ACCT 504 Case Study 1 (Gordon Construction)

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Case Study 1 (Part A)Analyze the impact of business
transactions on accounts; record (journalize and post)
transactions in the books; construct and use a trial
balance) Discussion Question 1: Post your response
to the following:
How would you describe the difference between
financial and managerial accounting? What are the
distinguishing features of managerial accounting?
There are many differences between financial and
managerial accounting. The financial accounting
statements are available to external users such as
employees, stockholders, creditors, investors, etc. This
is available to them so that they can monitor the
company's performances quarterly or annually.
Managerial accounting provides financial information
for managers and other internal people or department.
Managerial accounting is confidential so it is only
observed by internal users such as management,
owner, and will provided to external users such as the
public. Management uses this for budgeting purposes
or to monitor profit loss/gain within the company.
Managerial accounting can be available to them as
often as needed. Managerial accounting statements is
a great way for management to make decisions based
on what has been reported.
Another response
The differences between managerial accounting and
financial accounting are distinct. Managerial accounting
reports are for those in managerial and decision
making positions. The managers use the financial
report to answer questions, which would advance the
company and its employees. The manager would want
to know if certain investments should be made and
should the company advance an employee's salary.
The manager needs the report to decide if a factory is
built or if a certain stock is brought. The financial
accountant has the job of showing the external users
such as creditors and stockholders a picture of the
company's stability.

The manager's purpose is to manage by making stable

plans, delegate duties, motivate the workers, and
control the atmosphere. Distinguishing features of
managerial accounting are the fact no cpa will audit
the report, and there is no specific frequency of the
report. The reports are done in a need to know basis
and for a specific reason, which is for business
purposes. The reports are detailed and pertain to
specific business decisions. The financial accountant
need only be concerned with the company's finances.

DQ2
Discussion Question 2: Post your response to the
following:
Select a management function (planning,
directing and motivating, or controlling) and explain
how that function relates to business as a whole. Next,
select a different function listed by a classmate.
Discuss with your classmate how the functions you
each selected complement each other.
The management functions that I choose was
controlling. Controlling job is to make sure that
the each department/person is keeping the company's
activities or plans on track and in order to achieve that
they must work closely with Management planning
function. Controlling continually compares the
company's performance to make sure that the planned
standards are being met. In my opinion this is known as
the "dirty work". Controlling operations have to know
what to look for and how to keep track of all the
company's activities. They have to take actions and
quickly correct any errors and make sure that the
company goals are being achieved in a timely matter
or the time that it was planned. If there are errors it is
job of the controlling operations to take quick action.
The controlling operations not only correct errors after
it happens but they also are in charge of foreseeing
any potential errors and act quickly to get that
resolved.

Another response
I chose Controlling as part of the management
function. The controlling function relates to business as
a whole because it helps monitoring the firms
performance to make sure the planned goals are being
met. Managers need to pay attention to costs versus
performance of the organization. let say, if the
company has a goal of increasing sales by 10% over
the next two months, the manager may check the
progress toward the goal at the end of month one. If
they are not reaching the goal the manager must
decide what changes are needed to get back on track.
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ACCT 504 Case Study 2 (Williams Oil)

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Case study (Learning Objectives 2, 4: Explain the
components of internal control; evaluate internal
controls) Each of the following situations reveals an
internal control weakness: 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_profi
ts*the_p_l. Retrieved 2/28/2010
//http:yourdictionary.com /CVP.org Retrieved 2/26/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52
Statements

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ACCT 504 Case Study 3 (Wang Appliance Store)

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Construct and use a cash budget) Nathan Farmer, chief
financial officer of Wang Appliance Store, is responsible
for the company?s budgeting process. Farmer?s staff is
preparing the Wang cash budget for 2014. A key input
to the budgeting process is last year? 7 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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ACCT 504 Course Project Analysis of Nike, Inc. and Under
Armour, Inc.

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Course Project: A Financial Statement Analysis A
Comparative Analysis of Nike, Inc. and Under Armour,
Inc. Below is the link for the financial statements for
Nike, Inc. for the fiscal year ending 2014. First, select
2014using the drop-down arrow labeled Year, and then
select Annual Filings using the drop-down arrow labeled
All. You should select the 10k dated 7/15/2014,and
choose to download in PDF, Word, or Excel format. Axia
College Material
Appendix C

Budgets Matrix

Directions: Using the matrix, define each of the

budgets listed and briefly describe its uses.

Budget Definition Describe i

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

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ACCT 504 Course Project Oracle and Microsoft Corporation
(Devry)

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Course Project

Financial Statement Analysis Project -- A Comparative Analysis of

Oracle Corporation and Microsoft Corporation

Here is the link for the financial statements for Oracle Corporation
for the fiscal year ending 2007. First, select 2007 using the drop-
down arrow labeled for Year on the right-hand side of the page, and
then select Annual Reports using the drop-down arrow labeled Filing
Type on the left-hand side of the page. 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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ACCT 504 Entire Course (Devry)

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ACCT 504 Week 1-7 All Discussion Questions

ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation

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

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

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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ACCT 504 Midterm Exam (4 Sets, 2017)
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This Tutorial contains 4 Set of Midterm Exam 1.
Question : (TCOs A and E) Your friend, Ellen, has hired
you to evaluate the following internal control
procedures. Explain to your friend whether each of the
numbered items below is an internal control strength or
weakness. You must also state which internal control
procedure relates to each of the internal controls.

Business Plan

By

Kamilah T. Crooms
 DestinyWear

The name of my business is called DestinyWear.

DestinyWear is a urban fashion clothing company for
woman, men and youth. DestinyWear specializes in
making clothing for every occasion. My name is
Kamilah Crooms and I am the owner and CEO of
DestinyWear.My goal is to ensure that my company will
be succesfull in all areas and in each department. In
order for me to make sure that the company was going
to begin in the right direction I had to priortize what
was most important in establishing my business plan.
The main priority is that I had to first choose the
appropriate business structure, a high demanding
product, and most of all an outstanding accounting
team.
Business Structure
Upon establishing DestinyWear I had to decide which
business struture that I felt was best for me to pursue. I
decided that as a Entreprenuer the best choice for me
abd the direction of the company would be for me to be
sole proprietorship. Sole proprietorship allowed me to
be the sole owner of DestinyWear. The first and most
important reason that I wanted sole proprietorship is
because it is much easier to start a business as sole
proprietorships. Sole proprietorship takes all the profit
that and doesn't have to split it between any other
owners or corporations. I also want the power to make
and change decisions along the way without having to
first consult anyone else.

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

DestinyWear Accounting Department

The accounting plays a major role in establishing my
company DestinyWear. The accounting department
does more than managing and reporting the companys
financial documents it is the greatest tool in
establishing my business. The key to a powerful
accounting department here at DestinyWear is
applying the principles of internal control. These
principles consist of establishment of responsibilities,
segregation of responsibilities, documentation
procedures, Physical, mechanical, and electronic
controls, Independent internal verification and other
controls such as Bonding of employees. In order to
ensure that this business plan works DestinyWear has
to hire nothing but the best qualified employees.
DestinyWear Accounting Staff
DestinyWear accounting team of fine employees
will all be hired through the company. There are
several requirements that have to be met in order for
myself as the owner and Human Resource department
to even consider the applicant for accounting. We
looked for characteristics, education and work history
experience. The first and far most important qualifying
requirements are education. The applicant has to have
a Bachelor BA/BS in accounting degree a plus if he or
she has a masters.
The second requirement is experience. The applicant
must have the minimum of five years of experience
working in accounting. He or She must have knowledge
and employment experience of working with financial
statements, cash management and internal control.
Employees must be experienced in Invest idle cash,
planning the timing of major expenditures, delay
payment of liabilities keeping inventory levels low, and
increasing the speed of collection on receivables. In the
category of experience we had to hire applicants
according to the position that had to be filled in
accounting. For example, if a position in accounting
such as management or supervisory needed to be
filled, then we would look for years of experience in
management or supervisory positions. I personally
prefer that every employee have some type of
management experience.
Last but not least, the employees characteristics. It is a
must that every accounting staff member has and
applies professionalism, great ethic and moral skills,
accuracy, and most importantly punctuality, and
reaching company deadlines. These characteristics are
very important to have at DestinyWear.
DestinyWear Accounting Management Team
The DestinyWear accounting management team
will be reporting to me and to the other head staff each
week to report updates and any new changes. The
management team is responsible to have all the
different types of budgeting reports that includes Sales,
Labor, etc. Management must follow the responsibility
reporting system for each department. The managers
will use the companys financial information to predict
outcomes of the business. I require a report from each
responsibility center, cost center, profit center and
investment center to be reported each month.
Management is responsible to ensure that the company
does not over or under budget and if any changes it
must be reported immediately.
Conclusion
DestinyWear will be a very successful team not
only because of the products that we produce but
because of having a great accounting team. With the
help of accounting team I DestinyWear products will be
in every wardrobe in America.

REFERENCES
 //http:yourdictionary.com /CVP.org Retrieved
3/20/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52
Statements. March 19, 2010
Drucker, P. Managing in the next society 2002.
retrieved march 19,2010

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ACCT 504 Week 1-7 All Discussion Questions (Devry)

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Week 1DQ 1 - Financial Reporting Environment and GAAP

Week 1DQ 2 - Details of Financial Statements and Ratios

Costco Wholesale Corporation

If we look at the financial statements of the company we can find that
the company is financially strong. Its strength are:
1. It has enough amount of current asset to repay its current
liability. The current ratio of the company 8.18 indicates that
the company has $8.18 liquid asset to repay its $1 of current
liability.
2. The operating cost of the company is increasing because the
company is able to reduce its expenses.
3. Cash from operating activity has increased for the company.
Apart from this strength the company also has some weakness in its
financial statement:
(i) Increasing inventory indicates that the company inventory
conversion period is increasing.
 (ii) The cash from investing activity shows that the company cash
outflow is more in the short term investment i.e. in non
operating activity.
(iii) The overall has for the year 2008 has declined for the
company.
Net Income:

Net Income
$1,300,000
$1,250,000

$1,200,000

$1,150,000 Net Income

$1,100,000

$1,050,000

$1,000,000

$950,000
2006 2007 2008

If we look at the trend in net income of the company we can find that
the company net income looks fluctuating but it has improved it net
income in 2008 as compared to 2007.
Debt ratio as a percentage of total assets:

Debt ratio as percent of total asset

55.80%
55.70%
55.60%
55.50% Debt ratio as percent
55.40% of total asset
55.30%
55.20%
55.10%
55.00%
54.90%
2007 2008
If we look at the debt ratio as percent of total asset we can find that
the debt ratio is declining in 2008 as compared to 2007 i.e. the
company is increasing equity to finance debt.
Debt as a percentage of total equity:

Debt as percent of total equity

127.00%
126.50%
126.00%
125.50% Debt as percent of
125.00% total equity
124.50%
124.00%
123.50%
123.00%
122.50%
2007 2008

As we can see that the debt as percent of total equity is declining in

2008 as compared to 2007 i.e. the company is increasing equity in its
capital structure.
As we can see that there is nothing negative in 2008 for the company
and this is the reason it has positive trend as compared to 2007.
Hence there is no need to correct anything for the company.
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ACCT 504 Week 2 Homework (E2-17A, E2-18A, E3-22A,
E3-23A)

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This Tutorial contains Excel Files which can be used to
solve for any values (your Question may have different
company name or values, but that can be solved using
Excel file) E2-17A Dr Anna Grayson opened a medical
practice specializing in physical therapy 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.
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ACCT 504 Week 3 Case Study 1 (Melvin Plumbing
Corporation) **New**

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MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH
ARE LISTED BELOW. There are 10 sheets in the
Workbook, including this one. All of the information
that you need for the project is located in this
Workbook. Requirement #1 Lucent Technologies
Axia College of University of Phoenix
Lucent Technologies is a company based on networking
for service providers, government, and enterprises
worldwide (Lucent Technologies, n.d., Para 1). The
products and services they work with are separated
into three categories; service and maintenance,
wireless mobility networking, and wire line networking.
Lucent Technologies is backed by Bell Labs, which does
research and development in networking technologies.
During the years of 2001 to 2003 this company has
experienced a decrease in demand because of other
companies loss or capital used toward spending. This
is mainly due to a downturn in the economy. As an
investor this information is necessary to know because
it explains the decrease or increase in sections of the
balance sheet. In order to compare the growth or
decline of the companys profit, an investor must
change a balance sheet into a common-size balance
sheet. First when looking at the balance sheet an
investor will see that the amount of paid in capital has
increased from the year of 2003 to 2004, the assets
have increased, but the liabilities have decreased.
When running a debt/asset ratio it is noticed that this
ratio drops from 1.2 in 2003 to 1.0 in 2004. This shows
the companys risk is low when concerning financial
leverage, usually when the debt ratio is less than one
percent it is financed mainly by company equity, so this
company is close to being debt free from creditors.
After changing the balance sheet to a common-size
balance sheet there are several factors an investor will
look at. The current assets have dropped to .48 from .
49 in 2004. This does not show harm to the company
because only the accounts receivable dropped while
the rest of the current assets increased. This means the
company is not in as much danger of default on money
owed to it. It does have a rise in marketable securities.
The one concern in the assets is the increase of prepaid
cost of pensions and goodwill. Goodwill can be used for
tax breaks but prepaid pensions cannot benefit the
company.
When looking at the liabilities section an investor will
see a drop in pension and liabilities and an increase in
long term debt, both of these could be affected
because of the drop in the economy. Long term
liabilities are often increased to help a company control
interest rate increases so as an investor cutting back
on pension liabilities cuts back cost to the company
and watching interest rate increase show the company
is concerned with its earning and investors. This would
be encouraging or an investor. The stockholders deficit
shows a drop in accumulated deficits from -1.43 to
-1.22 and total deficits of -.26 to -.08. This shows the
company is working to control any money loss and
turning it to the companys advantage. Overall it shows
the company is still earning a profit although small.
With an increase of assets and a drop in liabilities the
company is showing it is working in a low risk capital.
After reviewing this information, a creditor or investor
must be able to compare this company to the industry
totals. By comparing how this company compares to
other companies similar to it, a person can see if it is
competitive and worth taking a risk. Running ratios will
also show if the company is capable of paying off any
debts it has or if it can acquire the needed cash in case
of emergencies. Overall as an investor, I would say this
company would be worth investing in.
Reference
Axia College. (2007). Understanding Financial
Statements. Retrieved May 10, 2010 from Axia College,
Week 2 Assignment, ACC/230.
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ACCT 504 Week 3 Case Study 1 Flower Landscaping
Corporation (Devry)

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

Differentiating Depreciation Methods

There is one main difference between straight line depreciation and

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

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Q -1 Other comprehensive income A. includes
extraordinary gains and losses. B. affects earnings per
share. C. includes unrealized gains and losses on
available-for-sale investments. D. has no effect on
income tax.
Preparing an Income Statement

The companies net income is profitable when the sales

exceed the cost of goods sold. In this, the gross profit is
$761k. This is beneficial to the company. Though we
took the cost of goods away from the net sales there
are still other areas which need to take a piece of the
pie. For this company, once the SG&A and depreciation
are taken out, the company still contains a profit of
$290k. But the buck does not stop there. Once the
interest income and interest expense are adjusted the
balance before earnings and taxes is $290k. After taxes
are taken out, the company is left with a net profit of
$174k.
In this case I think the company has achieved success
with a net profit of $174k. If the company were unable
to be profitable, the company would eventually go out
of business. We would be able to tell if the company
was not profitable by looking at each section
individually. The cost of goods sold is what stands out
for me. If we pay more to make the product then we
are actually selling it for, there is no profit to be made.
So, I think it should all start there.
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ACCT 504 Week 4 Quiz

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

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

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

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

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.
----------------------------------------------
ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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.

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

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The units-of-production method tracks the wear and
tear on the van most closely. Requirement 3. Which
method would Tasteful's prefer to use for income tax
purposes? Explain in detail why Tasteful's prefers this
method. For income tax purposes, 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.
----------------------------------------------

ACCT 504 Week 6 Case Study 3 - Cash Budgeting - LBJ

Company (Devry)

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ACCT504 Case Study 3 on Cash Budgeting
The cash budget was covered during Week 4 when we covered TCO D
and you read Chapter 7. There is also a practice case study to work
on. Your Professor will provide the solution to the practice case study
at the end of Week 5. Week 5 DQ 1
Due Tuesday, Day 2

In what ways does the statement of cash flows relate to the balance
sheet and income statement?

It is important to understand what we are doing with the numbers and

the results these numbers give us because the result is the information
that will be available to us from financial statements. Although some
want to see the income statement and ignore the other statements we
need to use them together to see the total picture of what is happening
to our business. The relationship between the numbers on the
financial statements shows us everything we need to know about the
business.

The income statement shows income and expenses for a period of

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

The statement of cash flow might be the most critical statement

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

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

credit that is an inflow. A sale shows up as income on the profit and
loss statement and as an inflow on the cash flow statement. It also
shows up either as cash or accounts receivable on the balance sheet.
Also, how quickly we can collect on accounts receivable will play a
big role in the cash flow. When the business spends money, it shows
up as an expense in the profit and loss statement and as an outflow on
the cash flow statement. It also shows up on the balance sheet as a
decrease in cash, or an increase or decrease in liabilities, depending
on what the expense represents.

Response 2
In what ways does the statement of cash flows relate to the
balance sheet and income statement?
The cash flow statement relates to the income statement and balance
sheet. The net income from the income statement is listed on the
statement of cash flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement reconciles the
net income to the actual cash the company received from or used
during operations. The second section of the statement of cash Flows
is the cash flow from investing activities which include purchase or
sale of assets. The last section in the Statement of Cash Flows is the
cash flows from financing activities that includes raising cash by
selling stocks/bonds or borrowing from backs; or cash out flows from
paying back loans. The balance sheet shows the different account
balances at the end of the accounting period. The statement of cash
flows reflects changes in the accounts listed on the balance sheet
between accounting periods. The net cash from operating, financing,
and investing activities are added up to calculate the net change in
cash.
Week 5 DQ 2
Due Thursday, Day 4

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

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

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

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

Response 2
Discuss how the statement of cash flows is utilized by investors. If you
were an investor reviewing a statement of cash flows, what section
might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.
The statement of cash flow is utilized by investors because it has all
information integrated from the balance sheet and the income
statement. The statement of cash flow is used by an investor to see if
the operating activities are greater than the net income to have
earnings that are called high quality. If operating activities are
less, then a red flag will be raised as to why the net income is not
becoming cash. Another reason would be investors believe cash is the
best. The statement shows all cash coming and going from the
business. If the company generates additional cash than what is being
used, then the company can reduce their debt, acquire another
business, or buy some of the stock back. The last reason why would be
that financial models are based upon the statement of cash flow.
If I was an investor reviewing a statement of cash flows the section
that might interest me the most would be the operating activities. I
would like to know how the company was doing and what areas need
to be improved to have more cash generated in the business. All the
sections are important to an investor so they can see the complete big
picture of their investment.
----------------------------------------------
ACCT 504 Week 6 Homework (E10-19A, E10-25A, E12-
16A, E12-20A)

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www.acct504mart.com
This Tutorial contains Excel Files which can be used to
solve for any values (your Question may have different
company name or values, but that can be solved using
Excel file) E10-19A Army Navy Sporting Goods is
authorized to issue 10,000 shares of common stock.
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.

----------------------------------------------
ACCT 504 Week 7 Course Project JCP Kohls (Devry)

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ACCT 504 Week 7 Course Project JCP Kohls (Devry)

Analyzing Statements of Cash Flows

4.8. Research Problem

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

STATEMENT OF CASH FLOW ANALYSIS

STARBUC HARELY
KS DAVIDSON RITE AID
2008 2008 2008

NET INCOME / $ $ $
STARTING LINE 315.5 - (1,079.0)
OPERATING $ $ $
ACTIVITIES 1,258.7 (684.7) 79.4
$ $ $
INVESTING ACTIVITES (1,086.6) (393.3) (2,933.7)
$ $ $
FINANCING ACTIVITIES (184.5) 1,293.4 2,904.0
$ $ $
CASH (11.5) 190.7 49.9

(b) Create a second table for each company comparing this same information for
each of the three years presented in that companys statement of cash flows.
Include an additional column that looks at the combined cash flows for all three
years.
STARBUCKS

2008 2007 2006

Net Income/Starting Line 315.5 672.64 564.26

1258.7
Cash from Operating Activities 0 1331.22 1131.63
-
1086.6
Cash from Investing Activities 0 -1201.95 -841.04
-
Cash from Financing Activities 184.50 -171.89 -155.33
Net Change in Cash -11.50 -31.35 138.80
Net Cash - Beginning Balance 281.30 312.61 173.81
Net Cash - Ending Balance 269.80 281.26 312.61

HARLEY DAVIDSON

2008 2007 2006

Net Income/Starting 1043.1

Line 0 933.84 5
-
Cash from Operating 684.6
Activities 5 798.15 761.78
-
Cash from Investing 393.2
Activities 5 391.21 -35.26
Cash from Financing 1293. - -
Activities 39 1037.80 637.02
190.7
Net Change in Cash 0 164.46 97.42
Net Cash - Beginning 402.8
Balance 5 238.40 140.98
Net Cash - Ending 593.5
Balance 6 402.85 238.4

RITE AID

2008 2007 2006

-
1078. 26.8 1273.
Net Income/Starting Line 99 3 01
Cash from Operating 309. 417.1
Activities 79.37 15 7
Cash from Investing - - -
 2933. 312. 231.0
Activities 74 78 8
-
Cash from Financing 2903. 33.7 272.8
Activities 99 2 4
30.0 -
Net Change in Cash 49.61 8 86.75
Net Cash - Beginning 106.1 76.0 162.8
Balance 5 7 2
Net Cash - Ending 155.7 106.
Balance 6 15 76.07

(c) Write a short analysis of the

information gathered. Your discussion
should address, among other things,
whether cash flow from operating
activities is large enough to cover
investing and financing activities, and
if not, how the company is financing
its activities. Discuss differences and
similarities between the companies
you have chosen.

Starbucks operating cash flow has gone up in 2007 and decreased a little in 2008. The net c
The net loss in cash at end of year is decreasing from the previous year. This could mean th

Harley Davidson's operating cash flow has significantly decreased from 2007. It appears the
activities is probable from the lack of information supplied for net income. With the econom
the net income is decreasing. With a bounced back economy in the coming year could refle

Rite Aid's operating cash flow has taken a significant decrease as well from previous years.
in cash is better than it has been in previous years. Rite Aids net gain in cash could be from
the company.