Balance Sheet And Statement Of Cash Flow

Balance Sheet and Statement of Cash Flow
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C H A P T E R
5
BALANCE SH EET AN D STATEMENT OF CASH FLOWS
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1 2 3 4 5 6 7 8 9
Explain the uses and limitations of a balance sheet. Identify the major classifications of the balance
sheet. Prepare a classified balance sheet using the report and account formats. Determine which
balance sheet information requires supplemental disclosure. Describe the major disclosure
techniques for the balance sheet. Indicate the purpose of the statement of cash flows. Identify the
content of the statement of cash flows. Prepare a basic statement of cash flows. Understand the
usefulness of the statement of ... Show more content on Helpwriting.net ...
USEFULNESS OF THE BALANCE SHEET
Op
Liquidity era tio ns
How quickly will my assets convert to cash?
By providing information on assets, liabilities, and stockholders' equity, the balance sheet provides a
basis for computing rates of return and evaluating the capital structure of the enterprise. As our
opening story indicates, analysts also use information in the balance sheet to assess a company's
risk2 and future cash flows. In this regard, analysts use the balance sheet to assess a company's
liquidity, solvency, and financial flexibility. Liquidity describes "the amount of time that is expected

to elapse until an asset is realized or otherwise converted into cash or until a liability has to be
paid."3 Creditors are interested in short–term liquidity ratios, such as the ratio of cash (or near cash)
to short–term liabilities. These ratios indicate whether a company, like Amazon, will have the
resources to pay its current and maturing obligations. Similarly, stockholders assess liquidity to
evaluate the possibility of future cash dividends or the buyback of shares. In general, the greater
Amazon's liquidity, the lower its risk of failure.
GROUNDED
The terrorist attacks of September 11, 2001, showed how vulnerable the major airlines are to falling
demand for their services. Since that infamous date,
... Get more on HelpWriting.net ...

Pro Forma Balance Sheet Analysis
Pro Forma Balance Sheet
The Balance Sheet table below shows the Pro–Forma Balance Sheet projections. As is illustrated,
the asset base will grow through accumulated cash balance and retained earnings will grow through
accumulated net profits. Based on these financial projections, the management of DELIGHT TYME
expects to build a business with a solid balance sheet for years to come.
The balance sheet shows the firm's financial position with respect to assets and liabilities at a
specific point in time. An example of a balance sheet is presented in Table..... The balance sheet
provides three types of information: assets, liabilities, and owners' equity. Assets are what the
company owns, and they include current assets those that can be converted ... Show more content on
Helpwriting.net ...
The projection for cash indicates that each year within the three–year projection will end with a
positive accumulated cash flow total.
With continued sales growth, cost controls, and gross margin maintenance, the financial projections
contained in this Business Plan should allow DELIGHT TYME Enterprise to maintain a positive
cash flow and cash balance for years to come. This indicates the DELIGHT TYME will have the
ability to sustain its operational cash requirements and provide DELIGHT TYME's ownership with
dividend distribution.
For clarification, dividend distribution in addition to their salaries can be taken by owners whenever
desired. However, even though loan repayment (if applicable) has been accounted for in the
Projected Cash Flow, dividend distribution had not been accounted for in the Projected Cash Flow.
Therefore, the ending cash balance for
Year 3 represents the total cash that would be available for divided distribution if all financial
projection is accurate.
Breakeven Point (BEP)
A company has achieved breakeven when its total sales or revenues equal its total expenses. No
profit has been made at the breakeven point, nor have any losses been incurred. This calculation is
critical for any business owner because the breakeven point is the lower limit of profit when
determining

The Balance Sheet and Financial Disclosures Essay
Chapter 3 The Balance Sheet and Financial Disclosures
Questions for Review of Key Topics
Question 3–1
The purpose of the balance sheet, also known as the statement of financial position, is to present the
financial position of the company on a particular date. Unlike the income statement, which is a
change statement that reports events occurring during a period of time, the balance sheet is a
statement that presents an organized array of assets, liabilities, and shareholders' equity at a point in
time. It is a freeze frame or snapshot picture of financial position at the end of a particular day
marking the end of an accounting period.
Question 3–2
The balance sheet does not portray the ... Show more content on Helpwriting.net ...
Retained earnings equals net income less dividends paid to shareholders from the inception of the
corporation.
Question 3–11
Disclosure notes provide additional detail concerning specific financial statement items. Included
are such data as the market values of financial instruments and off–balance–sheet risk associated
with financial instruments and details of pension plans, leases, debt, and assets. Common to all
companies' disclosures are certain specific notes such as a summary of significant accounting
policies, descriptions of subsequent events, and related third–party transactions. However, many
notes are designed to fit the disclosure needs of the particular reporting company. In fact, any
explanation that helps investors and creditors make decisions should be included.
Answers to Questions (continued)
Question 3–12
The disclosure of the company's significant accounting policies is extremely important to external
users in terms of their ability to compare financial information across companies. It is critical to a

financial analyst involved in assessing future cash flows of two construction companies to know that
one company uses the percentage–of–completion method in recognizing gross profit, while the other
company uses the completed contract method.
Question 3–13
A subsequent event is an event that occurs after the date of the financial statements

Balance Sheet and Mr. Wiles
Background:
Miniscribe was founded in the 1980s when the personal computer was on the rise. It had great
potential during this period and large growth capacity. During the first years the company grew fast
and furious. By 1983 it has outgrown its ability to remain private and needed the public investment
to continue to grow its operations and gain greater equity. In 1983 the company went public for
$11.50 a share. As soon as it went public, new entrants into the market and the decline in consumer
demand for personal computers had caused the market to decline. Miniscribe was on the verge of
going down with many other companies that could not make it through the economic slump. During
1985 an investment banker, Hambrecht and ... Show more content on Helpwriting.net ...
Inventory becomes obsolete quickly thus having inventory that cannot be sold. Inventory could be
overstated also if it has become impaired. Increase in property plant and equipment for a growing
company is normal but for one that should be past it rapid growth it may not be a good idea.
Inventory turnover is decreasing over time confirming inventory is becoming harder to sell or they
are producing too much in a market that is not purchasing it quickly.
Property, Plant and Equipment in a growing firm is expected to be increasing. Property plant in
equipment is increasing but the turnover or the rate at which the assets are being used are
decreasing.
Accounts payable is increasing every year with a substantial growth in 1988 which may be due to a
large amount of unpaid balances that will reduce assets. Accrued expenses increased dramatically in
1988. The long term debt was manageable in 1985 and 1986 but in 1987 quadruples. Being
leveraged is good to some extent such as in 1985 and 1986 but in 1987 and 1988 it becomes being
too leveraged.
In 1987 and 1988 the long term debt increased dramatically possibly due to increased loans to
manage cash flows. See Capital Structure and Solvency graph and ratios below. Total debt to equity
Long–term debt to equity
1985 1.05 0.52
1986 1.06 0.36
1987 1.70 0.97
1988 2.15 0.69

The Income Statement
The Income Statement prior to

Business: Balance Sheet and Cash
BACC 100 Assignment # 1 1. Jellybean Company reported equity of $32,000 on its December 31,
2014 balance sheet. The following information is available for the year ended December 31, 2015:
Revenues $73,000 Expenses 59,000 Liabilities 11,000 What are the total assets of Jellybean
Company at December 31, 2015? A) $14,000. B) $25,000. C) $35,000. D) $46,000. E) $57,000. 2.
At the end of its first year of operations, Matlocke Company has total assets of $2,000,000 and total
liabilities of $1,200,000. The owner originally invested $200,000 in the business, but has not made
any further investments or taken any withdrawals. What is the first year 's net income for Matlocke
Company? A) $ 600,000. B) $ ... Show more content on Helpwriting.net ...
(2) Received $1,500 cash from Barbara Hanson, the owner of the business. (3) Received $800 from
a customer in partial payment of his account receivable which arose as a result of sales during June.
(4) Rendered photography services to a customer on credit, $500. (5) Borrowed $2,500 from the
bank by signing a promissory note. (6) Received $1,000 from a customer in payment for services to
be rendered next year. How much revenue was earned in July? A) $1,200. B) $2,000. C) $3,000. D)
$5,500. E) $7,000. 13. Janfer Book Store purchased a new automobile that cost $10,000, made a
down payment of $3,000, and signed a note payable for the balance. The entry to record this
transaction is: A) Cash 3,000 Note Payable 7,000 Automobile 10,000 B) Cash 3,000 Automobile
3,000 C) Automobile 10,000 Cash 3,000 Janfer, Capital 7,000 D) Automobile 3,000 Cash 3,000 E)
Automobile 10,000 Notes Payable 7,000 Cash 3,000 14. Aimes opened a new business by investing
the following assets: cash, $4,000; land, $20,000; building, $80,000. Also, the business will assume
responsibility for a note payable of $32,000. Aimes signed the note as part of his payment for the
land and building. Which journal entry should be used on the books of the new business to record
the investment by Aimes? A) Assets 104,000 Aimes, Capital 104,000 B) Assets

Balance Sheet and Accounting
WHAT HAS THE INVISIBLE HAND ACHIEVED? Ross L. Watts Sloan School Massachusetts
Institute of Technology January 27, 2006 _____________________________ This paper was
presented at the Institute of Chartered Accountants in England & Wales Information for Better
Capital Markets Conference in London on December 20, 2005. I am grateful to Ryan LaFond,
Karthik Ramanna, Sugata Roychowdhury and Joseph Weber for their comments. All remaining
errors are mine. 1. INTRODUCTION When I was invited to present at this conference I was
asked to address the question: "What has the invisible hand achieved (in financial reporting)." This
is a rather broad question and an impossible one to answer using the evidence in the empirical
accounting ... Show more content on Helpwriting.net ...
Section 5 predicts the eventual outcomes if the FASB and International Accounting Standards Board
(IASB) continue in their apparent resolve to fundamentally change the nature of accounting and
financial reporting. Finally section 6 provides a summary and my conclusions. 1 Evidence of the
market ignoring unverifiable accounting numbers can be found in Leftwich (1983) who reports that
debt contracts exclude goodwill when measuring total assets. 3 2. PRIVATE MARKET FORCES
& FINANCIAL REPORTING 2.1 Agency costs and financial reporting. The original development
of accounting and financial reporting appears to be driven by control of agency costs. These costs
arise when a principal delegates decision–making ability to an agent who maximizes his own
welfare rather than that of the principal. There is considerable evidence that writing itself was
developed in order to allow for accounting and control of the costs of agency relations such as that
between a noble and a steward (de Ste Croix 1956; Yamey, 1962; Chadwick, 1992). Millennia later
the wardens of English medieval guilds would prepare and present audited financial accounts as a
mechanism to reduce agency costs (Watts and Zimmerman, 1983). The early English companies
inherited this mechanism from the guilds. For example, even in its first years the British East India
Company prepared annual audited financial statements and presented those statements

Balance Sheet and Net Income
On January 4, 2010, Harley, Inc. acquired 40% of the outstanding common stock of Bike Co. for
$2,400,000. This investment gave Harley the ability to exercise significant influence over Bike.
Bike's assets on that date were recorded at $10,500,000 with liabilities of $4,500,000. There were no
other differences between book and fair values. During 2010, Bike reported net income of $500,000.
For 2011, Bike reported net income of $800,000. Dividends of $300,000 were paid in each of these
two years. 49. How much income did Harley report from Bike for 2010? A. $120,000. B.
$200,000. C. $300,000. D. $320,000. E. $500,000.
26. Under the equity method, when the company's share of cumulative losses equals its investment
and the company has no ... Show more content on Helpwriting.net ...
What is consolidated net income for 2014?
Consolidated NCI = $406,000
All of the following are variable interests except
A. Asset purchase options
B. Participation rights
C. Lease residual value guarantees
D. Guarantees of debt
E. Stock Options
8. On June 1, CamCo received a contract to sell inventory for '500,000. The sale would take place in
90 days. CamCo immediately signed a 90–day forward contract to sell the yen as soon as they are
received. The spot rate on June 1 was $1 = 240 and the 90–day forward rate was $1 = 234. At
what amount would CamCo record the Forward Contract on June 1?
B. $0
8. Mills Inc. had a receivable from a foreign customer that is due in the local currency of the
customer (stickles). On December 31, 2010, this receivable for §200,000 was correctly included in
Mills' balance sheet at $132,000. When the receivable was collected on February 15, 2011, the U.S.
dollar equivalent was $144,000. In Mills' 2011 consolidated income statement, how much should
have been reported as a foreign exchange gain?
A. $0. B. $36,000. C. $48,000. D. $10,000. E. $12,000.

9. All of the following data may be needed to determine the fair value of a forward contract at any
point in time except
A. The forward rate when the forward contract was entered into.
B. The current forward rate for a contract that matures on the same date as the forward contract
entered into.
C. The future spot rate.
D. A discount rate.
E. The

Off Balance Sheet Financing Practices
[Student Name]
[Course Title]
[Instructor Name]
[Date]
The traditional accounting methods have been replaced by a number of new accounting techniques.
Some of which are observable while other remain hidden. Off Balance Sheet Financing or OBSF is
one of these new accounting techniques. It is a mode of obtaining finance for a business without
disclosing significant capital expenditures on the balance sheet of a company by means of using
different ways of classifying such expenses. OBSF is most of the times used by business enterprises
to maintain their leverage or gearing positions in such a way which would not have any negative
implications on the company. ... Show more content on Helpwriting.net ...
In addition, these expectations pose pressure on the management to find ways which may result in
better presentation of the financial statements and improved earnings (Boot and Thakor 1991). The
Banking sector in particular and other sectors in general are mostly seen following this approach. As
for instance, there has been observed a trend of investing in such portfolios and instruments which
are regarded as high risk investments. But the intention behind this is to improve or strictly stating
'inflate' the earnings of an enterprise without having regard to the riskiness of such investment
decisions and the fact that the stakeholders of the business need justification of such improvements
in the performance in the form of financial statements disclosures. For the purposes of obtaining
security on the risky investments, corporations tend to enter into complex third party arrangements
which cannot be disclosed in the financial statements. Apart from this, one other motivating factor
which is regarded as the major reason behind this approach of management is that they have their
own interests and objectives. As for instance, managers are better off in their performance appraisals
when the company is showing profits consistently (Boone and Raman 2001).
The practices of off balance sheet financing and accounting, as stated earlier, comprise of operating
leases, joint venture and collaborations with respect to R&D. Among these options,

Balance Sheet and Value
Learning Goal 6:
Explain the relationships among financial decisions, return, risk, and the firm's value.
1)
Any action taken by the financial manager that increases risk will also increase the required return.
True or False 2)
In common stock valuation, any action taken by the financial manager that increases risk will cause
an increase the required return. True or False 3)
In common stock valuation, any action taken by the financial manager that increases risk will cause
an increase in value. True or False 4)
An action on the part of a firm that increases the level of expected cash flows without a
corresponding increase in risk should reduce share value; An action that reduces the level of
expected cash flows without a ... Show more content on Helpwriting.net ...
True or False 6)
The book value per share of common stock is the amount per share of common stock that would be
received if all of the firm's assets were sold for their accounting value and the proceeds remaining
were divided among common stockholders. True or False 7)
________ is the value of the firm's ownership in the event that all assets are sold for their exact
accounting value and the proceeds remaining after paying all liabilities (including preferred stock)
are divided among common stockholders. A)
Liquidation value B)
Book value C)
The P/E multiple D)
The present value of the common stock 8)
________ is the actual amount each common stockholder would expect to receive if the firm's assets
are sold, creditors and preferred stockholders are repaid, and any remaining money is divided among
the common stockholders. A)
Book value C)
The P/E multiple D)
The present value of the dividends 9)
________ is a guide to the firm's value if it is assumed that investors value the earnings of a given
firm in the same way they do the average firm in the industry. A)
Book value C)

The P/E multiple D)
The

Balance Sheet Essay
The balance sheet, also known as the statement of financial position, includes an analysis of all the
firm's assets and liabilities. The balance sheet is a description of the firm's financial standing at an
instance in time. When navigating through a balance sheet one notices that it is divided into two
sections, the left side includes all of the firm's assets and the right side lists all of the firm's
liabilities. A firm's assets accounts for the cash, property, inventory, facility, equipment, and other
investments the firm has made in order to operate. The liabilities of a firm are the legal debts and
obligations the firm obtains during its course of business. Included on the side of liabilities is the
stockholders' equity, which accounts for the difference between the firm's assets and liabilities.
Stockholders' equity is a measure of the net worth of a firm. The expression "balance" sheet
describes the equilibrium set by the balance sheet identity:
Assets = Liabilities + Stockholders' Equity The poise between a firm's assets (capital and
investments) versus its liabilities (source of capital), and stockholders' equity are detrimental to the
integrity of the balance sheet.
The Income Statement
The income statement, also known as a statement of financial performance, illustrates the revenues
and expenses of a firm over a period of time. The "bottom" line expression represents the last or
bottom line of a financial statement, which provides a measure of the firm's net

The Value Of The Balance Sheet
The main purpose of the balance sheet is to reflect and explain the accounting equation: Assets =
Liabilities + Owner's Equity. This equation is the fundamental model for recording and reporting
transactions. It is essentially useful for showing what the company owns, what the company owes,
and what does the owner's equity remains. The ordering of the assets and the liabilities help the user
to assess the liquidity of the company. For our purpose focusing on Walt Disney World, we are
primarily focused on their assets and liabilities. In analyzing the balance sheet of our company, we
will explain each aspects of the balance sheet in three separate parts.
To understand how the total assets changed within a year, we shall look at each aspects of the assets.
In the cash and cash equivalent, we have seen that the cash in hand decreased in 2013 from $3,931
to $3,421 in 2014. This shall shows that the company may have spent cash on inventories and other
goods for the benefit of the company. In the receivables aspect, the amount of receivables has begun
to increase from 2013 to 2014 with an increase rate of 11.6%. In other terms, it increased from
$6,967 in 2013 to $7,822 in 2014. This was an infinitesimal increase and it shows that the company
had a lot of companies owing them for the purchase of the Walt Disney Products and land usage.
Another way of saying is that other companies may be purchasing land from Disney to sell their
products and expand their companies to wider

Balance Sheet and Cookie Creations
Continuing Cookie Chronicle
CCC1 Natalie Koebel spent much of her childhood learning the art of cookie–making from her
grandmother. They passed many happy hours mastering every type of cookie imaginable and later
creating new recipes that were both healthy and delicious. Now at the start of her second year in
college, Natalie is investigating various possibilities for starting her own business as part of the
requirements of the entrepreneurship program in which she is enrolled.
A long–time friend insists that Natalie has to somehow include cookies in her business plan. After a
series of brainstorming sessions, Natalie settles on the idea of operating a cookie–making school.
She will start on a part–time basis and offer her services in ... Show more content on Helpwriting.net
...
Natalie, too, would like to know if the company has been profitable or not during November. Natalie
realizes that in order to determine Cookie Creations' income, she must first make adjustments.
Natalie puts together the following additional information. 1. A count reveals that $35 of baking
supplies were used during November. 2. Natalie estimates that all of her baking equipment will have
a useful life of 5 years or 60 months and no salvage value. (Assume Natalie decides to record a full
month's worth of depreciation, regardless of when the equipment was obtained by the business.) 3.
Natalie's grandmother has decided to charge interest of 6% on the note payable extended on
November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of
interest accrued during November.) 4. On November 30, a friend of Natalie's asks her to teach a
class at the neighborhood school. Natalie agrees and teaches a group of 35 first–grade students how
to make Santa Claus cookies. The next day, Natalie prepares an invoice for $300 and leaves it with
the school principal. The principal says that he will pass the invoice along to the head office, and it
will be paid sometime in December. 5. Natalie receives a utilities bill for $45. The bill is for utilities
consumed by Natalie's business during November and is due December 15. Instructions Using the
information

The analysis and application of the balance sheet
The analysis and application of the balance sheet Kuang xin Financial accounting is one of the most
popular major in the world. In the study of accounting, people must know and use expertly the three
accounting statement, balance sheets, cash flow, and income statement. It is the most basic and
useful skill in one's career of accounting. But in the four basic financial statement, the balance sheet
or called statement of financial position is the only one which describe a single point in time of a
business' calendar year. "In financial accounting, a balance sheet or statement of financial position is
a summary of the financial balances of a sole proprietorship, a business partnership, a ... Show more
content on Helpwriting.net ...
Contingent liabilities such as warranties are noted in the footnotes to the balance sheet. The small
business 's equity is the difference between total assets and total liabilities."[Small Business
Administration]
There are anther type of balance sheet is US small business balance sheet. It is a small business
balance sheet lists current assets such as cash, accounts receivable, and inventory, fixed assets such
as land, buildings, and equipment, intangible assets such as patents, and liabilities such as accounts
payable, accrued expenses, and long–term debt. Contingent liabilities such as warranties are noted in
the footnotes to the balance sheet. The small business 's equity is the difference between total assets
and total liabilities.
Guidelines for balance sheets of public business entities are given by the International Accounting
Standards Board and numerous country–specific organizations/companys. "Balance sheet account
names and usage depend on the organization 's country and the type of organization. Government
organizations do not generally follow standards established for individuals or businesses."[Personal
balance] If applicable to the business, summary values for the following items should be included in
the balance sheet:[16] Assets are all the things the

Goodwill Balance Sheet
GOODWILL
What is the definition of Goodwill?
Goodwill is an intangible asset that mostly appears as the biggest intangible asset on the balance
sheet. The Goodwill can only be identified with the business as a whole. Therefore, the goodwill
cannot be sold individually in the marketplace, while some other intangible assets can be sold.
Goodwill is not easy to measure, because it includes exceptional management, desirable locations,
customer relations, and so on. The determination of the Goodwill is therefore most of the time very
subjective.
Companies only record the goodwill when there is an exchange transaction the involves the
purchase of an entire business.
When the company is purchased by another company, the goodwill ... Show more content on
Helpwriting.net ...
Goodwill booking in the balance sheet
According to Harold Averkamp (2015), Goodwill is reported on the balance sheet as a noncurrent
asset.
Since 2001, U.S. companies are no longer required/allowed to amortize the recorded amount of
goodwill.
"In accounting we use the word amortization to mean the systematic allocation of a balance sheet
item to expense (or revenue) on the income statement." Harold Averkamp (2015)
The amortization of an asset means that a company is allowed to split the value of the expenses
stated in the income statement over several months instead of a one–time booking.
However, the amount of goodwill is subject to a goodwill impairment test at least once per year.
The companies have to verify at least once a year if the value of their assets is aligned with the fair
value of the market.
The test verifies if the value of the assets is bigger than the market value. An adjustment is recorded
in order to bring the value of the asset at the fair value in case of inequality.
References
Ausick, P (9 May 2014) 3.2 Billion for beats– is apple crazy? Assesed at 26 April 2015 from

:http://247wallst.com/consumer–electronics/2014/05/09/3–2–billion–for–beats–is–apple–crazy/
Business Goodwill. (n.d.). Retrieved 04 27, 2015, from Value Adder:
http://www.valuadder.com/glossary/business–goodwill.html
Doorn, van P (October 29, 2014) Don't wory about facebooks 18,1 billion in goodwill from
whatsapp.

The Income Statement And The Balance Sheet
(Introduction)
Throughout the entirety of the paper I will discuss the purposes of the income statement and the
balance sheet; while also identifying the major types of expenses shown on the income statement,
and listing major types of assets inside the typical balance sheet. I will also discuss the three
different accounts that comprise the owner's equity on a corporate balance sheet and the three
categories of ratios that a business may use in an analysis of its financial statements. Lastly I will
explain a statement of cash flows and describe the three standard sections contained in cash flow
statements. Since I will be discussing multiple categories, I want to clearly state each one by
dividing them into separate sections. Each topic holds dominant relevance to finance and the ability
to fully understand a business by comprehending how they work. Having the ability to understand
the data projected from a business, is the bone structure for seeing how it grows or regresses. To aid
in this understanding I would like to first start off with the income statement.
Income Statement For businesses to have an overview of what direction their company is going,
whether it be profiting or declining, they will conduct a quarterly or yearly income statement. An
income statement "reports the earnings and expenses incurred over a certain time period" (Melicher
& Norton, 2014, p.357). There are different types of expenses listed inside the income statement that
give businesses

Applying A Balance Sheet On The World Of Finances
Excited to enroll in this class from the very beginning, I found it to be very informative. Not just it
taught me the important terminology used in the world of finances, but also allowed to apply these
concepts into my own financial life.
First of all, thanks to you, Professor Rutter, I have finally devoted time to make a balance sheet, a
document stating my current assets and income, and liabilities at the certain period of time. Now I
have been deliberately reviewing my credit card statements for the previous month, and calculating
how much money I have spent on the food each month, or how much I have spent on shopping at
amazon.com, etc. And even though my consuming behavior was never driven by materialism
completely, this class reminded me to be realistic about my general spendings, and to strictly
separate the needs from the wants. Additionally, I have expanded my skill of setting financial goals
and working towards them. For example, because of Christmas time that is approaching fast, which
usually includes gifts and travels, I suggested and pursued that my family (me, my husband, and our
child) stick to the weekly budget for food, including dining out. And it is been very helpful method
to save some money.
Then, the topic regarding financial institutions, as well as services and fees related to these
institutions, I found to be very empowering: this topic convinced me that doing a research prior
making any commitment to any institution is extremely important. As we

What Is Balance Sheet And Its Legal Form
Producing financial accounting statement is very crucial for business because it should adequately
provide a picture of the financial performance of a business. To concern this issue businesses
produce financial statements on regular basis adhering to one common standard. On of these
documents is the statement of financial position, also known as a balance sheet. It basically shows
business's assets or resources that it holds against its obligations or claims to other parties (McLaney
and Atrill, 2014). Balance sheet analysis is useful for investors to verify the profitability of
investment for a business. Analysis can warn of potential problems and, if done accurately
determine what the business really "worth". The aim of this essay is to ... Show more content on
Helpwriting.net ...
If the information listed in the document matches this formula than the company is liquid, i.e. it can
pay debts timely. Each of the three sections has several accounts within it to give an investor idea
about what the company owns and owes. Total assets on the balance sheet are grouped into two
categories: current and non–current, referring to the time period that they are held. All assets should
be measured in monetary terms and controlled by the business. Also assets are divided into tangible
(machinery, plant, cars) and intangible assets (patent, brand). Equities and liabilities, which
constitute claims, should balance the assets (Accountingtools.com, 2015). It is called the principle of
double entry: for example, cash balance might decrease by the amount of a purchase but capital will
increase by the same amount. Liabilities are also classified into current and non–current to indicate
the amount of obligations that must be shortly met and long–term raised finance. Figures of
liabilities and capital show how much finance the owners invest and how much is contributed by the
outside lenders. Potential investors can derive a lot of useful relationships from the balance sheet
figures, especially if comparison is made over time – in dynamics. Businesses usually prepare a
statement of financial position on the last day of its annual reporting period. In the UK companies
are free to choose this period and it is

Financial Statement : The Balance Sheet
Financial Statement Relationships Separately, the balance sheet reports a company's financial
position while the income statement reports a company's fiscal year profits and losses. The balance
sheet measures a company's financial position by reporting its assets, liabilities, and owner's
(shareholder's) equity. The income statement measures a company's financial performance by
reporting its revenues, expenses, and net income/loss. When combined, they serve two vital
purposes: (1) expand the accounting equation and (2) enable analysis using ratios to determine
industry position or potential material misstatements. The increase or decrease in owner's
(shareholder's) equity on the balance sheet is a direct result of the net ... Show more content on
Helpwriting.net ...
Therefore, the company utilized 4.37% of its assets in 2000, but decreased to 1.48% in 2001 to earn
net income of $4,153,000,000 and $1,501,000,000 respectively. The 2.89% decrease between the
two years shows that the company did not utilize its assets as effectively as they could have
(WorldCom 10–K 2002) (Rufus, Miller, & Hahn 2015) (Sherman 2016). Fraud Hypothesis Potential
After completing both vertical and ratio analyses, there is potential evidence to substantiate the need
for a fraud hypothesis. Out of the five financial relationships that could lead to fraud, the
relationship in question for WorldCom's financial statements is Assets versus Liabilities. It is
customary that companies maintain a balance between what they own and what they owe. However,
a shift in the balance in either direction could result from a change in company policy or fraud.
Overall, WorldCom's Debt to Assets' ratio is relatively stable with a slight increase of 1.69% from
2000's 40.55% to 2001's 42.24%. However, the decrease in the Current Liabilities account from
$17,673,000,000 in 2000 to $9,210,000,000 in 2001 results in a 52% drop in Total Current
Liabilities. The source of the significant drop is the $7,028,000,000 decrease in Short–Term Debt
and Current Maturities of Long–Term Debt. There is a possibility that WorldCom paid off these
debts, but there is also the possibility that WorldCom wrote them off. Current Ratio, Acid Test, and
Net Working

Partial Balance Sheet
exercises
Exercise 5–1
Installment sales; alternative recognition methods
( LO1 LO2 On June 1, 2006, the Luttman and Dowd Company sold inventory to the Ushman
Corporation for $400,000. Terms of the sale called for a down payment of $100,000 and four annual
installments of $75,000 due on each June 1, beginning June 1, 2007. Each installment also will
include interest on the unpaid balance applying an appropriate interest rate. The inventory cost
Foster $150,000. The company uses the perpetual inventory system.
Required:
1. Compute the amount of gross profit to be recognized from the installment sale in 2006, 2007,
2008, 2009, and 2010 using point of delivery revenue recognition. Ignore interest charges.
2. Repeat ... Show more content on Helpwriting.net ...
Prepare the necessary journal entries for the following dates (ignoring interest charges):
1. November 15, 2006, and 2. February 15, 2007.
Exercise 5–5
Evaluating efficiency of asset management
( LO6 The year 2006 income statement of Garret & Sons Music Company reported net sales of $10
million, cost of goods sold of $6 million, and net income of $1 million. The following table shows
the company's comparative balance sheets for 2006 and 2005:
($ in 000s) Assets: 2006 2005 Cash $ 240 $ 280 Accounts receivable 800 600 Inventory 850 700
Property, plant, and equipment (net) 2,600 2,520 Total assets $4,490 $4,100 Liabilities and
Shareholders' Equity: Current liabilities $ 720 $ 650 Notes payable 600 1,000 Paid–in capital 2,000
2,000 Retained earnings 1,170 450 Total liabilities and shareholders equity $4,490 $4,100
Some industry averages for the company's line of business are:
_______________________________________
inventory turnover 6 times average collection period 28 days asset turnover 2 times

_______________________________________
Required: Assess Garret & Son's asset management relative to its industry.
Exercise 5–6
Profitability ratios
(

Balance Sheet and Income Statement
Balance Sheet and Income Statement Jennifer Grayson BSA/500 June 4, 2011 Brian Keltch Balance
Sheet and Income Statement The following four companies are related to the companies that have
been in review over the last four weeks. These four following companies show how well the
company has been doing over the last two years or not so well. The company has pulled their
balance sheets and income statement to see if all the company's financial needs are being met. If the
company's needs are not being met, the company will show where the company needs to cut back
and where the company needs to improve. National Plastic Co Nation Plastic Co is a Korea–based
company that engages in synthetic resin products. The company 's products ... Show more content
on Helpwriting.net ...
The company is located in Reno, NV. The company is related to Huffman Trucking both companies
are in the trucking company. AMERCO Inc. Income Statement: Period End Date | 12/31/2011 |
9/30/2011 | | | Revenue | 633.09 | 703.18 | | | – Cost of Revenue | 556.69 | 452.02 | | | Gross Profit |
76.40 | 251.16 | | | – Operating Expenses | 51.53 | 66.72 | | | Operating Income | 24.87 | 184.43 | | | –
Interest Expense | 22.74 | 22.96 | | | – Foreign Exchange Losses (Gains) | 0.00 | 0.00 | | | – Net Non–
Operating Losses (Gains) | 0.00 | 0.00 | | | Pretax Income | 2.13 | 161.47 | | | – Income Tax Expense |
1.40 | 60.46 | | | Income Before XO Items | 0.73 | 101.01 | | | – Extraordinary Loss Net of Tax | 0.00 |
0.00 | | | – Minority Interests | 0.00 | 0.00 | | | Net Income | 0.73 | 101.01 | | | – Total Cash Preferred
Dividends | 0.00 | 0.16 | | | – Other Adjustments | 0.00 | 0.00 | | | Net Inc. Avail to Common
Shareholders | 0.73 | 100.85 | | | Abnormal Losses (Gains) | 30.66 | –7.92 | | | Tax Effect on Abnormal
Items | 0.25 | 2.77 | | | Normalized Income | 31.64 | 95.70 | | | Basic EPS Before Abnormal Items |
1.63 | 4.94 | | | Basic EPS Before XO Items | 0.04 | 5.20 | | | Basic EPS | 0.04 | 5.20 | | | Basic
Weighted Avg. Shares | 19.48 | 19.47 | |

Balance Sheet and Goodwill
Goodwill is an intangible asset, probably the most intangible of all intangible assets, hard to
measure and even more difficult to account for. Goodwill today constitutes a much larger part of
acquisition prices than it did previously, resulting in a much greater impact on financial statements.
During the twentieth century the concept of goodwill has changed significantly. In the earlier days
goodwill was thought of as the good and valuable relationships of a proprietor of a business with his
customers. The present concept is broader in that it encompasses many more intangible economic
factors of a business enterprise and accountants now consider that goodwill results from the
evaluation of the earning power of a business by investors ... Show more content on Helpwriting.net
...
It is no wonder that managements, in order to avoid this reduction in reportable earnings, frequently
opt to use the pooling of interest method when they complete a merger. Since no goodwill is created,
over–eager managers are able to pay outrageous prices for acquisitions with little or no
accountability on the balance sheet. Since it makes no sense to have two different ways for
accounting for a merger, the FASB decided they should eliminate the pooling of interest method and
force all transactions to be done via the purchase method. Executives and politicians claimed this
will significantly reduce the number of mergers since the new standards would cause reportable
earnings to drop as soon as a company had completed an acquisition. As a concession, the FASB
will no longer require goodwill to be written off unless the assets became impaired (which means it
becomes clear that the goodwill is not worth what the company paid for it).
The FASB 's six members unanimously approved two new accounting standards on Friday July 23,
2001. Financial Accounting Statement 141 will eliminate the pooling–of–interest method for
booking mergers. The method had been popular with dealmakers because it allowed companies to
do deals at a premium without marking up their assets. These markups inflate the size of future
amortization expenses and depressed reported earnings, supporters of pooling said. The FASB also
passed Financial Accounting Statement 142 – a closely– related standard

Southwest Airlines Balance Sheet
The income statement are the financial statements outline of a firm's performance over a period of
time, either quarterly or yearly. In the income statement of Southwest Airlines Co., the statement of
operations (in millions) provides the following information; "The operating revenues at the year
ended, December 31, 2016 total is $20,425 million, the operating expenses total is $16,665 million
with an operating income of $3,760 million, and the net income total is $2,244 million." The balance
sheet are the financial statements showing a firm's accounting worth on a particular point in time, a
snapshot of the firm. In the balance sheet of Southwest Airlines Co., the snapshot of the sheet (in
millions). "The current assets at the year ended,

Balance Sheet : Financial Position
Balance Sheet: The balance sheet is also referred to as Statement of Financial Position. The Balance
sheet at a particular point in time reports a company's financial position. The balance sheet has both
right and left sides. The left–hand side of the balance sheet takes the company's assets into
consideration because the assets are what they use in generating their income. The right–hand side,
however, has the company's liability and the stockholder's equity. In a nutshell, a balance sheet
indicates what is owned and owed by a company. According to Parrino and Kidwell (2012), "the
balance sheet identity can thus be stated as follows: Total assets = Total liabilities + Total
stockholder's equity and, Total stockholder's equity = Total assets – Total liabilities
Income Statement: The income statement makes a summary of the revenue, expenses, and the
profitability of a company over a period of time. Parrino and Kidwell (2012) expressed the basic
equation for income statement as follows: Net income = Revenues – Expenses
Cash Flow Statement: The cash flow statement shows a company's cash receipts and also cash
payments for a period of time. It is pertinent to know and understand the use of cash and also the
sources of cash in any company. The cash flow statement is derived by taking a look at the
company's net income during a period of time, and also at changes in balance sheet from the
beginning of the period to the end (Parrino & Kidwell, 2012).
It is important for

Balance Sheet and Cost
E12–1 (Classification Issues–Intangibles) Presented below is a list of items that could be included in
the intangible assets section of the balance sheet.
Instructions
(a) Indicate which items on the list would generally be reported as intangible assets in the balance
sheet. (b) Indicate how, if at all, the items not reportable as intangible assets would be reported in
the financial statements. 1. Investment in a subsidiary company.
2. Timberland.
3. Cost of engineering activity required to advance the design of a product to the manufacturing
stage.
4. Lease prepayment (6 months' rent paid in advance).
5. Cost of equipment obtained.
6. Cost of searching for applications of new research findings.
7. Costs ... Show more content on Helpwriting.net ...
The amortization expense is 75,000/12=$6,250
.
Dec 31 ,2012
Amortization expense 6,250
Patents 6,250
E12–12 (Accounting for Goodwill)
The entry in Graff's books is
Cash 100,000
Land 120,000
Buildings 200,000
Equipment 170,000
Copyrights 30,000
Liabilities 350,000
Fair value of net assets 270,000
Cash 380,000
Goodwill=380,000–270,000=$110,000
E12–16 (Accounting for R&D Costs) Margaret Avery Company from time to time embarks on a
research program when a special project seems to offer possibilities. In 2011, the company expends
$325,000 on a research project, but by the end of 2011 it is impossible to determine whether any

benefit will be derived from it.Instructions
(a) What account should be charged for the $325,000, and how should it be shown in the financial
statements?
The amount of $325,000

Balance Sheet and Customer Segments
What is DLJdirect's financial situation?
Exhibit 16 of the document showed DLJdirect's income statement from 1994–1999 (in millions).
Exhibit 17 showed DLJdirect key financial and operating performance. The revenue increased
steadily from 1994 to 1997. The revenue increase $50 million in 1998 which is equivalent to 43%
increase. In 1999 the revenue increased about $44 million. The income was stable prior to 1997
when the company experienced a loss and able to recovered the next year in 1998. In 1999, the
company reached the highest income because of the huge commission increase in that year. Overall,
the company is making good progress over the years with steady increment of commissions, total
trades, average daily trades, total ... Show more content on Helpwriting.net ...
PCC would be the last segment. Although they have an excess amount of average balances, they do
not prefer to trade online which makes them has the least profit potential.
Should DLJdirect target the Get Rich Fast (day trader) segment? Why?
Since this segment traded more frequently than others, they value DLJdirect fast and reliable service
that the company could offer. DLJdirect could provide the services that GRF segment sought which
are low fees, transaction confidence and site performance. The company could attempt to target this
segment but they should not spend a huge amount of money for this customer acquisition. Based on
exhibit 10 in the document, it showed that the size of this market segment is reducing as the years go
by. When compared to high–end customers, the company needs to assign a higher discount rate to
this segment because they swing the health of the stock market. Another problem is that this
segment consists of less affluent traders. Therefore, it is advisable for them not to go into this market
because the company could not build a long–term profitability in this segment.
In your opinion, are there other customer segments that DLJdirect should target? Why?
In my opinion, DLJdirect should not target other customer segments besides AA and GRF. The
reason is because the company has been doing well in AA segment which is proven by the company
good financial standing.

The Balance Sheet For Microsoft
According to Bruns (2004), the balance sheet is a financial document, which identifies a company's
assets and liabilities. By deducting asserts from liabilities, a company's net worth can be calculated
to show the value of the company. Further, it shows the financial of the company on a particular date
and "it provides a snapshot of a business' health at a point in time" (Bond, n.d. p. 4). However, the
fact that the balance sheet is a snapshot denotes that it is only valid at the time it was created. Thus,
it may not represent a true and fair view of the company. In this essay, I will discuss different
aspects of the balance sheet for Microsoft. I will also focus on the importance of the balance sheet
and the role it carries out.
Microsoft was founded in 1975 by Bill Gates and Paul Allen from Seattle, and incorporated in 1981
(Liquori, 2011). Being the number one software company in the world Microsoft employs about
52,000 people working full–time, 21,000 in product research and development, 23,500 in sales,
marketing, and support, 2,200 in manufacturing and distribution, and 4,000 in finance and
administration. The following report will include an analysis of financial reports, income statements,
Balance sheets, and cash flow statements (Liquori, 2011).
Several companies use the balance sheet to make sound business decisions. The balance sheet is like
a quantitative summary of a company's financial condition at a specific point in time, including the
assets, liabilities,

Increasing Competition On The Balance Sheet
With the increasing competition on the balance sheet both between banks and from non–banks
financial institutions, banks have diversified their product into non–intermediary financial services
as a result. One of the results of this has been the remarkable growth in the percentage of off–
balance–sheet (henceforth OBS) activities. Generally, OBS item refers to an asset or debt that does
not appear on the banks' balance sheet, e.g. standby letters of credit, currency and interest rate swaps
etc. In the last two decades, with the deregulation of the financial markets and improvement in
financial innovations, banks are encouraged to offer new financial products and services to increase
their profit (Jurman, 2005). Actually, decreasing profitability of traditional banking and increasing
competitiveness of markets force banks to undertake OBS activities. Therefore, banks have
expanded OBS activities dramatically, not only on the volume of 'traditional' OBS items, but also
the use of risky innovations (Khambata and Hirche, 2002). The data of European commercial banks
shows, the OBS activities increased from less than 50% of total outstanding loans in the early 1990s
to 150% of loans in the early 2000s. A similar trend has also occurred among commercial banks in
the United States (Bos and Kolari, 2013). Specifically, on the one hand, as we can see from table 1,
the share of OBS activities have been growing dramatically among sample developed markets'
banking industry. On the other

Balance Sheet and Points
1. A NSF check should appear in which section of the bank reconciliation? (Points : 2) Addition to
the balance per books. Deduction from the balance per bank. Addition to the balance per bank.
Deduction from the balance per books. |
2. A consequence of separation of duties is that (Points : 2) theft by employees becomes impossible.
operations become extremely inefficient because of constant training of employees. more employees
will need to be bonded. theft is still possible when several employees are involved. |
3. Which of the following is not included in the cash disbursements section of a cash budget?
(Points : 2) Payments for materials. Payments ... Show more content on Helpwriting.net ...
Creates a claim against the maker for the amount of principal only. Is one that is not paid in full
within 10 days of maturity. |
14. The following information is related to December 31, 2011 balances.
During 2012 sales on account were $145,000 and collections on account were $86,000. Also, during
2012 the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable
accounts at year end indicated that bad debts should be estimated at $54,000. The change in the cash
realizable value from the balance at 12/31/11 to 12/31/12 was (Points : 2) $50,000 increase. $59,000
increase. $42,000 increase. $51,000 increase. |
15. If a company sells its accounts receivables to a factor (Points : 2) the seller pays a commission to
the factor. the factor pays a commission to the seller. there is a gain on the sale of the receivables.
the seller defers recognition of sales revenue until the account is collected. |
16. The face value of a note refers to the amount (Points : 2) that can be received if sold to a factor.
borrowed plus interest received at maturity from the maker. at which the note receivable is recorded.
remaining after a service charge has been deducted. |
17. Net credit sales for the month are $900,000. The accounts receivable balance is $180,000. The
allowance is calculated as 5% of the receivables balance

Financial Statement Analysis : The Balance Sheet
Financial Statement Analysis
The balance sheet for my company, Intel, has provided the financial position for the past few years.
The information provided by the balance sheet shows that Intel Corporation has many assets. These
are things that the company owns and the assets are also considered the resources of the company.
The resources have been acquired through transactions that have been made between certain dates.
Intel's assets include, cash and cash equivalents, which have been on the rise. However cash and
cash equivalents are just one factor of the company's assets. All together the total current assets have
been declining, and rising. In September of 2014 the total current assets were at 27,509,000 and it
declined until ... Show more content on Helpwriting.net ...
As of June 2015 that number has dropped to 3,440,000, which is bad because that means that, the
changes in inventories and liabilities has decreased. These numbers are in millions, so when the
numbers change this dramatically, it means something happened. For cash flow sales, the higher the
number, the better. For the operation index, the higher the percentage, the better. For the operating
cash flow ratio, if the ratio falls below 1.00 then the company is not bringing in enough sales and
cash. They will have to find additional sources to finance their operations if they wish to continue
their business. For a company as large as Intel, it would not be so challenging to do so.
Ratio Analysis
ROE
The Return on Equity (ROE) for my company is 20.27% and has been mostly decreasing within the
past five years. Compared to one of Intel's many competitors, Microchip Technology Inc. (MCHP),
their Return on Equity is currently 19.2% and has been jumping from high to low numbers these
past few years. A return on equity of 20% is considered excellent, so as of currently it appears that
my company is in good standings with their ROE. Intel's competitor MCHP is also in good
standings as their ROE is almost at 20% as well. From the data that we are given from the two
companies we can tell that they are in good standings. The information is telling us that the
management has been performing well.
ROA
The Return on Assets (ROA)

Essay on Balance Sheet and Factory Overhead
Chrome–It, Inc., manufactures special chromed parts made to the order and specifications of the
customer. It has two production departments, stamping and plating, and two service departments,
power and maintenance. In any production department, the job in process is wholly completed
before the next job is started. The company operates on a fiscal year, which ends September 30.
Following is the post–closing trial balance as of September 30:
[pic]
.:.
Additional information:
1. The balance of the materials account represents the following:
[pic]
.:.
The company uses the FIFO method of accounting for all inventories. Material A is used in the
stamping department, and materials B and C are used in the plating department.
2. The balance ... Show more content on Helpwriting.net ...
i. After the actual factory overhead expenses have been distributed to the departmental accounts and
the applied factory overhead has been recorded and posted, any balances in the departmental
accounts are transferred to Under– and Overapplied Overhead.
j. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the
month.
k. During the month, Jobs 803 and 905 were sold at a markup of 50% on cost.
l. Received $55,500 from customers in payment of their accounts.
m. Checks were issued in the amount of $43,706 for payment of the payroll.
Required:
1. Set up the beginning trial balance in T–accounts.
2. Prepare materials inventory ledger cards and enter October 1 balances.
3. Set up job cost sheets as needed.
4. Record all transactions and related entries for the month of October and post to T–accounts.
5. Prepare a service department expense distribution work sheet for October.
6. At the end of the month:
a. Analyze the balance in the materials account, the work in process account, and the finished goods
account.
b. Prepare the statement of cost of goods manufactured, income statement, and balance sheet for
October 31.
SOLUTION:

Balance Sheet and Deferred Tax
From its origins in 1914 as a Western Australian farmers' cooperative, Wesfarmers has grown into
one of Australia's largest listed companies. Headquartered in Western Australia, its diverse business
operations covers supermarkets and department stores; home improvement and office supplies; coal
mining; insurance; chemicals, energy and fertilisers; and industrial and safety products. Wesfarmers
is one of Australia's largest employers and has a shareholder base of approximately 500, 000.
Subsidiaries of Wesfarmers
Wesfarmers owns vast range of subsidiaries ranging from retail industry to insurance and chemicals
and energy sectors all the below subsidiaries are 100 % owned and controlled by Wesfarmers Ltd
otherwise the controlling ... Show more content on Helpwriting.net ...
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance sheet date.
Journal Entries of land where its Fair Value appreciated which creates Deferred Tax Liability is as
follows:
Land Dr
Deferred Tax Liability Cr
BCVR Cr
Subsequently when the liability has been settled with Income Tax the entries would be as follows:
Deferred Tax Liability Dr
Income Tax Expense Cr
In the case of Wesfarmers Ltd it reviews Fair Value of the Assets acquired assets and if the fair value
of the assets is increased it will give rise to Deferred Tax Liabilities which stood at 552 m, However

Wesfarmers have Deferred Tax Assets resulting from decrease in the Fair value of the Different
Class of Assets and increase in Fair Value of Liabilities which was 1027 m which could be net off
against Deferred Tax Liabilities resulting 475 m Net Deferred Tax

Aol's Balance Sheet
AOL was able to beat out Prodigy and CompuServe because of the amount of marketing that AOL
used to gain customers. AOL was famous for blanketing college campuses, book stores and random
people by buying mailing list shipping out free CD's that gave customer a free trial period to try
AOL and then successfully converting those customers to paying customer. Because of the
unprecedented amount of CD's they gave to potential customers via the mail, as well as being
available in public places, providing access to a carrier that was previously only available if the
customer actually went to the effort to acquire a disc for access. They also invested in their network
to increase modem capacity, had low prices, an extraordinary marketing campaign, ... Show more
content on Helpwriting.net ...
The outcome is either a net income or net loss. This net income or loss is the extra money the
company gained or lost during it's fiscal year which cannot be seen in the balance sheet unless
income statement is prepared. You will find Net income or loss from income statement exists in the
equity section of the balance sheet.
The Balance Sheet give investors an idea what the company owns, and owes, as well as the amount
invested by shareholders. The Balance Sheet also provides a glimpse of the company's assets,
liabilities and shareholders' equity at a specific point in time. The Balance Sheet helps to give us the
financial status of the company. (Investopedia 2016)
The main purpose of the cash flow statement is to show the entrance and exit of cash, and whether
the cash gained as a result of the company's operations activities, investing or financing activities. A
cash flow statement of a healthy company would show that the density of cash entrance comes from
its operating activities. The net entrance or exist of cash should be equal to the difference between
beginning and ending balance of cash that appears in the balance sheet

Balance Sheet and Accounting Standards
ANSWER SHEET STUDENT'S SURNAME........................................... OTHER
NAMES......................................................... STUDENT NUMBER...............................................
TUTORIAL DAY & TIME.................................... TUTOR'S FULL
NAME......................................... Test 1 – Version 2 Session 2, 2012 Course Code: ACCG 224
Course Name: INTERMEDIATE FINANCIAL ACCOUNTING Time allowed: 55 minutes plus 5
minutes reading time Total No. of questions: Three Questions Instructions 1. You must answer ALL
questions in the test booklet. No separate booklet will be provided to answer the questions. 2. This is
a closed–book test. You are not allowed to refer to any text material for the ... Show more content on
Helpwriting.net ...
The qualitative characteristics for financial reporting contained in the Conceptual Framework are: a.
b. c.* 9. a contingent item depending on another event occurs at some time in the future a future
benefits controlled by an entity as the result of a future transaction a future benefit controlled by an
entity as the result of past transactions or events an item that has a physical existence and can be
converted into cash. a voluntary change to improve the relevance of information presented a change
due to the adoption of a new accounting standard a change due to the adoption of a new
interpretation all of the above. A company's workforce went on strike for an indefinite period
commencing on 5 August 20X1. The strike was expected to cause severe financial conditions for the
company. The financial statements for the year ended 30 June 20X1 were expected to be completed
by 7 August 20X1. In accordance with AASB 110 Events after the Reporting Date, the appropriate
treatment regarding the strike is: a.* b. c. d. disclosure as a note to the financial statements, as it is a
non–adjusting event; disclosure as a note to the financial statements, as it is an adjusting

Financial Statements And Balance Sheet
Manager within the farm, as well as the firm owners and those in leadership roles, help keep track of
the firm's performance by reviewing its financial statements like income statements and balance
sheet. The income statement is one of the major financial statements used by accountants and
business owners. The income statement is sometimes called profit and loss statement, statement of
operations or statement of income. It is important because it shows the profitability of a company
during the time interval specified on the heading. The income statement shows revenues, expenses,
gains, and losses; it does not show cash receipts nor cash disbursements. People pay attention to the
profitability of a company for many reasons, and the income statement helps in doing this in that it
helps current lenders and investors, company management, competitors, government agencies, labor
union, and others. The expense items located on the income statement appear under five major
categories
1. Expense for cost of goods sold or cost of services or sales
2. Operating expenses–selling
3. Operating expenses–general and administration
4. Financial expenses
5. Extraordinary expenses
BALANCE SHEET It is one of the major financial statements used by accountants and business
owners. The balance sheet presents a company financial position at the end of the specified date.
Because the balance sheet informs the reader of a company's financial position as

Balance Sheet and Direct Labor
Problem 1–7A (75 minutes)
Part 1
DE LEON COMPANY
Manufacturing Statement
For Year Ended December 31, 2013
Direct materials
Raw materials inventory, December 31, 2012
$ 166,850
Raw materials purchases 925,000
Raw materials available for use
1,091,850
Less raw materials inventory, December 31, 2013 182,000
Direct materials used
$ 909,850
Direct labor
675,480
Factory overhead
Depreciation expense–Factory equipment
33,550
Factory supervision
102,600
Factory supplies used
7,350

Factory utilities
33,000
Indirect labor
56,875
Miscellaneous production costs
8,425
Rent expense–Factory building
76,800
Maintenance ... Show more content on Helpwriting.net ...
Note that the company carries fewer days' supply (25.3 days) in its finished goods inventory.
Problem 2–4B (35 minutes)
Part 1
a. Predetermined overhead rate
= = = 50%
b. Overhead costs charged to jobs
Direct
Applied
Job No.
Labor
Overhead (50%)
625
$ 354,000
$177,000
626
330,000
165,000
627
175,000
87,500
628
420,000
210,000
629
184,000
92,000
630 10,000 5,000

Total
$1,473,000
$736,500
c. Overapplied or underapplied overhead determination
Actual overhead cost
$725,000
Less applied overhead cost 736,500
Overapplied overhead
$ (11,500)
Part 2
Dec. 31
Factory Overhead
11,500
Cost of Goods Sold
11,500
To assign overapplied overhead.
Problem 3–1A (45 minutes)
Part 1: Cost of goods transferred and cost of goods sold
Beginning goods in process inventory
$ 435,000
Direct materials used in production
157,500
Direct labor used in production
780,000
Overhead applied (115% of direct labor cost) 897,000 Total production costs
2,269,500
Less ending goods in process inventory (515,000)
Transferred to finished goods inventory (a)
$1,754,500
Beginning finished goods inventory
$ 633,000
Plus goods transferred from production 1,754,500
Goods available for sale 2,387,500
Less ending finished

Balance Sheet and Current Liabilities
Ch8 Student:
___________________________________________________________________________ 1.
Delta, Northwest, and United Airlines have all, at one time, filed for bankruptcy. True 2. In a
classified balance sheet, we categorize all liabilities as current. True 3. False A line of credit is an
informal agreement that permits a company to borrow up to a prearranged limit without having to
follow formal loan procedures and paperwork. True 9. False We record interest expense in the
period in which we pay it, rather than in the period we incur it. True 8. False Interest is stated in
terms of a percentage rate to be applied to the face value of the loan. True 7. False When a company
borrows cash from a bank promising to repay the ... Show more content on Helpwriting.net ...
True False 30. Regarding a contingent liability, when no amount within a range of potential losses
appears more likely than others, we record the maximum amount in the range. True False 31. If the
likelihood of a loss is reasonably possible rather than probable, we record no entry, but make full
disclosure in a footnote to the financial statements to describe the contingency. True False 32. If the
likelihood of loss is remote, disclosure usually is not required. True False 33. A contingent liability
is recorded only if a loss is at least reasonably possible and the amount can be reasonably estimated.
True False 34. The balance in the Warranty Liability account is always equal to Warranty
Expense. True False 35. A gain contingency is an existing uncertain situation that might result in a
gain, which often is the flip side of loss contingencies. True False 36. We record gain contingencies
when the gain is probable and can be reasonably estimated. True False 37. A company is said to be
liquid if it has sufficient cash to pay currently maturing debts. True False 38. The current ratio is
calculated by dividing current liabilities by current assets. True False 39. The acid–test ratio, or
quick ratio, is similar to the current ratio but is based on a more conservative measure of current
assets available to pay current liabilities. True False 40. Quick assets include only cash, short–term
investments, and accounts

Balance Sheet and Net Sales
PROBLEMS
1. Table 3.3 shows the December 31, 2009 pro– forma balance sheet and income statements for R&
E Supplies, Inc. The pro– forma balance sheet shows that R& E Supplies will need external funding
from the bank of $ 1.4 million. However, they show $ 1.27 million in cash and short– term
securities. Why are they going to the bank when they have most of the required amount in their cash
account?
2. Pro forma financial statements, by definition, are predictions of a company's financial statements
at a future point in time. So why is it important to analyze the historical performance of the
company before constructing pro forma financial statements?
3. Suppose you constructed a pro forma balance sheet for a company and the ... Show more content
on Helpwriting.net ...
Continuing problem 8, Pepperton's annual income statement and balance sheet for December 31,
2008 appear below. Additional in–formation about the company's accounting methods and the
treasurer's expectations for the first quarter of 2009 appear in the footnotes.
Pepperton Annual
Income Statement
December 31, 2008 ($ thousands)
Net sales $6,000 Cost of goods sold1 3,900
Gross profits 2,100 Selling and administrative expenses2 1,620 Interest expense 90 Depreciation3
90 Net profit before tax 300 Tax (33%) 99 Net profit after tax $ 201
Balance Sheet
December 31, 2008 ($ thousands)
Assets
Cash $300 Accounts receivable 960 Inventory 1,800 Total current assets $3,060
Gross fixed assets 900 Accumulated depreciation 150 Net fixed assets 750 Total assets $3,810

Liabilities
Bank loan $0 Accounts payable

Analyzing The Balance Sheet For Tootsie Roll
Classifying Assets
Let's look at the balance sheet for Tootsie Roll in more detail. First, the assets on a balance sheet are
listed by how easy it is for the asset to be converted into cash. The easiest asset to convert to cash is
listed first and the hardest to convert is listed last. The ease which an asset can be converted to cash
is called liquidity.
Current Assets
Current assets are assets that can be easily converted to cash or will be used within one year. Tootsie
Roll 's balance sheet lists cash first. Tootsie Roll lists investments, next. Investments may also be
listed on a balance sheet as marketable securities. Investments are short–term investments such as
stocks, bonds, or other investments that can be turned into cash ... Show more content on
Helpwriting.net ...
Finished goods inventory is the finished Tootsie Roll ® candies' inventory value after they have
been created, wrapped, packaged, and are ready to be sold. The total value of inventory at Tootsie
Roll on December 31, 2015 was $62.263 million.
Prepaid expenses are goods and services that have been paid for but not yet used. Some examples
could be internet service, insurance premium, and rent on office space. These are all items that can
be paid in advance but are used during the year. In the case of Tootsie Roll, prepaid expenses were
$5.935 million December 31, 2015.
Tootsie Roll's total current assets December 31, 2015 were $293.806 million.
Fixed Assets
Fixed assets are assets that will be held or used over a period longer than one year. Companies
typically have land, equipment, and buildings as their fixed assets. The account is usually called
property, plant, and equipment or PP&E.
The value of fixed assets typically decreases over time. The amount of the decrease each year is
accounted for and is called depreciation. Depreciation for the year is expensed on the income
statement and added to the accumulated depreciation account on the balance sheet. So the value of
the fixed assets on the balance sheet is reduced by the accumulated depreciation.
Tootsie Roll's total PP&E at the end of 2015 was $499.535 million and their accumulated

depreciation was $314.949 million, so the net PP&E was $184.586 million.
Intangible Assets
Intangible assets are assets that don't

Balance Sheet and Sales
MBA Financial Management and Markets Exam 1 Spring 2009 The following questions are
designed to test your knowledge of the fundamental concepts of financial management structure
[chapter 1], financial valuation [chapter 2], financial statements and tax planning [chapter 3], and
short–term financial forecasting and financing [chapter 14]. Choose the best possible answer to the
questions given. Each question is equally weighted. Papers are due 2/26/09 at the beginning of class.
True/False Indicate whether the statement is true or false. ____ 1. There are three primary
disadvantages of a regular partnership: (1) unlimited liability, (2) limited life of the organization,
and (3) difficulty of transferring ownership. These combine to ... Show more content on
Helpwriting.net ...
d. Corporate investors are exposed to unlimited liability. e. Corporations generally face relatively
few regulations. Which of the following statements is CORRECT? a. In a regular partnership,
liability for other partners ' misdeeds is limited to the amount of a particular partner 's investment in
the business. b. Partnerships have more difficulty attracting large amounts of capital than
corporations because of such factors as unlimited liability, the need to reorganize when a partner
dies, and the illiquidity (difficulty buying and selling) of partnership interests. c. A slow–growth
company, with little need for new capital, would be more likely to organize as a corporation than
would a faster growing company. d. In a limited partnership, the limited partners have voting
control, while the general partner has operating control over the business. Also, the limited partners
are individually responsible, on a pro rata basis, for the firm 's debts in the event of bankruptcy. e. A
major disadvantage of all partnerships relative to all corporations is the fact that federal income
taxes must be paid by the partners rather than by the firm itself. Which of the following statements is
CORRECT? a. The proper goal of the financial manager should be to attempt to maximize the firm
's expected cash flows, because this will add the most to the wealth of the individual shareholders. b.
The financial manager should seek that combination of

Balance Sheet And Statement Of Cash Flow

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