Learning Team Weekly Reflection

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Discuss the objectives for Week Four. 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.

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 4 Stockholders Equity Section of the
Balance Sheet (Lachlin Corporation Balance Sheet)

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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:

Evaluating Financial Health 1


Evaluating Financial Health
Apple Inc. (AAPL)
Axia College of University of Phoenix

Evaluating Financial Health 2


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.

Evaluating Financial Health 3


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

Evaluating Financial Health 4

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

Evaluating Financial Health 5

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.

Evaluating 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.apple.at.34
pc.world.market.share/
Hardware Marketplace. (2010). Computer Hardware.
Retrieved July 2, 2010 from
http://www.hardwaremarketplace.com/computer-hardware/
msn.com. (2010). Apple Inc: Key Ratios. Retrieved July
2, 2010 from

http://moneycentral.msn.com/investor/invsub/results/compare.asp?
Page=PriceRatios&Sy
mbol=AAPL
OnlyHarwareBlog. (2010). Highest debt to equity ratio
in the computer hardware industry
detected in shares of international business
machines. Retrieved July 2, 2010 from
http://onlyhardwareblog.com/?p=2107

----------------------------------------------
ACC 291 Week 4 Wileyplus Assignment Do It! 11-1, E11-5,
E11-7, BYP11-1, BYP11-2, P11-5A, P11-8A (New)

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Do It! 11-1, E11-5, E11-7, BYP11-1, BYP11-2,
P11-5A, P11-8A.

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

Wal-Mart was opposed by the unorganized retail


business holders in the USA as their business was
affected by opening Wal-Mart stores. The company
also opened its first store outside the USA in South
America in 1995. Wal-Mart wanted to spread itself
not only to the USA, but in other countries as well.
In 2006, the company was having 3800 stores in
USA and more than 2980 stores outside USA
making it one of the largest retail chains in the
world. This corporation was also having a vision to
establish itself in to a global entity. Wal-Mart was
one of the first companies to operate in the
organized retail sector (Fishman, 2006). The
modes of entry used by the company were
different for different countries. Wal-Mart used the
mode of entry in to various countries according to
the rules and regulations prevailing in to that
country (Wal-Mart Stores Inc: Financial Statement,
2010).

The sales of the company for the financial year


ending in January 2010 are 413.8 billion dollars
and income for the same period is 14.7 billion
dollars. The quarterly sales growth for the
company has been 5.90%, while the industry
average is 6.80 %. The five-year annual growth in
the sales of the company has been recorded at
7.50 % while five year annual growth of income is
6.58 %. By analyzing the financial statements of
WalMart Incorporated, we find that debt equity
ratio of Wal-Mart is 0.71 on 31st January 2010,
which is 0.68 for the industry. It means the
proportion of debt of the company in its capital
structure is lesser than the equity. The company is
less leveraged so the interest burden on the
company is minimal. Wal-Mart has capacity to
borrow from the market for its CAPEX in the future.
The interest coverage ratio is 13 times in January
2010, which is 21.9 for the industry. Wal-Mart
needs to improve profitability to improve interest
coverage ratio for the reduction of risk of the
lenders of the company (Wal-Mart Stores Inc:
Financial Statement, 2010).

The total revenues received by the organization in


the year ending January 2010 were $408.2 billion
whereas revenues in the year ending January 2009
were $404.3 billion dollars. The revenues in the
year ending January 2008 stood at $377 billion
dollars. Thus, it can be easily analyzed that the
total revenues of the organization has grown over
the years steadily. This has also impacted the net
income of the organization and thus, increments
could also be seen in the net income of the
organization. Net Income, which stood in the year
ending 2008 at $12.7 billion, increased to $13.4
billion for the year ending 2009 and again
increased to $14.3 billion in the year ending 2010
(Wal-Mart Stores Inc: Financial Statement, 2010).
Again if cash flow statement of the organization is
analyzed it can easily be viewed that the cash flow
from operating activities have always increased
from the last three years. The cash flow from
operating activities stood at $20.6 billion in the
year ending 2008 has increased to $23.1 billion for
the year ending 2009 and too further increased to
$26.2 billion for the year ending 2010. But the
cash flow from investing and financing activities
has seen positive and negative fluctuations both.
Here where net cash outflow from investing
activities has decreased first and increased later
again. For the year ending 2008, it stood at $15.6
billion which decreased to $10.7 billion but again
increased to $11.6 billion. Again the net cash
outflow from financing activities increased
constantly since at the end of year 2008, it stood
at $7.4 billion which further for the year ending
2009 increased to $9.9 billion and further
increased to $14.1 billion for the year ending 2010
(Wal-Mart Stores Inc: Financial Statement, 2010).

Wal-Marts return on equity has improved in the


last three years, which is a good sign for the
shareholders of the company. It was 19.9% in
January 2008, which increased to 20.3 % in 2009
and then again marginally increased to 20.4 % in
2010. The return on asset has also shown the
same trends in the last three years. In 2008 the
return on asset was 7.9 %. It increased to 8.1 % in
2009 and then further increased to 8.4 % in 2010.
It shows the increase in the efficiency in the
utilization of the assets of the company. The net
profit margins have been almost the same in the
last three years in the company. It was 3.4 % in
2008, 3.3 % in 2009 and 3.5 % in 2010 (Wal-Mart
Stores Inc: Financial Statement, 2010).
The price to sales ratio and price to book value
ratio have shown negative trends in the last three
years, which shows that the stock of the company
is available at cheap price as compare to the price
it was carrying three years back. The price to sales
ratio, which was 0.55 in 2008, was decreased to
0.46 in 2009 and then improved to 0.51 in 2010.
Similarly, price to book value ratio reduced from
3.12 in 2008 to 2.83 in 2009 and then improved
marginally to 2.86 in 2010. This represents the
better opportunity available for the shareholders to
invest in to the stock of the company. The book
value per share of the company has also increased
in the last three years. It was 16.26 dollars per
share in 2008, which increased to 16.63 dollars per
share in 2009 and further improved to 18.69
dollars per share in 2010. This represents the
increase in the retained earnings of the
shareholders in the company (Shim & Siegel,
2007).

Wal-Marts current assets level has shown stability


in the last three years for the company, which
shows the lesser investment in current assets for
the company even with the increased sales. In
2008 the cash and marketable securities available
with the company was 48020 million dollars, which
increased to 48949 million dollars in 2009 and
then decreased to 48331 million dollars in 2010.

Quantitative Analysis holds huge significance while


evaluating the financial health of the organization.
Three types of techniques are used for quantitative
analysis. The three techniques are trend analysis,
common-size analysis and ratio analysis. Trend
analysis is one of the significant quantitative
analysis tools that assist in analyzing the financial
health of the company as compared to its previous
years. The year on year trends in the financial
statements are studied to analyze whether
organization is improving upon its past
performance or it is further going down (Brigham &
Houston, 2007).

Common-Size analysis is another quantitive


analysis tool again one of another tool that helps in
making evaluation of the financial health of the
company as against its competitors. The financial
statements of the company and its industry
competitors are compared by taking a common
base and then performance is analyzed as against
the competitors. It helps in knowing whether the
organization is performing better than its
competitors or not. Ratio analysis is also used to
evaluate the financial statements of an
organization. This analysis is used to interpret the
performance shown in the financial statements of
the organization. The ratio analysis helps the
organization compare performance over the years
or in the same year (Brigham & Houston, 2007).

Quantitative Analysis is used by the company and


its stakeholders to analyze the financial
performance of the organization. Trend analysis is
used by the company, the shareholders and the
investors to analyze the performance of the
company over the years. Common-Size analysis is
used by the competitors, management, and
investors to evaluate the organization that is
performing better whereas ratio analysis is used
specifically by all the stakeholders to interpret
clear and well defined results shown in the
financial statements of the company (Brigham &
Houston, 2007).
These techniques help to evaluate the liquidity or
short-term solvency. By using current ratio, one
can analyze the effectiveness of the liquidity
position of the organization. Profitability of the
organization is also analyzed through profitability
ratios, common-size analysis, as it helps to know
the organizations profits earned by the company
as compared to others. Trend analysis and ratio
analysis with the help of different asset turnover
ratios and trends could easily analyze that assets
are effectively used or not (Brigham & Houston,
2007).

Wal-Marts current stock price is 50.56 dollars. The


stock has gone up as high as 56.27 dollars, and as
low as 47.35 dollars in the last year. The earnings
per share of the company which was 3.16 dollars
per share in 2008, was increased to 3.35 dollars in
2009. Earnings per share further increased to 3.76
dollars in 2010. The analysis shows the
improvement in the earnings of the company in
the last three year. The current price earnings ratio
of the company is 13.2 which is less than the
industry average of P/E ratio of 15 times (Wal-Mart
Stores Inc (WMT), 2010).

Analyzing the stock of the company from the


investment point of view, we can estimates that
the fundamentals of the company are very strong.
The stock has return on equity, return on assets
better than the industry average of 22.9 % and 9.1
% respectively. The company has given a better
annual average return on asset and return on
equity in the last five years as compared to the
industry. The company has a debt equity ratio and
net profit margin, which is less than the industry.
However, Wal-Mart is improving on the efficiency
front. As a result, Wal-Mart stock is recommended
for investment.

References

Brigham, E.F. & Houston, J.F. (2007). Fundamentals


of Financial Management. (11th ed.). Cengage
Learning.

Fishman, C. (2006). The Wal-Mart Effect: How the


World Most Powerful Company Really Works-- and
How it's Transforming the American Economy.
Penguin Group

Shim, J.K. & Siegel, J.G. (2007). Schaum's Outline


of Financial Management. (3rd ed.). McGraw-Hill
Professional.

Wal-Mart Corporate. (2010). History. Retrieved July


25, 2010 from http://walmartstores.com/AboutUs/297.aspx

Wal-Mart Stores Inc: Financial Statement (2010).


Retrieved May 31, 2010, from
http://moneycentral.msn.com/investor/invsub/results/statemnt.as
px?Symbol=WMT

Wal-Mart Stores Inc. (WMT) (2010). Retrieved May


31, 2010, from http://finance.yahoo.com/q/co?
s=WMT+Competitors

----------------------------------------------

ACC 291 Week 5 Discussion Question 1

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Why do corporations buy back their own stock?

For this week's checkpoint we had to look up three job postings in the
field of accounting. I'm glad that I got this opportunity because it
actually opened my eyes and expanded my knowledge in the
accounting field. The three job positions are listed below. The first job
title was Senior Internal Auditor. A Senior Internal Auditor
responsibilities is to plan and perform financial, operational audits,
and identify business process risk. This job position only specified
that the pay was well over 100k a year!!!! Qualifications BA/BS,
and minimum of 3-4 years public accounting. The second job posting
was a Tax Manager. Tax Manager is responsible for conducting basic
tax research, maintain tax records and ensure proper tax accounting.
This position requires a BA in Accounting, and a minimum of 7-8
years of expereience.The job pay is listed as 120k!!! The third job
posting was Assistant Corporate Controller- SR Management.
Assistant Corporate Controller- SR Management position Inventory
Accounting for North America, Credit management for North
America and Corporate accounting for Latin America, responsible
for assuring accuracy of inventory and sales and works closely with
external auditors on receivable audits. The requirements for this
position is as follows, BA/BS, public accounting experience preferred,
Strong verbal and written communication. For the Assistant
Corporate Controller- SR Management the salary pay starts at 110k-
130k with bonus and benefits.

I didn't know that Accounting career actually paid this much. I might
think about changing my careers.

----------------------------------------------
ACC 291 Week 5 Individual Effect of Unethical Behavior
Article Analysis

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

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

----------------------------------------------
ACC 291 Week 5 Individual WileyPLUSAssignment
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we have another New set of week 5 Willyplus assignment which
could be found on this link

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.
----------------------------------------------
ACC 291 Week 5 Learning Team Ratio Analysis Memo

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Resource:Virtual Organizations
Click the Virtual Organization link on the student
website to access the Virtual Organizations.
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
----------------------------------------------

ACC 291 Week 5 Learning Team Weekly Reflection

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Discuss the objectives for Week Five. 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.

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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