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ACCT 504 Case Study 1 (Gordon Construction)
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Case Study 1 (Part A)Analyze the impact of business transactions on
accounts; record (journalize and post) transactions in the books;
construct and use a trial balance) During the first month of operation
of Gordon Construction, Inc.,
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 Case Study 2 (Williams Oil)
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Case study (Learning Objectives 2, 4: Explain the components of
internal control; evaluate internal controls) Each of the following
situations reveals an internal control weakness: Situation a. In
evaluating the internal control over inventory for the Williams Oil

Services Company, an auditor learns that the warehouse receiving
clerk is responsible for ordering parts for supply inventory use in
drilling services, counts the inventory when received at the dock,
records the receipts into the inventory ledger, and takes the annual
inventory
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 Case Study 3 (Wang Appliance Store)
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Construct and use a cash budget) Nathan Farmer, chief financial
officer of Wang Appliance Store, is responsible for the company?s
budgeting process. Farmer?s staff is preparing the Wang cash budget
for 2014. A key input to the budgeting process is last year?s
statement of cash flows, which follows (amounts in thousands):
Wang Appliance Store
Statement of Cash Flows
2013 (in thousands) Cash
Flows from Operating Capstone Discussion Question
Due Tuesday, Day 2
• What have you learned in this course about the process of
analyzing financial statements?

I have learned that there is a lot more to analyzing financial
statements than I thought. This class has made me question my
decision to go into the accounting field. I feel inadequate after taking
this class. I am not an articulate, or analytical person. I tend to get
confused easily and do better at putting the information together
than I am at figuring out what it all means. This is my last block of
classes before my Bachelor program starts, and I don't know if I am
ready, or if I even want to continue. Analyzing financial statements
takes a very detail oriented mind, and one that is great at problem
solving. It is critical to understand the financial statements, and how
they relate to one another. There is a lot of information that is not as
obvious as it would seem. Looking at the bottom line will not give a
good picture of how a company is doing financially. It is important to
know the how and why the bottom line looks the way that it does.
Response 2
I have learned that it takes someone that has the patience, tenacity,
and motivation to truly analyze the statements. If you go about it not
wanting to do the work you wont give a good analysis. I found that
you have to be willing to dig deeper than most would to get a full
picture of the company. I found that it is not an easy task to
complete. For me the process is a tedious one. I don't think I would
want to go into that type of accounting where I have to analyze the
statements of a company. I think for me I would be better in
specialized accounting like A/P or A/R. I am better at figuring out
problems and figuring out ways to make them better. I am better at
specific tasks so for me I wouldn't want to analyze the statements. I

am glad to have learned how, because at some point I am sure it will
come in handy.
Response 3
All financial statements are essential documents because they tell
what has happened to a business over a period of time but most
users of financial statement are more concerned about what will
happen in the future. Stockholders and creditors are concerned with
future earnings and dividends and company's future ability to repay
its debts. Management is concerned with the company's ability to
finance future expansion.
Working as a bookkeeper I do all the steps in monthly cycles
consisting of entering transactions into the journals, working with
A/R, A/P, payroll and preparing the reports, but I have not been able
to analyze the reports the way I learned in this class. I learned how
important is to monitor and interpret the results. I learned how to
compare financial statements of a company with a company from the
same industry and point out the differences and similarities. This
class taught me the importance of analyzing the Income Statement,
Balance Sheet, Cash Flow Statement and Stockholder’s Equity each
one individually. I learned how essential is the quality reporting and
how useful this quality is in business decision making. I learned about
key financial ratios: liquidity ratios, activity ratios, leverage ratios,
and profitability ratios. All these ratios are valuable as analytical
tools and will help me indicate the areas of strength and weakness in
a business. Even though I learned the information step by step in this
class I tent to go over every single chapter all over again to better

absorb the material. This class taught us the potential of some
management manipulations of financial statements, thus following
the general accounting rules, being honest, ethical and professional
are the ways on leading to safe and profitable decisions.
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c ACCT 504 Course Project Analysis of Nike, Inc. and Under
Armour, Inc.
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Course Project: A Financial Statement Analysis A Comparative
Analysis of Nike, Inc. and Under Armour, Inc. Below is the link for the
financial statements for Nike, Inc. for the fiscal year ending 2014.
First, select 2014using the drop-down arrow labeled Year, and then
select Annual Filings using the drop-down arrow labeled All. You
should select the 10k dated 7/15/2014,and choose to download in
PDF, Word, or Excel format. Week 3 DQ 1
Due Tuesday, Day 2
Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might the
information contained within the stockholder equity statement be
used for management and investor decision-making? Provide specific
examples of situations in which the stockholder equity information
might be used.

The statement of stockholders’ equity provides the changes in the
equity accounts during the accounting period more in depth than the
balance sheet. The information found on the statement of
stockholders’ equity includes retained earnings, common and
preferred stock, and additional paid in capital. Management uses the
statement of stockholders’ equity to ensure they are reaching their
goal of maximizing shareholder's equity. The use of market ratios
help with the analysis of the statement of stockholders’ equity, such
as earnings per share, price-to-earnings, dividend payout, and
dividend yield. These ratios will help both management and investors
in analyzing the company. For example, if I were looking to invest in a
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/dividendpayout
ratio.asp
Response 2
Explain what can be found on a statement of stockholders’ equity.

The major elements of stockholders' equity include capital stock,
paid-in capital, retained earnings, treasury stock, unrealized loss on
long-term investments, and foreign currency translation gains and
losses.
How might the information contained within the stockholder equity
statement be used for management and investor decision-making?
Provide specific examples of situations in which the stockholder
equity information might be used.
Management may look at the 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 2
Due 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=Spo
tting+Creative+Accounting+On+The+Balance+Sheet&submit=Search
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ACCT 504 Course Project Oracle and Microsoft Corporation
(Devry)
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Course Project
Financial Statement Analysis Project -- A Comparative Analysis of
Oracle Corporation and Microsoft Corporation
Here is the link for the financial statements for Oracle Corporation
for the fiscal year ending 2007. First, select 2007 using the drop-
down arrow labeled for Year on the right-hand side of the page, and
then select Annual Reports using the drop-down arrow labeled Filing
Type on the left-hand side of the page.
You should select the 10k dated 6/29/2007 and choose to download in
PDF, Word, or Excel format.
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.ht
m

Mladjenovic, P. (2009). Stock Investing for Dummies. Dummies.
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ACCT 504 Entire Course (Devry)
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ACCT 504 Week 1-7 All Discussion Questions
ACCT 504 Week 3 Case Study 1 Flower Landscaping Corporation
ACCT 504 Week 4 Midterm Exam Set 1
ACCT 504 Week 4 Midterm Set 2
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 Final Exam (3 different finals) (Devry)
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1. (TCO A) Which one of the following is an advantage of
corporations relative to partnerships and sole proprietorships?
(Points : 5)
Reduced legal liability for investors
Harder to transfer ownership

Lower taxes
Most common form of organization
2. (TCO A) When a corporation distributes a dividend, _____. (Points
: 5)
Cash Flow Statement Analysis
Cash Flow Statement Analysis
The cash flow statement is important financial statement of the
corporation. The cash flow statement states from where cash has
come and where cash has been gone. Thus the cash flow statement
makes a relationship between beginning balance and ending balance
of cash. The cash flow statement is prepaid on the basis of income
statement and balance sheet of the company. The Little Bit 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 Midterm Exam (4 Sets, 2017)
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This Tutorial contains 4 Set of Midterm Exam 1. Question : (TCOs A
and E) Your friend, Ellen, has hired you to evaluate the following
internal control procedures. Explain to your friend whether each of
the numbered items below is an internal control strength or
weakness. You must also state which internal control procedure
relates to each of the internal controls. For the weaknesses, you also
need to state a recommendation for improvement Week 5 DQ 1
Due Tuesday, Day 2

In what ways does the statement of cash flows relate to the balance
sheet and income statement?
It is important to understand what we are doing with the numbers
and the results these numbers give us because the result is the
information that will be available to us from financial statements.
Although some want to see the income statement and ignore the
other statements we need to use them together to see the total
picture of what is happening to our business. The relationship
between the numbers on the financial statements shows us
everything we need to know about the business.
The income statement shows income and expenses for a period of
time and if we are making or loosing money. The balance sheet
compares the assets to liabilities and shows how much money the
business would have if everything is sold today.
The statement of cash flow might be the most critical statement
because there is plenty of information we can gain form it. This
statement relates with the income statement on operating activities
to see if they are generating cash or not. It is related to the balance
sheet on how much cash is used in investing activities. In relationship
with the balance sheet the cash flow statement shows what cash is
provided or used by financing activities. It will tell us how much debt
has been paid and will indicated if we are using more debt or have
paid down the credit line.
When the business makes a sale or receives payment for a sale on
credit that is an inflow. A sale shows up as income on the profit and
loss statement and as an inflow on the cash flow statement. It also
shows up either as cash or accounts receivable on the balance sheet.

Also, how quickly we can collect on accounts receivable will play a big
role in the cash flow. When the business spends money, it shows up
as an expense in the profit and loss statement and as an outflow on
the cash flow statement. It also shows up on the balance sheet as a
decrease in cash, or an increase or decrease in liabilities, depending
on what the expense represents.
Response 2
In what ways does the statement of cash flows relate to the
balance sheet and income statement?
The cash flow statement relates to the income statement and
balance sheet. The net income from the income statement is listed on
the statement of cash flows. Operating activities are analyzed on the
statement of cash flows; this section of the statement reconciles the
net income to the actual cash the company received from or used
during operations. The second section of the statement of cash Flows
is the cash flow from investing activities which include purchase or
sale of assets. The last section in the Statement of Cash Flows is the
cash flows from financing activities that includes raising cash by
selling stocks/bonds or borrowing from backs; or cash out flows from
paying back loans. The balance sheet shows the different account
balances at the end of the accounting period. The statement of cash
flows reflects changes in the accounts listed on the balance sheet
between accounting periods. The net cash from operating, financing,
and investing activities are added up to calculate the net change in
cash.

Week 5 DQ 2
Due Thursday, Day 4
Discuss how the statement of cash flows is utilized by investors. If you
were an investor reviewing a statement of cash flows, what section
might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.
Prior to making an investment in a company, one would want to
understand the decisions the owners are making to fund the
operations of the company daily. Maintaining sufficient cash to
acquire new product, pay overhead, and satisfy generated sales
would be the predominant need of the company. Second need would
be for the company to have sufficient cash to remain competitive.
This may require cash to invest in research and development,
increase inventory as new product introduction, improve efficiency in
plant and equipment, or cash to satisfy prior borrowing obligations.
By reviewing the statement of cash flow, the investor can determine
if the company is generating sufficient cash internally to fund
operations or are they requiring outside injection of cash to finance
the short fall in cash needed to operate the company. Last, the
investor can review the statement of cash flow to better understand
the leverage of the company and the requirement for repayment of
debt, or dividends to reward prior investments.

Response 2
Discuss how the statement of cash flows is utilized by investors. If you
were an investor reviewing a statement of cash flows, what section
might interest you most? Why? Discuss the circumstances in which
other sections of the statement might be important to an investor.
The statement of cash flow is utilized by investors because it has all
information integrated from the balance sheet and the income
statement. The statement of cash flow is used by an investor to see if
the operating activities are greater than the net income to have
earnings that are called “high quality”. If operating activities are less,
then a red flag will be raised as to why the net income is not
becoming cash. Another reason would be investors believe cash is the
best. The statement shows all cash coming and going from the
business. If the company generates additional cash than what is
being used, then the company can reduce their debt, acquire another
business, or buy some of the stock back. The last reason why would
be that financial models are based upon the statement of cash flow.
If I was an investor reviewing a statement of cash flows the section
that might interest me the most would be the operating activities. I
would like to know how the company was doing and what areas need
to be improved to have more cash generated in the business. All the
sections are important to an investor so they can see the complete
big picture of their investment.
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ACCT 504 Week 1-7 All Discussion Questions (Devry)

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Week 1DQ 1 - Financial Reporting Environment and GAAP
Week 1DQ 2 - Details of Financial Statements and Ratios
Week 2DQ 1 - Accounting EquationAccounting Cycle
Week 2DQ 2 - Accrual Accounting and Adjusting Entries
Week 3DQ 1 - Merchandising Operations and Income Statements
Week 3DQ 2 - Inventory Cost-Flow Assumptions
Candela Corporation
Axia College of University of Phoenix
Candela Corporation
Candela Corporation and Subsidiaries have been working for
over 34 years developing and commercialize aesthetic laser systems
that allow physicians and personal care providers to treat a variety
of cosmetic and medical conditions such as removal of spider veins,
scars, stretch marks, warts, as well as hair removal and age spots,
freckles and tattoos. Other skin treatments such as psoriasis and
acne and acne scars are also treated. (Axia College, 2007)
Going from top to bottom on The Candela Corporation and
Subsidiaries Consolidated Statement of Cash Flows; for the
operating activities, 2002 shows an alarming loss in the net income
while 2003 and 2004 for the company are showing a significant and
steady climb in the net income. In 2004 there was a new category
added called Provision for the disposal of discontinued operations

and the category has caused an increased the account for 2004.
Loss from discontinued operations grew from 2002 to 2003 but had
a significant decline for 2004. Depreciation has increased over the
last 3 years as well. Provision for bad debts increased significantly
too, but an increase in bad dept is expected as revenue increases.
The provision for deferred taxes shows the company went from a
loss in 2002 and 2003 to show there was no tax loss in 2004. The tax
benefit from exercised stock options has practically doubled sense
2003. The changes in assets and liabilities for the last 3 years have
been up and down. Receivables have increased, notes receivable
decreased, and inventories have increased. Other current assets,
other assets have also increased. Accounts payable has made a
significant decrease in the last 3 years as well as accrued payroll
expenses. The accrued payroll decreasing could mean that the
amount of employees over the years has decreased as well. The
accrued warranty costs have increased as well; this could mean that
the company renewed equipment warranties. The net cash provided
by operating activities looks to have gone from a loss in 2002 to a
large profit in 2003 and then a decrease, yet still a profit for 2004. It
appears on the operations level that management needs to do more
to regulate the company’s finances so there is not an up and down
variance each year.
The cash flow from investing activities shows me that in the last
three years they had large amount of investments in 2002 and 2003
but now they are letting them decrease.
The cash flow from financing activities states that the proceeds
from issuance of common stock have increased significantly from
2002 to 2003 and rose a little more in 2004. The repurchases of
stock has not happened sense 2002 and the principle payment of
long-term debt grew in 2003 from 2002 and shows no activity for
2004. Same goes for the net borrowing on line of credit; it appears
that Candela Corporation is current on payments to line of credit.
So, the net cash from financial activities looks great for 2004. The
cash and cash equivalents for each year have increased steadily.

After reviewing the consolidated statement of cash flows for
Candela Corporation, I believe the company is making a profit, but
perhaps need some control over their operating activities.
Reference
Axia College. (2007). Statement of Cash Flows. Retrieved June 14,
2010 from Axia
College, Week Six, ACC 230.
--------------------------------------------------
ACCT 504 Week 2 Homework (E2-17A, E2-18A, E3-22A, E3-
23A)
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,
Professional Corporation (P.C.), experienced the following events
Findwhat.com Case - CheckPoint
ACC 230

Findwhat.com has recorded the 135 percent increase in the revenue
which is mainly due to the business acquired of Espotting during the
year. The different accounting policies are present for the acquiring
firm and the acquired firm. The company has recorded certain
premature revenues for the amount which advertisers had made only
the advance deposit. As result, the company is recognizing the
vendor financing as revenue. In some places, the gross revenue has
been recognized while in another, the net revenue has been
recognized. The network click revenue is recognized at gross level
while the private level revenue is taken at net level. Some of the
revenue expenditures have been recognized as the capital
expenditures.
Revenue for set up network fee is treated as deferred revenue and is
recognized over a period of time. The company is very inconsistent
with regards to its accounting policies in terms of recognition of
revenue. The provision and treatment of amount for doubtful debt is
also not satisfactory. When a customer clicks on a sponsored
advertisement, the whole of the revenue due to him is recognized.
The company is having a very high amount of doubtful debt balance
at the end of the year ending December 31, 2004.
--------------------------------------------------
ACCT 504 Week 3 Case Study 1 (Melvin Plumbing
Corporation) **New**
www.acct504mart.com

MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE LISTED
BELOW. There are 10 sheets in the Workbook, including this one. All
of the information that you need for the project is located in this
Workbook. Requirement #1: During its first month of operation, the
Melvin Plumbing Corporation, which specializes in residential
plumbing, completed the following Week 7 DQ 1
Due Tuesday, Day 2
Post your answer to Study Question 5.2 on p. 180 (Ch. 5). As you read
your classmates’ responses, consider the following scenario: If you
compared two different companies that utilized two different
valuation methods, how might the quality of the results differ? Also,
comment on the difficulty of making comparisons between two firms
that use different valuation methods.
Understanding the different inventory methods is crucial. First
the person that establishes the inventory needs to determine which
method to use. LIFO, or FIFO. LIFO means Last in First Out. This
means that when a purchase is made, and sales are recorded the
newest product is used first. So if I bought 10 combs at $2 on
December 1st, and then I buy 5 combs at $2.50 on December 10th.
When sales are made I am going to record sales using the $2.50 until
I sell through the 5 combs that were purchased on the 10th, and then
the cost will go to the previous purchase price of $2 until those 10
combs are sold through. FIFO is just the opposite. Meaning that
goods are used in the order that they are received. The first items
ordered, are the first items sold. Either method will pass an audit. It
is important to note though that managers can't switch back and
forth between the two methods. Profit will vary depending on which
method is being used. Say you sold only 6 combs at $3 each. Using

the LIFO method this would equal $3.50 profit. If you used the FIFO
method, this would result in a $6.00 profit.
Response 2
Post your answer to Study Question 5.2 on p. 180 (Ch. 5). As you read
your classmates’ responses, consider the following scenario: If you
compared two different companies that utilized two different
valuation methods, how might the quality of the results differ? Also,
comment on the difficulty of making comparisons between two firms
that use different valuation methods.
It is very important to understand which inventory valuation method
is being used to determine the profit numbers quality. The balance
sheet, statement of cash flow and income statement can be directly
impacted by the valuation method that used to determine the costs
of inventory. The three methods that are used are FIFO, LIFO and
Average Cost. The valuation ratios can be dramatically affected
depending on the inventory valuation that is being used over a long-
term period; especially because prices are likely to rise. When using
FIFO you can increase net income, but then at the same time raise
the amount taxes that business is obligated to pay. When using LIFO
the inventory can be obsolete because they are old this will result in
lower net revenue because the products pricing is higher. The
Average Cost results usually fall between LIFO and FIFO. The bottom
line can be affected mainly by the inventory analysis and the ratio
results that are formed from that analysis. It is easier to compare
companies that are in the same line of business, so I believe that
quality of results would differ tremendously if different valuation
methods were used. If you use LIFO that company may seem

unattractive but they are performing well, as for FIFO it may look
good as for profit, but may not be performing well.
DQ 2
Week 7 DQ 2
Due Thursday, Day 4
Post your answer to Study Question 5.6 on p. 180 (Ch. 5). Discuss the
consequences of poor quality reporting. What has the U.S.
government done to improve the quality of reporting after recent
financial scandals such as Enron?
I think that the significance is that the analysts only see this one
HUGE transaction. The events that actually led up to this large
transaction actually took place over a 2 year period. These items
should have been written off as they occurred. Wall Street would not
have known that the executives refused to write off these accounts
when they should have. Wall Street only see's the one large
transaction. If the company would have been more honest in their
reporting they would have seen (more than likely) that there were
many accounts over a two year period that should have been written

off at different periods. So the analysts would not have seen a
pattern of recurring write-offs. If the analysts only see the one
transaction they are less likely to be able to paint an accurate picture
of the financial standing of the business for investors, or potential
investors. If the investors could see that there were many accounts
that had to be written off maybe their investing decisions would have
been different. The regulation of the accounting field has grown by
leaps and bounds since the Enron scandal. The government has
implemented several agencies and regulations to ensure honesty in
accounting practices. SOX is one example of an agency that has been
put into place to ensure honesty in accounting. SOX implements
things like internal controls, and accountability for CEO's and CFO's.
Response 2
I believe the impact and importance of this write-off event is a very
big matter. It is obvious how they handled it that it was a scandal
from the start. I think that everyone involved had a big role in how
things played out. To me I think of the investors as a really big hit to
this but also feel that audit committees have to be held responsible
as well. It has been shown over many examples that adit oversights
are happening to financial reporting. Although I do feel they are
getting better and tighter due to conforming tightly with the GAAP
requests. I feel over time the accounts receivable should have been
written off in smaller increments and not all taken by $405 million at
once. Maybe that isn't correct but it would have been easier I would
think to take the receivables over time.

Response 3
Wall Street should have read the footnotes and seen that the write
off was for accounts receivables and should have been reported in
the allowance for doubtful accounts. Every company that allow sales
on credit face doubtful accounts; therefore, the write off may
reoccur. The significance of this transaction is that WorldCom want
to cover up the $405 million dollars that it was unable to collect from
its customers, but WorldCom wrote off a large sum of money rather
recording the write-off as needed and the analyst over looked it.
Depending on how the company policy is for writing off accounts,
from 1998 to the 3rd quarter in 2000 is 11 quarters. If the company
wrote off bad accounts quarterly it should have wrote off
36,818,181.82 per quarter. Investors would not want to continue to
invest into a company that has poor collection skills, or poor
management. Unusual items are simply for those items that are not
recurring operating expenses. Bad debts do not fall under this
category. Since the Enron and WorldCom scandals many rules and
regulations have been put in place by the government such as SOX.
More people are being held accountable for their actions and
consequences follow poor quality reporting such as fudging the
books.
--------------------------------------------------
ACCT 504 Week 3 Case Study 1 Flower Landscaping
Corporation (Devry)
www.acct504mart.com

The Entire Case Study is due Sunday at MidnightMountain time at
the end of Week 3.
This Case Study is worth 100 points or 10% of your final course
grade.
Presenting to Stakeholders
Presenting to Stakeholders
“Financial statements provide insight into the company’s current
status and lead to the development of policies and strategies for the
future” (Axia, 2007). Financial statements and notes to the financial
statements should be used to analyze the company. For instance, what
do the financial statements reveal about why the company has
requested a loan or purchased items on credit? What is the firm’s
capital structure and what does the firm have outstanding? How well
can the company pay back debt? What recourses are used to pay
debt? What is the company’s performance record and are there any
future expansions? What are the expected returns and how successful
is the company compared to industry averages? Which areas of
operations contributed to the company’s success, and what are the
strengths and weaknesses of the company? What changes can be
made to improve the future performance of the company?
Key financial ratios will assist in determining the information
requested. Liquid ratios measure a firm’s ability to meet cash needs
as they arise. The current ratio is a good tool to use because it
measures the ability the firm has to pay debts when due. The current
ratio for REC is at 2.4 times for 2007, although it is down from 2006
the company is still able to pay current debt when due. Cash flow

ratio considers cash flow from operating activities has increased from
2006, and this indicates an improvement in short-run solvency.
Average collection period has gone down 5 days within the last year.
The cash conversion cycle gives in-site on why the cash flow has
improved or decreased, in this case the conversion period for REC
has improved by 26 days.
Activity ratios measure the liquidity of specific assets and the
efficiency of managing assets. Accounts payable turnover is up seven
times from the prior year and inventory turnover is also up .25 from
last year. Accounts payable turnover is down 9.05 from 12.10 in
2006. This means that the company is taking longer to repay
payables. The fixed asset turnover and total asset turnover ratios are
used to assess management’s skills in generating sales from
investments in assets. The fixed asset turnover has dropped slightly,
but the total asset turnover has risen slightly. The increase in total
asset turnover comes from improvements in inventory and accounts
receivable turnover.
Leverage ratios measure the extent of a firm’s financings with debt
relative to equity and its ability to cover interest and other fixed
charges (Axia, 2007). Debt ratio, long-term debt to total
capitalization and dept to equity have all raised slightly implying a
slightly riskier capital structure. The times interest earned and the
cash interest coverage have increased since 2006. The interest
payments can be covered 7.4 times this year. The cash interest has
improved due to the operating profits and cash from operations. The
fixed coverage ratio is also important in cases where companies use
operating leases. In this case, the fixed charges have increased
slightly.
Profitability ratios are used to measure the overall performance of a
firm and its efficiency in managing assets, liabilities, and equity. The

ratios used are the gross profit margin, operating profit margin and
net profit margin. All of which have improved for REC. As well as the
cash flow margin, return on total assets, return on equity and cash
return on assets. Over all the company seems to be in well financial
standings and looking toward a profitable year.
Reference
Axia College. (2007). The Analysis of Financial Statements. Retrieved
June 28, 2010,
from Axia College, Week Eight, ACC 230.
--------------------------------------------------
ACCT 504 Week 3 Quiz
www.acct504mart.com

Q -1 Other comprehensive income A. includes extraordinary gains
and losses. B. affects earnings per share. C. includes unrealized gains
and losses on available-for-sale investments. D. has no effect on
income tax. Q-2 Use the following data of TortoiseTortoise Sales, Inc.:
Unit Total Units Units Cost Cost Sold Beginning inventory 16 $3 $48
Purchase on Apr 25 25 6 150 Purchase on Nov 16 11 8 88 Sales 40 ?
Analysis of Scenarios:
Debt Scenario would increase the debt ratios from to 50%. Equity
Scenario would reduce the debt ratio to 40%. With Debt option,
earnings per share would be higher. Interest declines to 2.86 times
with the Debt option while times interest earned increases to 3.75
times with the Equity option. Either option exhibits a good use of
financial leverage because for both, the financial leverage index
being greater than 1. However, it is higher using the Debt option.
--------------------------------------------------
ACCT 504 Week 4 Quiz
www.acct504mart.com
Q -1 Anderson Company had the following information in 20142014.
Accounts receivable 12/31/14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . $14,000 Allowance for uncollectible account 12/31/14 (before
adjustment). . . . . . . 850 Credit sales during 2014. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . 36,000

Interpreting Financial Ratios
Luna Lighting, a retail firm, has experienced modest sales growth
over the past three years
but has had difficulty translating the expansion of sales into improved
profitability. Using
three years’ financial statements, you have developed the following
ratio calculations and
industry comparisons. Based on this information, suggest possible
reasons for Luna’s profitability problems.
Industry
2009 2008 2007 2009
Current 2.3X 2.3X 2.2X 2.1X
Average collection period 45 days 46 days 47 days 50
days
Inventory turnover 8.3X 8.2X 8.1X 8.3X
Fixed asset turnover 2.7X 3.0X 3.3X 3.5X
Total asset turnover 1.1X 1.2X 1.3X 1.5X
Debt ratio 50% 50% 50% 54%
Times interest earned 8.1X 8.2X 8.1X 7.2X

Fixed charge coverage 4.0X 4.5X 5.5X 5.1X
Gross profit margin 43% 43% 43% 40%
Operating profit margin 6.3% 7.2% 8.0% 7.5%
Net profit margin 3.5% 4.0% 4.3% 4.2%
Return on assets 3.7% 5.0% 5.7% 6.4%
Return on equity 7.4% 9.9% 11.4%
11.8%
Based on this information, some possible reasons for Luna’s
profitability problems are suggested as under:
a) Net Profit margin of the company has degraded and this might
be due to decrease in the net income of the company due to increase
in expenses. This needs to be improved upon by cost control and cost
reduction.
b) Return on equity of the company has degraded further and this
also indicates that there is a decrease in the net income of the
company due to increase in expenses. This needs to be improved
upon by cost control and cost reduction.
c) Fixed charge coverage has fallen, which means that the debt
payment along with interest might have increased and this will also
lead to decrease in the net income of the company and thus
degrading the profitability position of the company.
d) Operating profit margin has dropped even though gross profit
margin has remained constant. It means that the operating expenses

are higher and need to e controlled to improve the profitability of the
company.
e) The fixed assets turnover and the return on assets have also
degraded; this also indicates decrease in the net income of the
company.
--------------------------------------------------
ACCT 504 Week 5 Case Study 2 Internal Control - LJB
Company (Devry)
www.acct504mart.com
Case Study 2 - Internal Control- Due by Sunday of week 5
LJB Company, a local distributor, has asked your accounting firm to
evaluate their system of internal controls because they are planning
to go public in the future. The President wants to be aware of any new
regulations required of his company if they go public so he met with a
colleague of yours at a local restaurant. The President of the
company explained the current system of internal controls to your
colleague. Your colleague has since been promoted to a tax position
so she has passed on the information below so you can generate
recommendations for the partner at your accounting firm to share
with the President of LJB Company. Capstone Discussion Question
Due Tuesday, Day 2
• What have you learned in this course about the process of
analyzing financial statements?

I have learned that there is a lot more to analyzing financial
statements than I thought. This class has made me question my
decision to go into the accounting field. I feel inadequate after taking
this class. I am not an articulate, or analytical person. I tend to get
confused easily and do better at putting the information together than
I am at figuring out what it all means. This is my last block of classes
before my Bachelor program starts, and I don'tknow if I am ready, or
if I even want to continue. Analyzing financial statements takes a very
detail oriented mind, and one that is great at problem solving. It is
critical to understand the financial statements, and how they relate to
one another. There is a lot of information that is not as obvious as it
would seem. Looking at the bottom line will not give a good picture
of how a company is doing financially. It is important to know the
how and why the bottom line looks the way that it does.
Response 2
I have learned that it takes someone that has the patience, tenacity,
and motivation to truly analyze the statements. If you go about it not
wanting to do the work you wont give a good analysis. I found that
you have to be willing to dig deeper than most would to get a full
picture of the company. I found that it is not an easy task to complete.
For me the process is a tedious one. I don't think I would want to go
into that type of accounting where I have to analyze the statements of
a company. I think for me I would be better in specialized accounting
like A/P or A/R. I am better at figuring out problems and figuring out
ways to make them better. I am better at specific tasks so for me I
wouldn't want to analyze the statements. I am glad to have learned
how, because at some point I am sure it will come in handy.
Response 3

All financial statements are essential documents because they tell
what has happened to a business over a period of time but most users
of financial statement are more concerned about what will happen in
the future. Stockholders and creditors are concerned with future
earnings and dividends and company's future ability to repay its
debts. Management is concerned with the company's ability to
finance future expansion.
Working as a bookkeeper I do all the steps in monthly cycles
consisting of entering transactions into the journals, working with
A/R, A/P, payroll and preparing the reports, but I have not been able
to analyze the reports the way I learned in this class. I learned how
important is to monitor and interpret the results. I learned how to
compare financial statements of a company with a company from the
same industry and point out the differences and similarities. This
class taught me the importance of analyzing the Income Statement,
Balance Sheet, Cash Flow Statement and Stockholder’s Equity each
one individually. I learned how essential is the quality reporting and
how useful this quality is in business decision making. I learned about
key financial ratios: liquidity ratios, activity ratios, leverage ratios,
and profitability ratios. All these ratios are valuable as analytical
tools and will help me indicate the areas of strength and weakness in
a business. Even though I learned the information step by step in this
class I tent to go over every single chapter all over again to better
absorb the material. This class taught us the potential of some
management manipulations of financial statements, thus following the
general accounting rules, being honest, ethical and professional are
the ways on leading to safe and profitable decisions.
--------------------------------------------------
ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)
www.acct504mart.com

ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)
Evaluating Financial Health 1
Evaluating Financial Health
Apple Inc. (AAPL)
Apple Inc. (AAPL)
Apple is one of the strong market participants of computer industry. It
also involve in manufacturing of telecom devices, software and other
peripherals. It enjoys full advantage of USA as home country, as it
has a strong retail network of 273 physical stores whose majority is in
USA, beside the E-retail outlet around the globe. The diversified
product portfolio empowers the apple to strive in tough competition
against Dell, HP & Compaq (Electronista, 2010). Amongst its

competitor Apple’s outclass profitability is witnessed of its effective
diversification efficient reach of product to customer and state of an
art Research and Development.
Management‘s Strategy
It is clear from the financial and the strategic analysis of the Apple
Inc. that the management of the company believes in continued
research, innovation and product development. It may be the sole
reason that why the firm avoids the cash dividend and rely over the
stock options. Besides the hardware business of computer the apple is
also focus on developing application software operating system, and
all such software application which added the value of its product.
The management is of the view that R&D, integrated marketing
channels and its product diversification is the source of competitive
edge against rivals of its industry. Management is aware of the need
of the investment in the promotion and advertisement activities; it
increases the brand equity, brand loyalty and awareness about the
products. Management also considers focusing on the retail store as it
is the source to remain in contact with customer and a way to market
the product directly; it is also a way to cross sell the market to
customer.
Financial returns in Comparison to Industry
An investor is always keen to know about the profitability. Hence we
start with the assessment of profitability. Apple Inc. has shown a
tremendous improvement in net sales and profitability since 2005 to
2009. In 2008 the net income increases 75.07% and in 2009 increases
34.58% shown that Apple cop. is continuously enhancing its profit.
Company earning PS is also at increasing trend. In 2009 basic EPS
is 9.22 from 6.94 last year, and it was 4.04 in 2007. It should be noted
that no cash dividend is announced since 2005, although stock base
benefit and compensation is given. An increase in return on asset has
been observed in 2009 i.e.26.96% against 19.33% last year while

industries average is 19.8. Hence Apple is leading the Industry from
this angle. Return on equity is 18.92% into 2009 lower than 33.40%
of industry benchmark, meaning apple is at lower leverage with a roe
increase of 4.03% this year (Hardware Marketplace, 2010).
Financial Risk and Industry
At this stage of our analysis we extend our findings to assessment of
risk associated with the investment opportunities in APPLE Inc.
Analyzing the liquidity we observed that Apple has a sound ability to
meet its short term obligation.It is revealed by the healthy current
ratio of 2.74 for the year 2009; it is improved from 2.46 of the last
year 2008. If we had a glace on the industry it reflects a standard of
2.5. In the computer equipment industry a very low inventory has
been observed. That is why the acid test ratio fall lightly below the
current ratio i.e. acid test ratio is 2.70 for the year 209 in comparison
to 2008, which were 2.43. If we compare the acid test of 2009 i.e. 2.70
with industry average, which is 2.5 (msn.com, 2010). On the liquidity
situation it is stated that the risk avoider will be glad to look at the
satisfactory liquidity position.
As far as the solvency risk is concern in the long run the debt
equity ratio is 0.11 for the year 2009, which is increased from 0.08 of
2008. Here it is important to refer to the industry average of 0.07
(OnlyHardwareBlog, 2010). Hence it is apparent that though the
APPLE Inc. is more risky in the long run, but it does not sound like
the alarm.
Cash Flow Analysis
Due to the increase in sale the operation of the firm expanded,
and hence besides other assets, the requirement of the cash also

increases in 2009. $1.11 billion is generated from operations, which
is 5.87% higher than the last year. The deferred tax expense in 2009
is v1040 million this noon cash expense last year it was 39 million
and 78 million in 2007 (Electronista, 2010).
The company actively invests in marketable securities that not only
improve its liquidity, but rather give a room to meet hazardous need
of raw inventory at any point of time. Investing activities gives
negative balance $ 17.434 billion. It is also clear from the cash flow
that firm does not announce any dividend in cash, rather it takes a tax
benefit form stock base benefit; secondly, firm keeps healthy cash in
hand.
Apple and its Main Competitor
When comparing the Apple with its major competitor like Dell
& HP, Apple marks higher price earning ratio of 19.10 times that is
greater than Dell and HP, which is 16 times and
18.3 times respectively. We analyze the share price to book value it is
5.71 times; again higher than 4.1 times of Dell and 1.38 times of HP.
Cause of higher market price is the retention of profit and stock base
benefits. Apple also has high capitalization; the date is $ 250.0 billion
(Electronista, 2010).
Apple’s Performance and Economy
Global economic recession is on the way to recovery, although
Europe and America needs some more time to normalize. However,
reasonable growth is observed in emerging market like Brazil,
Malaysia, India and China. Triad block recorded a poor growth.
What is going to be with the world economic outlook is the global
economy is going to revive with the “V” shape pattern or its recovery
would be like expanded “U” as some economist say growth will be

slow. I am of the view that Apple Inc. should more focus on the
emerging market like India, China, South Pacific region countries. So
Apple needs to exploit more and more opportunities outside the USA.
I am optimistic that the idea of direct marketing will work out side the
USA as well. Hence Apple needs to introduce maximum retail store
outside the USA.
It is important to look at trend analysis and industry comparisons as a
means of determining if it is the best time to expand or stay put and to
see how its future products will be accepted by the public.
References
Electronista. (2010). Apple only US computer builder to outgrow
industry average. Retrieved
July 2, 2010, from
http://www.electronista.com/articles/10/06/04/isuppli.sees.apple.at.34
pc.world.market.share/
Hardware Marketplace. (2010). Computer Hardware. Retrieved July
2, 2010 from

http://www.hardwaremarketplace.com/computer-hardware/
msn.com. (2010). Apple Inc: Key Ratios. Retrieved July 2, 2010 from
http://moneycentral.msn.com/investor/invsub/results/compare.asp?Pa
ge=PriceRatios&Sy
mbol=AAPL
OnlyHarwareBlog. (2010). Highest debt to equity ratio in the
computer hardware industry
detected in shares of international business machines. Retrieved
July 2, 2010 from
http://onlyhardwareblog.com/?p=2107
--------------------------------------------------
ACCT 504 Week 5 Homework (E7-15A, E7-19A, E8-20A, E9-
23A, E9-29A)
www.acct504mart.com
The units-of-production method tracks the wear and tear on the van
most closely. Requirement 3. Which method would Tasteful's prefer
to use for income tax purposes? Explain in detail why Tasteful's
prefers this method. For income tax purposes, Tasteful's would prefer
the double-declining-balance method because it provides the most
depreciation, and thus, the largest tax deductions in the early life of
the asset. E8-20A Corp. purchased 10, $1,000, 77% bonds of Power

Source Corporation when the market rate of interest was 12%.
Interest is paid semiannually on the bonds, and the bonds will mature
in ten years
Financial Analysis
Wal-Mart Stores Incorporated operates chain of retail stores in USA
as well as outside the USA. The first Wal-Mart store was opened by
Sam Walton in Arkansas in USA in 1962. Within a span of five years;
he opened more stores and he number increased to 24 stores across
Arkansas. The incorporation of Wal-Mart Stores Incorporated was
done in 1969. Wal-Mart grew in the United States of America by
opening of more stores in to the country. The company not only
opened the stores across Arkansas but also across the United States
of America (Wal-Mart Corporate, 2010).
Wal-Mart was opposed by the unorganized retail business holders in
the USA as their business was affected by opening Wal-Mart stores.
The company also opened its first store outside the USA in South
America in 1995. Wal-Mart wanted to spread itself not only to the
USA, but in other countries as well. In 2006, the company was having
3800 stores in USA and more than 2980 stores outside USA making it
one of the largest retail chains in the world. This corporation was also
having a vision to establish itself in to a global entity. Wal-Mart was
one of the first companies to operate in the organized retail sector
(Fishman, 2006). The modes of entry used by the company were
different for different countries. Wal-Mart used the mode of entry in
to various countries according to the rules and regulations prevailing
in to that country (Wal-Mart Stores Inc: Financial Statement, 2010).
The sales of the company for the financial year ending in January
2010 are 413.8 billion dollars and income for the same period is 14.7
billion dollars. The quarterly sales growth for the company has been

5.90%, while the industry average is 6.80 %. The five-year annual
growth in the sales of the company has been recorded at 7.50 %
while five year annual growth of income is 6.58 %. By analyzing the
financial statements of Wal–Mart Incorporated, we find that debt
equity ratio of Wal-Mart is 0.71 on 31st January 2010, which is 0.68
for the industry. It means the proportion of debt of the company in
its capital structure is lesser than the equity. The company is less
leveraged so the interest burden on the company is minimal. Wal-
Mart has capacity to borrow from the market for its CAPEX in the
future. The interest coverage ratio is 13 times in January 2010, which
is 21.9 for the industry. Wal-Mart needs to improve profitability to
improve interest coverage ratio for the reduction of risk of the lenders
of the company (Wal-Mart Stores Inc: Financial Statement, 2010).
The total revenues received by the organization in the year ending
January 2010 were $408.2 billion whereas revenues in the year
ending January 2009 were $404.3 billion dollars. The revenues in the
year ending January 2008 stood at $377 billion dollars. Thus, it can be
easily analyzed that the total revenues of the organization has grown
over the years steadily. This has also impacted the net income of the
organization and thus, increments could also be seen in the net
income of the organization. Net Income, which stood in the year
ending 2008 at $12.7 billion, increased to $13.4 billion for the year
ending 2009 and again increased to $14.3 billion in the year ending
2010 (Wal-Mart Stores Inc: Financial Statement, 2010).
Again if cash flow statement of the organization is analyzed it can
easily be viewed that the cash flow from operating activities have
always increased from the last three years. The cash flow from
operating activities stood at $20.6 billion in the year ending 2008 has
increased to $23.1 billion for the year ending 2009 and too further
increased to $26.2 billion for the year ending 2010. But the cash flow

from investing and financing activities has seen positive and negative
fluctuations both. Here where net cash outflow from investing
activities has decreased first and increased later again. For the year
ending 2008, it stood at $15.6 billion which decreased to $10.7 billion
but again increased to $11.6 billion. Again the net cash outflow from
financing activities increased constantly since at the end of year
2008, it stood at $7.4 billion which further for the year ending 2009
increased to $9.9 billion and further increased to $14.1 billion for the
year ending 2010 (Wal-Mart Stores Inc: Financial Statement, 2010).
Wal-Mart’s return on equity has improved in the last three years,
which is a good sign for the shareholders of the company. It was
19.9% in January 2008, which increased to 20.3 % in 2009 and then
again marginally increased to 20.4 % in 2010. The return on asset has
also shown the same trends in the last three years. In 2008 the return
on asset was 7.9 %. It increased to 8.1 % in 2009 and then further
increased to 8.4 % in 2010. It shows the increase in the efficiency in
the utilization of the assets of the company. The net profit margins
have been almost the same in the last three years in the company. It
was 3.4 % in 2008, 3.3 % in 2009 and 3.5 % in 2010 (Wal-Mart Stores
Inc: Financial Statement, 2010).
The price to sales ratio and price to book value ratio have shown
negative trends in the last three years, which shows that the stock of
the company is available at cheap price as compare to the price it
was carrying three years back. The price to sales ratio, which was
0.55 in 2008, was decreased to 0.46 in 2009 and then improved to
0.51 in 2010. Similarly, price to book value ratio reduced from 3.12 in
2008 to 2.83 in 2009 and then improved marginally to 2.86 in 2010.
This represents the better opportunity available for the shareholders
to invest in to the stock of the company. The book value per share of
the company has also increased in the last three years. It was 16.26

dollars per share in 2008, which increased to 16.63 dollars per share
in 2009 and further improved to 18.69 dollars per share in 2010. This
represents the increase in the retained earnings of the shareholders
in the company (Shim & Siegel, 2007).
Wal-Mart’s current assets level has shown stability in the last three
years for the company, which shows the lesser investment in current
assets for the company even with the increased sales. In 2008 the
cash and marketable securities available with the company was
48020 million dollars, which increased to 48949 million dollars in
2009 and then decreased to 48331 million dollars in 2010.
Quantitative Analysis holds huge significance while evaluating the
financial health of the organization. Three types of techniques are
used for quantitative analysis. The three techniques are trend
analysis, common-size analysis and ratio analysis. Trend analysis is
one of the significant quantitative analysis tools that assist in
analyzing the financial health of the company as compared to its
previous years. The year on year trends in the financial statements
are studied to analyze whether organization is improving upon its
past performance or it is further going down (Brigham & Houston,
2007).
Common-Size analysis is another quantitive analysis tool again one of
another tool that helps in making evaluation of the financial health of
the company as against its competitors. The financial statements of
the company and its industry competitors are compared by taking a
common base and then performance is analyzed as against the
competitors. It helps in knowing whether the organization is
performing better than its competitors or not. Ratio analysis is also
used to evaluate the financial statements of an organization. This
analysis is used to interpret the performance shown in the financial

statements of the organization. The ratio analysis helps the
organization compare performance over the years or in the same
year (Brigham & Houston, 2007).
Quantitative Analysis is used by the company and its stakeholders to
analyze the financial performance of the organization. Trend analysis
is used by the company, the shareholders and the investors to
analyze the performance of the company over the years. Common-
Size analysis is used by the competitors, management, and investors
to evaluate the organization that is performing better whereas ratio
analysis is used specifically by all the stakeholders to interpret clear
and well defined results shown in the financial statements of the
company (Brigham & Houston, 2007).
These techniques help to evaluate the liquidity or short-term
solvency. By using current ratio, one can analyze the effectiveness of
the liquidity position of the organization. Profitability of the
organization is also analyzed through profitability ratios, common-
size analysis, as it helps to know the organization’s profits earned by
the company as compared to others. Trend analysis and ratio
analysis with the help of different asset turnover ratios and trends
could easily analyze that assets are effectively used or not (Brigham
& Houston, 2007).
Wal-Mart’s current stock price is 50.56 dollars. The stock has gone up
as high as 56.27 dollars, and as low as 47.35 dollars in the last year.
The earnings per share of the company which was 3.16 dollars per
share in 2008, was increased to 3.35 dollars in 2009. Earnings per
share further increased to 3.76 dollars in 2010. The analysis shows
the improvement in the earnings of the company in the last three
year. The current price earnings ratio of the company is 13.2 which is

less than the industry average of P/E ratio of 15 times (Wal-Mart
Stores Inc (WMT), 2010).
Analyzing the stock of the company from the investment point of
view, we can estimates that the fundamentals of the company are
very strong. The stock has return on equity, return on assets better
than the industry average of 22.9 % and 9.1 % respectively. The
company has given a better annual average return on asset and
return on equity in the last five years as compared to the industry.
The company has a debt equity ratio and net profit margin, which is
less than the industry. However, Wal-Mart is improving on the
efficiency front. As a result, Wal-Mart stock is recommended for
investment.
References
Brigham, E.F. & Houston, J.F. (2007). Fundamentals of Financial
Management. (11th ed.). Cengage Learning.
Fishman, C. (2006). The Wal-Mart Effect: How the World Most
Powerful Company Really Works-- and How it's Transforming the
American Economy. Penguin Group
Shim, J.K. & Siegel, J.G. (2007). Schaum's Outline of Financial
Management. (3rd ed.). McGraw-Hill Professional.
Wal-Mart Corporate. (2010). History. Retrieved July 25, 2010 from
http://walmartstores.com/AboutUs/297.aspx
Wal-Mart Stores Inc: Financial Statement (2010). Retrieved May 31,
2010, from
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx
?Symbol=WMT

Wal-Mart Stores Inc. (WMT) (2010). Retrieved May 31, 2010, from
http://finance.yahoo.com/q/co?s=WMT+Competitors
--------------------------------------------------
ACCT 504 Week 6 Case Study 3 - Cash Budgeting - LBJ
Company (Devry)
www.acct504mart.com
ACCT504 Case Study 3 on Cash Budgeting
The cash budget was covered during Week 4 when we covered TCO D
and you read Chapter 7. There is also a practice case study to work
on. Your Professor will provide the solution to the practice case study
at the end of Week 5. This case study should be uploaded by 11:59PM
Mountain time of the Sunday ending Week 6 to the Week 6
Assignment Dropbox. You are encouraged to use the Excel template
file provided in Doc Sharing.
The LBJ Company has budgeted sales revenues as follows:
April May June For this week's checkpoint we had to look up three
job postings in the field of accounting. I'm glad that I got this
opportunity because it actually opened my eyes and expanded my
knowledge in the accounting field. The three job positions are listed
below. The first job title was Senior Internal Auditor. A Senior
Internal Auditor responsibilities is to plan and perform financial,
operational audits, and identify business process risk. This job
position only specified that the pay was well over 100k a year!!!!
Qualifications BA/BS, and minimum of 3-4 years public accounting.
The second job posting was a Tax Manager. Tax Manager is
responsible for conducting basic tax research, maintain tax records
and ensure proper tax accounting. This position requires a BA in
Accounting, and a minimum of 7-8 years of expereience.The job pay

is listed as 120k!!! The third job posting was Assistant Corporate
Controller- SR Management. Assistant Corporate Controller- SR
Management position Inventory Accounting for North America,
Credit management for North America and Corporate accounting for
Latin America, responsible for assuring accuracy of inventory and
sales and works closely with external auditors on receivable audits.
The requirements for this position is as follows, BA/BS, public
accounting experience preferred, Strong verbal and written
communication. For the Assistant Corporate Controller- SR
Management the salary pay starts at 110k-130k with bonus and
benefits.
I didn't know that Accounting career actually paid this much. I might
think about changing my careers.
--------------------------------------------------
ACCT 504 Week 6 Homework (E10-19A, E10-25A, E12-16A,
E12-20A)
www.acct504mart.com
This Tutorial contains Excel Files which can be used to solve for any values
(your Question may have different company name or values, but that can
be solved using Excel file)E10-19A Army Navy Sporting Goods is
authorized to issue 10,000 shares of common stock. During a two-month
period, Army Navy completed these stock-issuance Discussion Question 1:

Based on what you know about accounting, what role do you see it
playing in business operations? How dependent do you think a business is
on its accounting department? Why?
Accounting plays many important roles especially when it comes to
business operations. Accounting is mainly responsible for almost all of the
financial needs of the business. It keeps track of all spending, profit and
loss that the company inquires.
The business is very dependent on it accounting department. Accounting
department is responsible for monitoring more than the cash flow, it also
works closely with IRS, government to make sure that everythingis being
done correctly (payroll, taxes, etc). The accounting side of the business
can be considered to be the lungs of the company next to the heart.
Discussion Question 2:
Why are ethics so important in the field of accounting?
Wow where should I start? First of all the when dealing with accounting
there must be consistent clear communication between the business and
the accounting department. Honesty is always the best policy. Good
ethnics keeps the business running at its top level.The company's
personal information, employee information could be given to the wrong
hands and it can destroy the company. A good accounting department
has way too much to lose and they will not want to riska horrible
reputation in the field.
Another response
People bring all their financial information to an accountant who in turn
looks through all of it with a fine tooth comb. People need to know that

they can trust this person with all of their personal information. Most
licensed professionals swear to a code of ethics, whether they follow them
or not is up to that professional. Unfortunately there are many out there
that do not and they ruin the trust for other professionals. Accountants
really need to have the trust of their clients being that they work with
peoples taxes and finances and need much information from their clients.
Another response
Ethics are important in the field of accounting for several reasons. Ethics
mean different things to differnt depending on the role of the accountant.
If an accountant is hired by an individual or a business, that accountant is
trusted with the finances of the person or business. The accountant is
trusted to give an honest account of finances and not to defraud or
jeopardize that individuals or companies relationshipwith the
government, creditors of financiers. Individuals and businesses also trust
the ethics of accountants insofar that they do not disclose their
information to those that do not have a right to it. Finally, In the
accounting profession, much like many other professional service
professions, an accountants reputation is the continuing source of
employment.If they are knows to have a bad or evenflexible ethical code
then they can develop a bad reputation and experience a loss of business.
--------------------------------------------------
ACCT 504 Week 7 Course Project JCP Kohls (Devry)
www.acct504mart.com

ACCT 504 Week 7 Course Project JCP Kohls (Devry)
Financial Statements
Today,I will be describingabalance sheet,incomestatement,retainedearningsstatement,and
statementof cashflowsandhow a companyusesthese financial statementsasa tool to make future
decisionsforthe company.
Balance Sheet
A balance sheetastatementsheetthatreportsthe company’sfinancialbalancesof the business.
Thissheetincludesthe company’stotal of assetsandliabilities.Itisusedforall three typesof
businesssole proprietorship,businesspartnershipandcorporate businesscompany’s.Creditorsrely
on thisfinancial sheettodetermineif the companywill be able torepay.
Income Statement
An Income Statementisafinancial statementthatshowsthe company’sprofitandlosses.Itbasically
showsall the company’sgainsandlossesthatwere made duringa periodof time.Afterthe company
deductsthe expensesfromthe revenuethenyouwill getatotal netincome.Thisisa great
statementtouse especiallybecause thiswill show investorshow muchnetincome is the company
bringingin,orhow financiallystable the companytrulyis.
RetainedEarningsStatements
RetainedEarningsStatementsreportsthe changestothe retainedearnings(netincome ina
corporation) duringacertaintime period.Thisfinancial statementshowsdividends,profitsand
loses.InvestorsandLendersmonitorthe retainedEarningStatementsespeciallywhenitcomesto
monitoringdividends.Some investuse thistool tosee if the companyispayinghigh/low dividends.
RetainedEarningsStatementispartof the balance sheetunderStockholdersequity.
Statementof CashFlow
Statementof CashFlowsprovidesinformationregardingthe company’scashreceipts.This
statementgivesadetailedaccountof the operating,investingandfinancial activitiesof the
company.It alsoallowsinvestorsachance to observe how financiallystablethe companyissothat
theycan make a choice if theywantto take a risk oninvestingintothe company. Alsothe

accountingdepartmentneedsthisstatementinorder tosee if the companyhas enoughmoneyfor
payroll uses.
All fourof these financial statementsare all extremelyimportanttoolstouse inthe business.
Anotherstatementthatwasnotlistedbutisoftenusediscalledcomparative statements.
Comparative statementgivesaside byside comparisonof the financialstatementsabove.
Reference
http:yourdictionary.com/accounting_statements.orgRetrieved1/28/10
Thomas,Y. 2005-08-27 “Accounting101 pg. 52 Statements

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