ACCT 504 Case Study 1 (Gordon Construction)

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www.acct504mart.comCase 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.asp http://financial-     Retrieved 2/18/2010

statements.suite101.com/article.cfm/financial_statements_the_p_l. Retrieved 2/18/2010

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ACCT 504 Case Study 2 (Williams Oil)

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www.acct504mart.comCase 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 Control

How it Works Example

Establishment of responsibility

Happens when the company assigns one person to be in control of a specific job or have authority to make decisions.

My job, Our Sales department is the only one that can waive a restocking fee. It allows the Sales team to be in control of the customers returns

Segregation of duties This is when the company has more than one person to control a task or job

A church- You have people who count the offering and then you have someone who writes down and logs in what was received

Documentation procedures

Evidence or proof of all company transactions

My job we deliver ship shingles to our customers, and we make the driver sign prior to leaving and

we make the customer sign a “Proof Of Delivery” form

Physical, mechanical, and electronic controls

Allows the company to control assets through physical or electronic based systems or programs.

Our job has a system called Cisco and this tracks the employees breaks and lunches. Also, monitors how long the CSR have been ready or working.

Physical control would be the security guard, they require identification prior to entry.

Independent internal verification

Any information that can be reviewed , compare, and reconciliation by a employee

My job has a way of tracking our inventory and when someone says that they were shorted on their order we can go back and track the inventory and compare the numbers in the system and a physical count to

determine if the numbers were incorrect

Other controls Bonding of employees, company protects against abuse of assets.

Our company fired a girl just recently because she had used the company card business card for personal us that was not work related.

Principles of Cash Management

How it Works Example

Invest idle cash Occurs when any excess funds or cash needs to be invested,

My father’s company makes wise investments and it turns around in his favor

Plan the timing of major expenditures

A company wants to make sure that there is money set aside for major cash needs

During the recession profits dropped lower than expected so some companies pulled from these funds

Delay payment of liabilities

When a company pays the bills at an appropriate time not

Ok, when times are tough at home and bills are due I

late and not too soon.

organize the bills by which bills needs to be paid the soonest, because if I pay the bills too early I will cut off my excess funds that could be used for something else

Keep inventory levels low

Happens when a company keeps the inventory low so that it will continue to bring profit

See’s Chocolate factory has to make sure that they are not over producing or making too much or else the sit and the company will lose money

Increase the speed of collection on receivables

Money that is owe to the company by other people or customers is money that can not be counted towards the companies funds

When a customer places a order for a product and has not paid yet, the company can not count the money as their’s until it is received.

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ACCT 504 Case Study 3 (Wang Appliance Store)

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www.acct504mart.comConstruct 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 firm’s 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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www.acct504mart.comCourse 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. It’s 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.

Kelly’s Sweetheart Flowers

The owner of Kelly’s 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.

Kelly’s Sweetheart Flowers

When the fixed cost decreases, the contribution margin ratio the net income and sales will increase.

For example,

The flowers are $10 per unit. The variable cost per unit is $4.00. The contribution margin will be ($10-$4) = $6. The fixed cost is $3. We subtract Contribution margin – Fixed Cost= Net income. The net income is $3.00.

Define contribution ratios

The contribution margin ratio is the contribution margin per unit margin divided by the unit selling price.

What happens to contribution ratios as one of the components changes?

Shown in the example above, if one or more of the components changes is will cause the net income to increase or decrease.

Reference

statements.suite101.com/article.cfm/cost_volume_profits*the_p_l. Retrieved 2/28/2010

//http:yourdictionary.com /CVP.org Retrieved 2/26/2010

Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 Statements

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ACCT 504 Course Project Oracle and Microsoft Corporation (Devry)

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www.acct504mart.comCourse Project                       Financial Statement Analysis Project -- A Comparative Analysis of Oracle Corporation and Microsoft CorporationHere 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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www.acct504mart.comACCT 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 MaterialAppendix 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 expected sales for the period. All of the other budgets depend on the sales budget. This is where all the other budgets will start from

The sales budget shows dollars and units. This will allow management to see how many units will be produced for the period

Production budget A production of units needed to be produced in order to meet the projected sales

Shows management how many units will be produced during each budget period and what amount is needed to fulfill inventory demands

Direct materials budget Is the estimated quantity or cost of the raw materials that is needed in order to produce the units required to fulfill inventory

Shows management how much raw materials that is already on hand and or that needs to be ordered to meet inventory demands.

Direct labor budget A estimate of cost and quantity of direct labor needed in order to meet production

Shows how many hours, how many laborers needed to produce the units for 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 overhead budget

An estimated expected amount of manufacturing cost for the budget period

This list all overhead cost involving cash disbursement in a quarter

Selling and administrative expense budget

Anticipated selling and administrative expenses in the budget period

Shows area of budget expenses that are not listed other than manufacturing. Expenses such as

marketing, promotion cost etc for the budget period

Budgeted income statement Estimate of expected profitability of operations in a budget period

Is a very important tool because it shows the company estimated profit for the budget period.

Cash budget A projection of expected cash flows in and out of the business.

Cash budget helps management keep a tally or total of all cash balances.

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

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www.acct504mart.com1. (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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www.acct504mart.comThis 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.

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

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www.acct504mart.comWeek 1DQ 1 - Financial Reporting Environment and GAAPWeek 1DQ 2 - Details of Financial Statements and RatiosWeek 2DQ 1 - Accounting EquationAccounting CycleWeek 2DQ 2 - Accrual Accounting and Adjusting EntriesWeek 3DQ 1 - Merchandising Operations and Income StatementsWeek 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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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) 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 company’s 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 master’s.

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 company’s 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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www.acct504mart.comMAKE 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:

2006 2007 2008$950,000

$1,000,000

$1,050,000

$1,100,000

$1,150,000

$1,200,000

$1,250,000

$1,300,000

Net Income

Net Income

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

Debt ratio as a percentage of total assets:

2007 200854.90%

55.00%

55.10%

55.20%

55.30%

55.40%

55.50%

55.60%

55.70%

55.80%

Debt ratio as percent of total asset

Debt ratio as percent of to-tal asset

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:

2007 2008122.50%

123.00%

123.50%

124.00%

124.50%

125.00%

125.50%

126.00%

126.50%

127.00%

Debt as percent of total equity

Debt as percent of total equity

As we can see that the debt as percent of total equity is declining in 2008 as compared to 2007 i.e. the company is increasing equity in its capital structure.

As we can see that there is nothing negative in 2008 for the company and this is the reason it has positive trend as compared to 2007. Hence there is no need to correct anything for the company.

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

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www.acct504mart.comThe 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 1Due Tuesday, Day 2

Go to the U.S. Securities and Exchange Commission’s Web site at http://www.sec.gov and the Financial Accounting Standards Board’s 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 Commission’s 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 2Go to the U.S. Securities and Exchange Commission’s Web site at http://www.sec.gov and the Financial Accounting Standards Board’s 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 SEC’s 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 FASB’s 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 Foundation’s 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 2Due 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 2Section 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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www.acct504mart.comQ -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 company’s 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 company’s 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 company’s 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 4 Quiz

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www.acct504mart.comQ -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 product’s 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 5 Case Study 2 Internal Control - LJB Company (Devry)

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www.acct504mart.comCase 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.

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ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

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www.acct504mart.comACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)

Week 3 DQ 1Due 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 company’s 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/dividendpayoutratio.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 stockholder’s 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 2Due Thursday, Day 4

Provide an example from the text or the Internet that demonstrates a situation in which a company’s 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 firm’s financial success?” Look for indicators like liquidity or solvency to answer this discussion question.

An example that demonstrates the situation is Enron. Enron’s 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 firm’s 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 company’s 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 company’s 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 company’s 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 company’s 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 company’s 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 company’s 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 company’s 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 firm’s financial success?” Look for indicators like liquidity or solvency to answer this discussion question.

Net income is not necessarily a good indicator of a firm’s 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&submit=Search

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ACCT 504 Week 5 Homework (E7-15A, E7-19A, E8-20A,

E9-23A, E9-29A)

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www.acct504mart.comThe 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 competitor’s share’s 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.htm

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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www.acct504mart.comACCT504 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 company’s 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.comThis 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 Inc’s 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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www.acct504mart.comACCT 504 Week 7 Course Project JCP Kohls (Devry)Week 5 DQ 1Due 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 2Due 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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