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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., completed the following
transactions: 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 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 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 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 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. 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 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. Axia College Material

Appendix C

Budgets Matrix

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

Budget Definition Describe its uses

Sales budget Estimate of the The sales budget


expected sales for shows dollars and
the period. All of the units. This will allow
other budgets management to see
depend on the sales how many units will
budget. This is be produced for the
where all the other period
budgets will start
from

Production budget A production of units Shows management


needed to be how many units will
produced in order to be produced during
meet the projected each budget period
sales and what amount is
needed to fulfill
inventory demands

Direct materials Is the estimated Shows management


budget quantity or cost of how much raw
the raw materials materials that is
that is needed in already on hand and
order to produce the or that needs to be
units required to ordered to meet
fulfill inventory inventory demands.

Direct labor budget A estimate of cost Shows how many


and quantity of hours, how many
direct labor needed laborers needed to
in order to meet produce the units for
production that budget period.
Management will
decide what will be
the right amount of
laborers needed and
if the company will
be able to meet the
budget

Manufacturing An estimated This list all overhead


overhead budget expected amount of cost involving cash
manufacturing cost disbursement in a
for the budget period quarter

Selling and Anticipated selling Shows area of budget


administrative and administrative expenses that are not
expense budget expenses in the listed other than
budget period manufacturing.
Expenses such as
marketing,
promotion cost etc
for the budget period

Budgeted income Estimate of expected Is a very important


statement profitability of tool because it shows
operations in a the company
budget period estimated profit for
the budget period.

Cash budget A projection of Cash budget helps


expected cash flows management keep a
in and out of the tally or total of all
business. cash balances.

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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

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 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)

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 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. 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 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

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
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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

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 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. 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 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.
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 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.
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 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
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 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 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

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ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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

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 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. 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 6 Homework (E10-19A, E10-25A, E12-


16A, E12-20A)

FOR MORE CLASSES VISIT

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.
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 7 Course Project JCP Kohls (Devry)

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ACCT 504 Week 7 Course Project JCP Kohls (Devry)

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.

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