ACCT 504 Case Study 1 (Gordon Construction)

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Case Study 1 (Part A)Analyze the impact of business
transactions on accounts; record (journalize and post)
transactions in the books; construct and use a trial
balance) During the first month of operation of Gordon
Construction, Inc Income statement is a financial
statement that shows how much money is coming from
product sales and services prior to any expenses being
taken out. Both internal and external users such as
managers and investors are able to access this. For
example, if a investor wanted to see if the company
made money or lost money they would use this
financial statement report.
Balance sheet shows what condition the company is
currently in. whereas the other financial statements
only came monthly or annually. For example, what if
the management planning team wanted to see the
company's current assets, ownership equity and
liabilities? All they have to do is run the balance sheet
report.
CVP income statement or Cost Volume statement
reports or monitors the effects of the changes in cost
and volume when it comes to the company profits. For
example, I work at a manufacturing plant for roofing
shingles. The CVP analyst studies the cost which
includes but not limited too, manufacturing, material,
labor cost. This financial statement report would help
the management team budget the cost of
manufacturing goods.
Statement of cash flow tracks the movement of cash
coming in or out of the business. This financial
statement will show if the company made cash or not,
or if the net income increased or decreased. For
example, the owner or the management department
will use this to determine if the company has earned
enough money to be able to for any expenses.
Retained earnings statements is a percentage that is
kept by the company to be reinvested or to be used to
pay debts. For example, if a company was looking to
expand their business by purchasing top of the line
equipment they can use this statement to see how
much money the company has put away.

References:

http://www.investopedia.com/terms/r/retainedearnings.asphttp://fin
ancial- Retrieved 2/18/2010

statements.suite101.com/article.cfm/financial_stateme
nts_the_p_l. Retrieved 2/18/2010
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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: Axia College Material
Appendix B

Cash Management Matrix

Directions: Using the matrix, list how each of the

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

Principles of Internal How it Works Example

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

Principles of Cash How it Works Example

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

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ACCT 504 Case Study 3 (Wang Appliance Store)

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Construct and use a cash budget) Nathan Farmer, chief
financial officer of Wang Appliance Store, is responsible
for the company?s budgeting process. Farmer?s staff is
preparing the Wang cash budget for 2014. A key input
to the budgeting process is last year?s statement of
cash flows, which follows (amounts in thousands
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 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.
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 Course Project Oracle and Microsoft Corporation

(Devry)

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Course Project

Financial Statement Analysis Project -- A Comparative Analysis of

Oracle Corporation and Microsoft Corporation

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

You should select the 10k dated 6/29/2007 and choose to download in
PDF, Word, or Excel format. 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 Entire Course (Devry)

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ACCT 504 Week 1-7 All Discussion Questions

ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation

ACCT 504 Week 4 Midterm Exam Set 1

ACCT 504 Week 4 Midterm Set 2
Axia College Material
Appendix C

Budgets Matrix

Directions: Using the matrix, define each of the budgets listed and briefly describe its uses.

Budget Definition Desc

Sales budget Estimate of the expected sales for The sales budg
the period. All of the other budgets units. This will
depend on the sales budget. This is see how many
where all the other budgets will produced for th
start from

Production budget A production of units needed to be Shows manage

produced in order to meet the will be produce
projected sales period and wha
to fulfill invent

Direct materials budget Is the estimated quantity or cost of Shows manage

the raw materials that is needed in materials that
order to produce the units required and or that nee
to fulfill inventory meet inventory

Direct labor budget A estimate of cost and quantity of Shows how ma

direct labor needed in order to laborers neede
meet production units for that b
Management w
be the right am
needed and if t
able to meet th

Manufacturing overhead budget An estimated expected amount of This list all ove
manufacturing cost for the budget cash disbursem
period

Selling and administrative expense budget Anticipated selling and Shows area of b
administrative expenses in the are not listed o
budget period manufacturing.
marketing, pro
the budget per

Budgeted income statement Estimate of expected profitability of Is a very impor

operations in a budget period shows the com
 for the budget

Cash budget A projection of expected cash flows Cash budget he

in and out of the business. keep a tally or
balances.

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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)

Discussion Question 1: Post your response to the following:

You know how important it is to create budgets for your

household. How does budgeting help management make good
business decisions?
Budgeting is a very important skill that can be applied to everyday
life and also when it comes to making good business decisions. I
really like the way our class resources says about Budgeting.
Budgeting is used as a planning tool used by management to make
good decision for the company. If a company is successful than more
than likely that means that the management team is very good at
managing the company finances. Budgeting helps management plan
ahead, defines what is most important, shows warning signs, reach a
company target without over or under budgeting and etc.

Another response
In a business, a budget helps a business make good decisions because
they are used by the company to plan for future events and coordinate
the events and duties in the company. They also gives objectives used
to evaluate the performance of the company on each level which can
help to make future decisions that will not hurt the company based on
the projected objectives. It can also be used to alert the company of
possible problems or negative trends in the company that need to be
addressed so that there is a clear picture of the overall health of the
company before decisions are made. The budget helps the company to
be able to make an informed decision when making one. It is there in
order to make sure that making a decision like taking on another
company will not hurt the company and is something that the
compnay can sustain based on the budget.

DQ2
Discussion Question 2: Post your response to the following:
What are some of the different types of budgets?

Describe in detail one type of budget covered in the text.

Describe what the budget is used for and what information it

provides a business.

Then, as you respond to your classmates, discuss how the

budget you described relates to the budgets they described.

Discuss how a business benefits from each of the budgets.

There are many different types of budgetting. For example, there sales
budget which allows management to see how many units that need to
be produced, production budget which will allows everyone to see
how many units are going to be produced in or needed to be produced
in order to meet the inventory for that budget period. One budget that
I can describe in detail is called the direct labor budget and this
budget shows how many people, hours is needed in order to meet the
required budget for that period. This will give management an idea of
how much money is needed such as paying the cost of labor. The
company benefits by each of these budgets because it will help
manage just how much money it will cost the company during this
period. Management can also see if there are different ways to cost
the company out of pocket cost down during this period.

Another response
I chose to write about the Production Budget. The Production Budget
shows the cost of each unit needed to produce an item or manufacture
a product. The formula used by the Production Budget :

Budget sales units + Desired ending finished goods units - Beginning

finished goods units = Required production units.

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

Every Easter Holiday, there appears these Hot Cross Buns and the
bakeries production department allows for the purchases for items
needed to make the buns. After Easter has gone, Hot Cross Buns are
not included in the budget.
--------------------------------------------------------------

ACCT 504 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. What
is a Flexible budget?
A Flexible budget is a budget that change or is
flexible during different levels or activity. Unlike the
static budget which is a budget based on one activity
level, the flexible budget is based off of more than one
activity level.

The steps to development a flexible budget is :

a) Identify the activity index, and the range of
activity
b) Find out what the variable cost, and determine
the variable cost per unit
c) Find out what the fixed cost and determine the
budgeted amount for each unit
d) Organize the budget for selected additional
activity within the appropriate range

The information found on a flexible budget

cannot begin with the master budget. The flexible
budget uses the same guidelines the original budget.
The budget consists of Sales, Cost of Goods Sold,
Selling Expenses, General and Administrative
Expenses, Income Taxes, and finally the Net Income.
The information on the budget is a great tool to
be used for evaluation performances. The flexible
budget can be used for monthly comparison purposes.
Also during the process that management is identifying
the activity index and the range of activity it will allow
them to see the cost of direct labor hours for that
budget period.
--------------------------------------------------------------

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

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Week 1DQ 1 - Financial Reporting Environment and GAAP

Week 1DQ 2 - Details of Financial Statements and Ratios

Week 2DQ 1 - Accounting EquationAccounting Cycle

Week 2DQ 2 - Accrual Accounting and Adjusting Entries

Week 3DQ 1 - Merchandising Operations and Income Statements

Week 3DQ 2 - Inventory Cost-Flow Assumptions

Capstone Discussion Question: Post your response to the following:

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

To be perfectly honest with you I truly had no clue what accounting

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

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

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

ACCT 504 Week 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. During the
first month of operation (May), the business, titled.
Anna Grayson

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

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

Costco Wholesale Corporation

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

Net Income
$1,300,000

$1,250,000

$1,200,000
$1,150,000 Net Income

$1,100,000

$1,050,000

$1,000,000
$950,000
2006 2007 2008

If we look at the trend in net income of the company

we can find that the company net income looks
fluctuating but it has improved it net income in 2008 as
compared to 2007.
Debt ratio as a percentage of total assets:
Debt ratio as percent of total asset
55.80%
55.70%
55.60%
55.50% Debt ratio as percent
55.40% of total asset
55.30%
55.20%
55.10%
55.00%
54.90%
2007 2008

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

can find that the debt ratio is declining in 2008 as
compared to 2007 i.e. the company is increasing equity
to finance debt.
Debt as a percentage of total equity:

Debt as percent of total equity

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

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

is declining in 2008 as compared to 2007 i.e. the
company is increasing equity in its capital structure.
As we can see that there is nothing negative in 2008
for the company and this is the reason it has positive
trend as compared to 2007. Hence there is no need to
correct anything for the company.
--------------------------------------------------------------

ACCT 504 Week 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.
Week 1 DQ 1
Due Tuesday, Day 2

Go to the U.S. Securities and Exchange Commissions Web site

at http://www.sec.gov and the Financial Accounting Standards
Boards Web site athttp://www.fasb.org. Identify the mission and main
activities of each organization. Then, analyze the similarities and
differences between the roles of each entity. Which entity has more
influence over financial statement reporting? Explain your answer.
According to the SEC website their mission is to protect investors,
maintain fair, orderly, and efficient markets, and facilitate capital
formation. The SEC also requires public companies to disclose
meaningful financial and other information to the public. This
provides a common pool of knowledge for all investors to use to judge
for themselves whether to buy, sell, or hold a particular security. The
SEC is concerned primarily with promoting the disclosure of
important market-related information, maintaining fair dealing, and
protecting against fraud.
According to the FASB website the mission of the FASB is to establish
and improve standards of financial accounting and reporting that
foster financial reporting by nongovernmental entities that provides
decision-useful information to investors and other users of financial
reports. Since 1973, the Financial Accounting Standards Board
(FASB) has been the designated organization in the private sector for
establishing standards of financial accounting that govern the
preparation of financial reports by nongovernmental entities

The major difference in the SEC and the FASB is that the SEC deals
with reporting of financial statements for all industries while the
FASB deals mainly with the private nongovernmental entities. Both
are concerned with the fairness of financial reports and work in the
interest of the public. I believe that the SEC has more influence over
financial statement reporting because they can bring civil action
against companies and individuals for violations of securities laws.
Although according to the FASB website, the Commissions policy
has been to rely on the private sector for this function to the extent
that the private sector demonstrates ability to fulfill the responsibility
in the public interest.

Response 2

Go to the U.S. Securities and Exchange Commissions Web site

at http://www.sec.gov and the Financial Accounting Standards
Boards Web site athttp://www.fasb.org. Identify the mission and main
activities of each organization. Then, analyze the similarities and
differences between the roles of each entity. Which entity has more
influence over financial statement reporting? Explain your answer.

U.S. Securities and Exchange Commission (SEC)

According to the SECs website The mission of the U.S. Securities

and Exchange Commission is to protect investors, maintain fair,
orderly, and efficient markets, and facilitate capital formation(U.S.
Securities and Exchange Commission, 2010, Para. 1).

The main activities of the SEC are to interpret federal securities

laws; issue new rules and amend existing rules; oversee the
inspection of securities firms, brokers, investment advisers, and
ratings agencies; oversee private regulatory organizations in the
securities, accounting, and auditing fields; and coordinate U.S.
securities regulation with federal, state, and foreign authorities. (U.S.
Securities and Exchange Commission, 2010)

Financial Accounting Standards Board (FASB)

According to the FASBs website The mission of the FASB is to

establish and improve standards of financial accounting and
reporting that foster financial reporting by nongovernmental entities
that provides decision-useful information to investors and other users
of financial reports. That mission is accomplished through a
comprehensive and independent process that encourages broad
participation, objectively considers all stakeholder views, and is
subject to oversight by the Financial Accounting Foundations Board
of Trustees (Financial Accounting Standards Board, n.d., Para. 3).

The main activities of the FASB are to identify financial reporting

issues based on requests/recommendations from stakeholders or
through other means. The FASB Chairman decides whether to add a
project to the technical agenda, after consultation with FASB
Members and others as appropriate, and subject to oversight by the
Foundation's Board of Trustees. The Board deliberates at one or
more public meetings the various reporting issues identified and
analyzed by the staff. The Board issues an Exposure Draft to solicit
broad stakeholder input. (In some projects, the Board may issue a
Discussion Paper to obtain input in the early stages of a project) The
Board holds a public roundtable meeting on the Exposure Draft, if
necessary. The staff analyzes comment letters, public roundtable
discussion, and any other information obtained through due process
activities. The Board redeliberates the proposed provisions, carefully
considering the stakeholder input received, at one or more public
meetings. The Board issues an Accounting Standards Update
describing amendments to the Accounting Standards Codification
(Financial Accounting Standards Board, n.d.).

Both the SEC and the FASB have the same goals of fairness,
accuracy, and understandability of financial accounting and
reporting. Both agenecys accomplish these goals in the best interest
of the overall public.
The differences between the SEC and the FASB is that the FASB
regulates financial reporting in the private sector of businesses (but
are subject to the rules and regulations of the SEC) and the SEC deals
with regulating the financial reporting of publicly held corporations.
I believe that the SEC has the greatest influence over financial
statements reporting because they have the final approval on all
changes of the rules and regulations. The Sec can also bring civil or
administrative enforcement actions against individuals and
companies in violation of the securities laws.

References
Financial Accounting Standards Board. (n.d.). Facts about FASB.
Retrieved July 15, 2010, from Financial Accounting Standards
Board:http://www.fasb.org/facts/index.shtml#mission
U.S. Securities and Exchange Commission. (2010, May 3). The
Investors Advocate: How the SEC Protects Investors, Maintains
Market Integrity, and Facilitates Capital Formation. Retrieved July
15, 2010, from U.S. Securities and Exchange
Commission: http://www.sec.gov/about/whatwedo.shtml

Week 1 DQ 2
Due Thursday, Day 4
Search the Internet or the Online Library for information about the
Sarbanes-Oxley Act. A useful guide to some of these provisions is
located at http://www.soxlaw.com. Summarize at least two provisions
of the law, and discuss your interpretation of these provisions with
your classmates. Do you think this law will make financial statements
more reliable? Also, discuss how Sarbanes-Oxley establishes
boundaries to ensure ethical practices. What does the law allow or
prohibit, and why?

The Sarbanes-Oxley act has many provisions to give companies

guidelines for responsible, and ethical financial reporting. One of
those provisions is listed in Section 302 of the act. The provision is
that periodic statutory financial reports be certified that signing
officers have reviewed the reports, the report does not contain any
untrue, or misleading information. The financial statements fairly
present the financial condition. The signing officers are responsible
for internal controls. A list of all deficiencies in internal controls,
and a list of fraud involving employees, and anything that could
negatively affect the internal controls.

Another provision pertains to the "management assessment of

internal controls". This provision ensures that information is
published in annual reports regarding the adequacy of internal
controls, structure and procedures.

The Sarbanes-Oxley act is designed to help companies promote

ethical accounting procedures. The act gives guidelines as to how
financial statements are reported. The act requires verification that
officers within the company have checked the information in the
reports for accuracy and true. The act also requires that the
companies have internal controls in place to ensure ethical reporting
practices. The main thing that the Sarbanes-Oxley promotes is
transparency in reporting.

Response 2
Section 802 of the Sarbanes-Oxley Law defines the
penalties that may be assessed against individuals who
failed to comply with the Act. An individual could be
subject to 20 years in jail for altering, destroying,
mutilating, concealing, falsifying records, documents or
tangible objects. Guilt is define by the intent to impede
a legal investigation. This part of the law gets to the
heart of how Arthur Anderson reacted by destroying
documents important to Worldcom. The law further
defines that any accountant who knowingly violates
their ethics by wilfully violates the requirements of
maintenance of all audit or review papers. These
papers are subject to review up to five years.

The second Section that I reviewed was the Section

302. This actually is my favorite part of the law
because it directly holds the officers and directors
accountable for the accuracy of reporting in their
financial statements. It defines that the management
must review and understand the financial statements
and sign that they are true and accurate. It also holds
the management accountable for the internal controls,
requiring any deficiencies to be reported. In the past
directors of companies relied heavily on the internal
officers, management, to report the company
performance without questioning the accuracy or
taking their role on oversight committees seriously.
They could hide behind a veil of trust of the key
leaders. This Section clearly puts the responsibility for
the Board to remain independent of the executives and
function more effectively on the respective oversight
committees they serve. The example I would share is
what happened in WorldCom. The company leaders
shared what they wanted to with the Board, who
trusted implicitly the top leaders. Had they questioned
their legal representation or auditors, they potentially
could have uncovered the fraud that was committed by
the creation of shell companies, with WorldCom
employees as stockholders.

I would love to think this law would protect the

investing community. Financial reporting has improved
to some extent. Unfortunately the scams still
continue. Example would be Barney Madoff or what
happened in the financial mortgage industry. These
unethical practices were conducted after Sarbanes
Oxley was implemented. Madoff was able to provide
false financial information to investors. Financial
industry was allowed to get to aggressive in
underwriting and product suite. Fines and penalties
are deterrents. Ethics still must be inherent in an
individual and company. Laws and requirements are a
guide. There will never be enough auditors, inspectors
or oversight boards to catch all of the fraud in the
corporate community.

The law prohibits falsifying information, failing to notify

of material changes, and destruction of records.
--------------------------------------------------------------

ACCT 504 Week 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. 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.
--------------------------------------------------------------

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
2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,000 Cash sales during
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.

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

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. The President wants to be aware of any new
regulations required of his company if they go public so he met with a
colleague of yours at a local restaurant.
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.

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

ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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/dividendpayoutrat
io.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 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
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.
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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

Analyzing an Income Statement

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

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

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

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

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

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ACCT 504 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. During
a two-month period, Army Navy completed these stock-
issuance transactions: Cash Flow Statement Analysis

Cash Flow Statement Analysis

The cash flow statement is important financial statement

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

The net income of the company was $5500 during 2009.

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

Reference

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

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

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ACCT 504 Week 7 Course Project JCP Kohls (Devry)

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ACCT 504 Week 7 Course Project JCP Kohls (Devry)
Week 5 DQ 1
Due Tuesday, Day 2

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

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

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

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

Response 2

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

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

Week 5 DQ 2
Due Thursday, Day 4

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

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

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

Response 2

Discuss how the statement of cash flows is utilized by investors. If you were an
investor reviewing a statement of cash flows, what section might interest you
most? Why? Discuss the circumstances in which other sections of the statement
might be important to an investor.
The statement of cash flow is utilized by investors because it has all information
integrated from the balance sheet and the income statement. The statement of
cash flow is used by an investor to see if the operating activities are greater than
the net income to have earnings that are called high quality. If operating
activities are less, then a red flag will be raised as to why the net income is not
becoming cash. Another reason would be investors believe cash is the best. The
statement shows all cash coming and going from the business. If the company
generates additional cash than what is being used, then the company can reduce
their debt, acquire another business, or buy some of the stock back. The last
reason why would be that financial models are based upon the statement of cash
flow.

If I was an investor reviewing a statement of cash flows the section that might
interest me the most would be the operating activities. I would like to know how
the company was doing and what areas need to be improved to have more cash
generated in the business. All the sections are important to an investor so they
can see the complete big picture of their investment.

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