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ACCT 504 Case Study 1 (Gordon Construction)
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Case Study 1 (Part A)Analyze the impact of business transactions on
accounts; record (journalize and post) transactions in the books;
construct and use a trial balance) During the first month of operation
of Gordon Construction, Inc., completed the following
transactions:June2Gordon received $55,000 cash and issued common
stock to the stockholders. Current assets
When it comes to a company's classified balance sheets you will find
current assets sheet. Current assets is cash or cash equilivants that
the company will use. What you will find on a current asset sheet is
Cash and equilvants, Short term investments, Accounts receivables,
and other assets.
Long-term investments
Long-term investments when it comes to balance sheet are
investments that the company intends to hold onto. The investments
that are listed are as follows, bonds, stocks and cash. You will also
find short-term investments in the company. The difference between
short-term and long-term investments is that the short-term
investments will be sold and the long-term investments normally the
company will choose to keep it.
Property, plant, and equipment

Property, plant, and equipment are what the company calls "fixed
assets". Property, plant and equipment are assets that can not be
easily converted into cash. These are basically items such as company
car (used to deliver products), computers and copier machine, and
freezer used for restaurants.
Intangible assets
Intangible assets are non-monetary items that can not be seen or
touched. For example, trademarks, copywriters, patents and
goodwill. Intangible assets are normally listed in the separate assets.
references
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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, No supervisor reviews the receiving clerks work. For
Discussion Question 1: Post your response to the following:

• When reviewing a financial report, why should information be
reliable, relevant, consistent, and comparable?
• In other words, why are these accounting characteristics
important?
• What kinds of problems could be created if a financial report is
not reliable, relevant, consistent, or comparable?
It is extremely vital that the company has accurate financial
reporting. This information determines whether or not to invest in
your company's stock. This information will help them decide if it is
profitable to invest or not to invest in your company based what is in
your financial history. The information must be relevant because it
will help the company, investors and lenders make decisions. It helps
answer questions like, "how stable is your company", or "what future
does this company have". The information should be reliable. In other
words the information that is reported must be able to be verified,
backed up with truthful information. Comparable occurs when
different companies use the same accounting principles. This makes it
much easier to compare results between company's. Consistency
happens when the company uses the same accounting method every
year. When the financial statements are reported each year, it paints
a financial picture of where the company is headed now and in the
future.
What kinds of problems will occur if the information does not include
these things?

Falsified or manipulated statements doesn't only effect the company
but it also to name a few effects the lenders, creditors, investor's, etc.
This will result in the company not having a faithful representation.
Another response
The main objective of generating financial information is providing
useful information that can be used in decision-making... only if this
information is relevant, reliable, comparable, and consistent, can it
be useful for decision makers. (Kieso, 2003).
Relevance gives a basis for making decisions that will impact the
future of a business, and it confirms and corrects expectations from
the past. If the information makes a difference in making decisions, it
is relevant.
Reliability means that the information can be depended on and it can
be proven to be free of error, and the information is factual. The
information cannot favor one set of users over another. CPAs audit
financial statements to ensure reliability.
Comparability is also an important characteristic of financial
reporting... this happens when different businesses use similar
accounting principles, making it much easier for one to compare
companies, and the method used in a business must be disclosed to
the users of the information to enable the users to convert the
information as accurately as possible.
Consistency simply means that the business uses the same
accounting principles on a yearly basis... consistently. This helps
decision makers analyze a company's trends. A company can change

the methods used if they can justify the change, showing that the
new method is more useful for analysis. If the method is changed, it
must be disclosed in the notes that go with the statements to show
users a lack of consistency.
These characteristics are very important to a business... decisions
cannot be made based on incorrect information, and everyone
involved in a business venture of any kind, whether they be
management, owners, or investors and creditors, as well as
consumers, etc. must be able to rely on the financial information
provided in order to make any type of decision. Without this
information, it is difficult to imagine any business succeeding, even
for a short time.
Examples of problems that could occur without reliable, relevant,
consistent, or comparable information includes not being able to get
loans or investments; management could make decisions that cause
irreparable damage to entire operations, consumers could easily lose
faith and cut their ties... the possibilities are endless for companies
that lack these qualities in their financial reporting.
DQ2
For Discussion Question 2: Post your response to the following:
• How does information from financial reports influence business
decisions?
• Why is it important for business managers to understand the
information found on financial reports?

How does information from financial reports influence business
decisions?
Once the information from the financial reports have been posted
then a team will review the company's financial history to see what
decision were profitable or not. The decisions that were made
previous to the financial reports being posted will show which way
the company needs to go to continue to remain #1.
Why is it important for business managers to understand the
information found on financial reports?
IT is extremely important for he business managers to understand the
information found on the financial reports. The business managers
are going to be the people that are going to make decisions for the
company. They need to know how to interpret the financial reports
and come up with different strategies that will continue to make the
company money.
Another response
The information from financial reports influences business decisions
because it shows where the company stands. The managers use the
information from the financial report compared to the current year
from the previous year, whether the company growths or losses. It is

very important for business managers to understand the information
found on financial reports because the information from the financial
reports enables business managers to see how to improve and keep
the business afloat. It also gives business managers an insight what
came in and went out and the total operating cost of the company as
well as cutting cost in a certain areas. The information from the
financial reports helps the manager manages the business
accurately.
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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

Internal Cash Control
By
Kamilah Crooms
Accounting 220
Jess Stern
Internal Cash Control
The accounting department receives from sales invoices once a
month. Most of the information is missing on the invoices.
The accounting department relies on each department within the
company and all the information has to be submitted completely and

in a timely matter. In this scenario most of the information that has
been turned in has information that is missing on the invoices. I
would say that the internal controls that are not being followed are
Documentation procedures. Company documentation is very
important and must be turned in complete. These documents show
proof of delivery or proof of services to the customer. Any incomplete
documents can be very costly and can cause a delay in the company
being paid for any services rendered. For example, one of the
requirements in a transportation department is to make sure that the
drivers verify the load and sign for the load prior to leaving the yard,
these documents says that the load left in good condition. Well, it so
happened that we allowed a driver to leave without signing the
paperwork. This caused a delay in accounting because we had to get
signatures from the driver and the customer which took a month
later to complete.
Rob, Sue, and Bob use the same cash register at the donut shop.
Rob, Sue, and Bob all use one register has often turned into not the
best decision ideally for the company. It can increase the risk for the
drawer being short and it will be hard for the company to find out
which employee or employees had shorted the register. The internal
controls that are not being followed are Establishment of
responsibility. Happens when the company assigns one person to be
in control of a specific job or have authority to make decisions (pg
161 Internal Control and Cash). When the company signs one person

to be responsible over the register it will allow the company to hold
that one person responsible for any shortages.
Sam does the ordering of materials at the beginning of every month
and pays the bill.
In this case Sam is ordering materials and paying all the bills. This
process is actually known as related activities (pg 162 Internal
Control and Cash). This occurs when one person is doing two different
responsibilities just like Sam. The internal Control that is not being
applied is Segregation of Duties. It is better for the two to be a
separate responsibility because it will minimize the billing errors.
Bank reconciliations are done by the person who is responsible for all
cash responsibilities.
The problem with this scenario is that the same person is responsible
for all cash responsibilities, why is this person doing the only one that
does this job? Having one person take on such a major responsibility
increases the chances of embezzlement and thief. The internal control
that is not being applied is rotating employees’ duties and requiring
employees to take vacations. One person should not be completely in
control of one job, the company should encourage vacations or
switching positions to prevent incorrect handling of the company’s
valuable information.

New checks came in and are left on the shelf with other supplies.
This is a tough scenario because there are all sorts of internal
controls that are not being used in this case. I would say in my
opinion that the first internal control that comes to my mind that is
not being applied is bonding of employees who handle cash.
Every employee that works near or with expensive equipment should
be held reliable or responsible for the company’s assets. Bonding of
employees who handle cash protects the company by insuring that
the employee is or isn’t a risky applicant (background checks) or
reassuring that the employee that they will be prosecuted to the
fullest extinct if they are found guilty of thief. For example, I had
worked at Mc Donald’s and
there were my shift managers and one employee that were caught
with stealing money from the company. This situation had happen
very differently. The armor truck dropped off a deposit that belonged
to another company (armors mistake) but they signed it. Those
employees thought that nothing was going to be traced back to them
but the little did they know, all evidence traced back to them. They
each received jail time, and felony records.
Everyone has access to the computer system and the last audit was
seven years ago by the former accountant

This scenario has two things that are going on at the same time. I
will first start off with the computer system and how everyone has
access to the computer. The internal control that is not being applied
is Physical, Mechanical, and Electronic Controls. This allows the
company to control assets through physical or electronic based
systems or programs. It is extremely important for a company to
invest in computer or informational protection for the company and
for their employees. Today’s technology age most companies are
investing in a computerized program. This will help protect from
internal errors and external protection. For example, all companies
invest in a virus protection this will ensure that the company’s
information is protected and not in the wrong hands.
Invest idle cash
Invest idle cash occurs when any excess funds or cash needs to be
invested. The money should be highly invest and risk free. For
example, a major company should make investments with their
assets into profitably investments and risk free.
Plan the timing of major expenditures
This is when a company sets aside money for major cash needs. We
live in a world that things happen daily. A good company would set
aside emergency funds. For example, during a terrible thunderstorm,

the winds practically ripped off the roofing shingles off a commercial
business. The company will be able to use the money for emergency.
Delay payment of liabilities
Delay payment of liabilities is when a company pays bills not too soon
and not late. This allows the company to have money available for
bills that that really need to be paid allowing excess funds to be free
for other uses.
Keep inventory levels low
This occurs when the company keeps the inventory low so that it will
bring in more profits. For example, if the managers at a fast-food
over plan and fix too many hamburgers and the customers don’t buy
it, then the food will go bad and the company will lose profit.
Increase the speed of collection on receivables
This occurs when money is owed to the company, the company
cannot claim these until the funds have been received. Some
companies offer incentives to encourage customers to pay early or on
time. For example, my job encourages their customers by letting
them know that there will be a price increase on or after a certain
date and this really works because the customers want to pay at a
lower price.

References:
http:yourdictionary.com /accounting_statements.org Retrieved
2/13/2010
Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 Statements
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ACCT 504 Course Project Analysis of Nike, Inc. and Under
Armour, Inc.
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Course Project: A Financial Statement Analysis A Comparative
Analysis of Nike, Inc. and Under Armour, Inc. Below is the link
for the financial statements for Nike, Inc. for the fiscal year
ending 2014. First, select 2014using the drop-down arrow
labeled Year, and then select Annual Filings using the drop-
down arrow labeled All. You should select the 10k dated
7/15/2014,and choose to download in PDF, Word, or Excel
format. Axia College Material
Appendix B
Cash ManagementMatrix
Directions: Using the matrix, list how each of the principles of internal control works, and give an
example for each. Next, list how each of the principles of cash management works, and give an
example for each.
Principles of Internal
Control
How it Works Example
Establishment of responsibility Happens when the company assigns
one person to be in control of a
specific job or have authority to
make decisions.
My job, Our Sales department is
the only one that can waive a
restocking fee. It allows the Sales
team to be in control of the
customers returns
Segregation of duties This is when the company has more
than one person to control a task or
job
A church- You have people who
count the offering and then you have
someone who writes down and logs
in what was received
Documentation procedures Evidence or proof of all company
transactions
My job we deliver ship shingles to
our customers, and we make the
driver sign prior to leaving and we
make the customer sign a “Proof Of
Delivery”form
Physical, mechanical, and
electronic controls
Allows the company to control assets
through physical or electronic based
systems or programs.
Our job has a system called Cisco and
this tracks the employees breaks and
lunches. Also, monitors how long the
CSR have been ready or working.
Physical control would be the
security guard, they require

identification prior to entry.
Independent internal
verification
Anyinformationthat canbe reviewed
, compare, andreconciliationbya
employee
My job has a way of tracking our
inventory and when someone says
that they were shorted on their
order we can go back and track the
inventory and compare the numbers
in the system and a physical count to
determine if the numbers were
incorrect
Other controls Bonding of employees, company
protects against abuse of assets.
Our company fired a girl just recently
because she had used the company
card business card for personal us
that was not work related.
Principles of Cash
Management
How it Works Example
Invest idle cash Occurs when any excess funds or
cash needs to be invested,
My father’s company makes wise
investments and it turns around in
his favor
Plan the timing of major
expenditures
A company wants to make sure that
there is money set aside for major
cash needs
During the recession profits dropped
lower than expected so some
companies pulled from these funds
Delay payment of liabilities When a company pays the bills at an
appropriate time not late and not
too soon.
Ok, when times are tough at home
and bills are due I organize the bills
by which bills needs to be paid the
soonest, because if I pay the bills too
early I will cut off my excess funds
that could be used for something
else
Keep inventory levels low Happens when a company keeps the
inventory low so that it will continue
to bring profit
See’s Chocolate factory has to make
sure that they are not over producing
or making too much or else the sit
and the company will lose money
Increase the speed of
collection on receivables
Money that is owe to the company
by other people or customers is
money that can not be counted
towards the companies funds
When a customer places a order for a
product and has not paid yet, the
company can not count the money as
their’s until it is received.
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ACCT 504 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.
Balance sheet shows what condition the company is currently in.
whereas the other financial statements only came monthly or
annually. For example, what if the management planning team
wanted to see the company's current assets, ownership equity and
liabilities? All they have to do is run the balance sheet report.
CVP income statement or Cost Volume statement reports or monitors
the effects of the changes in cost and volume when it comes to the
company profits. For example, I work at a manufacturing plant for
roofing shingles. The CVP analyst studies the cost which includes but
not limited too, manufacturing, material, labor cost. This financial
statement report would help the management team budget the cost of
manufacturing goods.
Statement of cash flow tracks the movement of cash coming in or out
of the business. This financial statement will show if the company
made cash or not, or if the net income increased or decreased. For
example, the owner or the management department will use this to

determine if the company has earned enough money to be able to for
any expenses.
Retained earnings statements is a percentage that is kept by the
company to be reinvested or to be used to pay debts. For example, if a
company was looking to expand their business by purchasing top of
the line equipment they can use this statement to see how much money
the company has put away.
References:
statements.suite101.com/article.cfm/financial_statements_the_p_l.
Retrieved 2/18/2010
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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
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 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

• How would you describe the difference between financial and
managerial accounting? What are the distinguishing features of
managerial accounting?
There are many differences between financial and managerial
accounting. The financial accounting statements are available to
external users such as employees, stockholders, creditors, investors,
etc. This is available to them so that they can monitor the company's
performances quarterly or annually. Managerial accounting provides
financial information for managers and other internal people or
department. Managerial accounting is confidential so it is only
observed by internal users such as management, owner, and will
provided to external users such as the public. Management uses this
for budgeting purposes or to monitor profit loss/gain within the
company. Managerial accounting can be available to them as often as
needed. Managerial accounting statements is a great way for
management to make decisions based on what has been reported.
Another response
The differences between managerial accounting and financial
accounting are distinct. Managerial accounting reports are for those
in managerial and decision making positions. The managers use the
financial report to answer questions, which would advance the
company and its employees. The manager would want to know if
certain investments should be made and should the company advance
an employee's salary. The manager needs the report to decide if a
factory is built or if a certain stock is brought. The financial
accountant has the job of showing the external users such as creditors
and stockholders a picture of the company's stability.
The manager's purpose is to manage by making stable plans, delegate
duties, motivate the workers, and control the atmosphere.
Distinguishing features of managerial accounting are the fact no cpa
will audit the report, and there is no specific frequency of the report.
The reports are done in a need to know basis and for a specific
reason, which is for business purposes. The reports are detailed and

pertain to specific business decisions. The financial accountant need
only be concerned with the company's finances.
DQ2
• Select a management function (planning, directing and
motivating, or controlling) and explain how that function relates to
business as a whole. Next, select a different function listed by a
classmate. Discuss with your classmate how the functions you each
selected complement each other.
The management functions that I choose was controlling. Controlling
job is to make sure that the each department/person is keeping the
company's activities or plans on track and in order to achieve that
they must work closely with Management planning function.
Controlling continually compares the company's performance to
make sure that the planned standards are being met. In my opinion
this is known as the "dirty work". Controlling operations have to
know what to look for and how to keep track of all the company's
activities. They have to take actions and quickly correct any errors
and make sure that the company goals are being achieved in a timely
matter or the time that it was planned. If there are errors it is job of
the controlling operations to take quick action. The controlling
operations not only correct errors after it happens but they also are in
charge of foreseeing any potential errors and act quickly to get that
resolved.
Another response
I chose Controlling as part of the management function. The
controlling function relates to business as a whole because it helps
monitoring the firm’s performance to make sure the planned goals
are being met. Managers need to pay attention to costs versus

performance of the organization. let say, if the company has a goal of
increasing sales by 10% over the next two months, the manager may
check the progress toward the goal at the end of month one. If they
are not reaching the goal the manager must decide what changes are
needed to get back on track.
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ACCT 504 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. (1) The cashier
counts the total receipts and reconciles the receipts with the cash
register total
Cost, Volume, and Profit Formulas
By
Kamilah Crooms

Due February 28, 2010
xplain the components of cost-volume-profit analysis.
The components of cost volume-profit analysis consist of Level or
volume of activity, Unit Selling Price, Variable Cost per unit, total
fixed costs, and Sales mix.
What does each of the components mean?
Level or volume of activity is the activity that causes change or
behavior when it comes to the cost. Unit selling Price is the cost for
the product basically how much each unit is selling for. The Variable
Cost per unit is something that can change depending on the activity.
The total fixed cost does stay the same as activities change but differ
per unit. The Sales mix is basically what the name says. It’s a mixture
of sale items when more than one product sold the sales will remain
the consistent.
Based on the formulas you have reviewed, what happens to
contribution margin per unit when unit selling prices increase?
Contribution margin is the amount of revenue left over after
subtracting the variable cost. So basically Unit sales price subtracting
or minus variable cost.

Illustrate your explanation with an example from a fictitious
company of how an increase in unit selling prices might affect
contribution margin.
Kelly’s Sweetheart Flowers
The owner of Kelly’s Sweetheart Flowers is selling their bouquet of
flowers for $10 per unit. The Variable Cost per unit is $4.00. The
contribution margin will be ($10-$4) = $6. If the sells price increases
to say $15, then the contribution margin will be ($15-$6) = $9 per
unit.
When fixed costs decrease, what does this do for sales? Illustrate
your explanation with an example from a fictitious company.
Kelly’s Sweetheart Flowers
When the fixed cost decreases, the contribution margin ratio the net
income and sales will increase.
For example,
The flowers are $10 per unit. The variable cost per unit is $4.00. The
contribution margin will be ($10-$4) = $6. The fixed cost is $3. We

subtract Contribution margin – Fixed Cost= Net income. The net
income is $3.00.
Define contribution ratios
The contribution margin ratio is the contribution margin per unit
margin divided by the unit selling price.
What happens to contribution ratios as one of the components
changes?
Shown in the example above, if one or more of the components
changes is will cause the net income to increase or decrease.
eference
statements.suite101.com/article.cfm/cost_volume_profits*the_p_l.
Retrieved 2/28/2010
//http:yourdictionary.com /CVP.org Retrieved 2/26/2010
Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 St
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ACCT 504 Week 1-7 All Discussion Questions (Devry)
www.acct504mart.com

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
7 How should mixed costs be classified in CVP analysis? What
approach is used to effect the appropriate classification?
According to our class materials all mixed cost must be classified into
their fixed and variable and variable elements. The method that can
be used to determine is called the high/low method. To determine the
variable cost the analysis takes the total cost and divide it with the
low activity level. To get the fixed cost then the company would have
to subtract the total variable with either the high or low activity level.
9. Cost volume profit CVP analysis is based entirely on unit costs. Do
you agree? Explain.
In my opinion when it comes to making financial decisions for the
company, often times more than one method is used. Cost volume
profit is also based on Volume or level activities, unit selling prices,
variable cost per unit, total fixed and sales mix.
14. You can find the break point in dollars by drawing a horizontal
line to the vertical axis. I you want to find the break even point in
units it will be a vertical line from the break even point to the
horizontal axis.
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ACCT 504 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: Axia College
Material
Appendix C
Budgets Matrix
Directions: Using the matrix, define each of the budgets listed and briefly describe its uses.
Budget Definition Describe its uses
Sales budget Estimate of the expected sales for
the period. All of the other
budgets depend on the sales
budget. This is where all the
other budgets will start from
The sales budget shows dollars
and units. This will allow
management to see how many
units will be produced for the
period
Production budget A production of units needed to
be produced in order to meet the
projected sales
Shows management how many
units will be produced during
each budget period and what
amount is needed to fulfill
inventory demands
Direct materialsbudget Is the estimated quantity or cost
of the raw materials that is
needed in order to produce the
units required to fulfill inventory
Shows management how much
raw materials that is already on
hand and or that needs to be
ordered to meet inventory
demands.
Direct labor budget A estimate of cost and quantity of
direct labor needed in order to
meet production
Shows how many hours, how
many laborers needed to produce
the units for that budget period.
Management will decide what
will be the right amount of
laborers needed and if the
company will be able to meet the

budget
Manufacturing overhead
budget
An estimated expected amount of
manufacturing cost for the
budget period
This list all overhead cost
involving cash disbursement in a
quarter
Selling and administrative
expense budget
Anticipated selling and
administrative expenses in the
budget period
Shows area of budget expenses
that are not listed other than
manufacturing. Expenses such as
marketing, promotion cost etc for
the budget period
Budgeted income statement Estimate of expected profitability
of operations in a budget period
Is a very important tool because it
shows the company estimated
profit for the budget period.
Cash budget A projection of expected cash
flows in and out of the business.
Cash budget helps management
keep a tally or total of all cash
balances.
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ACCT 504 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 transactions Discussion Question
1: Post your response to the following:

• You know how important it is to create budgets for your
household. How does budgeting help management make good
business decisions?
Budgeting is a very important skill that can be applied to everyday
life and also when it comes to making good business decisions. I
really like the way our class resources says about Budgeting.
Budgeting is used as a planning tool used by management to make
good decision for the company. If a company is successful than more
than likely that means that the management team is very good at
managing the company finances. Budgeting helps management plan
ahead, defines what is most important, shows warning signs, reach a
company target without over or under budgeting and etc.
Another response
In a business, a budget helps a business make good decisions because
they are used by the company to plan for future events and
coordinate the events and duties in the company. They also gives
objectives used to evaluate the performance of the company on each
level which can help to make future decisions that will not hurt the
company based on the projected objectives. It can also be used to
alert the company of possible problems or negative trends in the
company that need to be addressed so that there is a clear picture of
the overall health of the company before decisions are made. The
budget helps the company to be able to make an informed decision
when making one. It is there in order to make sure that making a
decision like taking on another company will not hurt the company
and is something that the compnay can sustain based on the budget.

DQ2
• What are some of the different types of budgets?
• Describe in detail one type of budget covered in the text.
• Describe what the budget is used for and what information it
provides a business.
• Then, as you respond to your classmates, discuss how the
budget you described relates to the budgets they described.
• Discuss how a business benefits from each of the budgets.
There are many different types of budgetting. For example, there
sales budget which allows management to see how many units that
need to be produced, production budget which will allows everyone
to see how many units are going to be produced in or needed to be
produced in order to meet the inventory for that budget period. One
budget that I can describe in detail is called the direct labor budget
and this budget shows how many people, hours is needed in order to
meet the required budget for that period. This will give management
an idea of how much money is needed such as paying the cost of
labor. The company benefits by each of these budgets because it will
help manage just how much money it will cost the company during
this period. Management can also see if there are different ways to
cost the company out of pocket cost down during this period.
Another response

I chose to write about the Production Budget. The Production Budget
shows the cost of each unit needed to produce an item or
manufacture a product. The formula used by the Production Budget :
Budget sales units + Desired ending finished goods units - Beginning
finished goods units = Required production units.
An example would be, every Easter the bakeries in the Bronx loads up
on Hot Cross Buns. My mother and grandmother would buy these
tasty sweet breads,and eat them for breakfast. I personally would
like to eat them every week but, they are only sold during the Easter
season. Maybe, it has something to do with the glazed cross on the
top.
Every Easter Holiday, there appears these Hot Cross Buns and the
bakeries production department allows for the purchases for items
needed to make the buns. After Easter has gone, Hot Cross Buns are
not included in the budget.
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ACCT 504 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.
This Case Study relates to TCO's D and E and Chapters 3 and 4.
MAKE SURE TO COMPLETE ALL REQUIREMENTS WHICH ARE
LISTED BELOW.
There are 10 Sheets in the Workbook including this one.
What is a Flexible budget?
• A Flexible budget is a budget that change or is flexible during
different levels or activity. Unlike the static budget which is a budget
based on one activity level, the flexible budget is based off of more
than one activity level.
• The steps to development a flexible budget is :
a) Identify the activity index, and the range of activity
b) Find out what the variable cost, and determine the variable cost
per unit
c) Find out what the fixed cost and determine the budgeted
amount for each unit
d) Organize the budget for selected additionalactivity within the
appropriate range
• The information found on a flexible budget cannot begin with
the master budget. The flexible budget uses the same guidelines the
original budget. The budget consists of Sales, Cost of Goods Sold,
Selling Expenses, General and Administrative Expenses, Income
Taxes, and finally the Net Income.
• The information on the budget is a great tool to be used for
evaluation performances. The flexible budget can be used for monthly

comparison purposes. Also during the process that management is
identifying the activity index and the range of activity it will allow
them to see the cost of direct labor hours for that budget period.
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ACCT 504 Week 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 ?
Capstone Discussion Question: Post your response to the following:
• Think back over what you have studied and learned in this
course. Do you have a new perception of or appreciation for the field
of accounting and how it contributes to business? Explain.
To be perfectly honest with you I truly had no clue what accounting
did for a company and how important it was. I always thought that
accounting only dealt with payroll. In fact accounting does much
more that just payroll and monitor company supplies (coffee, paper,
pens & pencils). The accounting sets budgets for the entire company,
monitors outflow and inflow of profits, plans budgets for each
department, and much more. When I first begun this class I was
really nervous, I truly thought that I was going to have a hard time

understanding the accounting but I happy to say that I was wrong. I
understood every part of this course.
On a personal note I would like to thank you Jess. If it wasn't for your
pep talk I probably would had gave up. You are truly a great
instructor. I wish you all the best! God Bless
Another response
Accounting has taken a whole new meaning to me in my vocabulary.
Prior to this course, I just took accounting as a calculator and
crunching numbers. I now have a new respect for accounting and all
the aspects that are involved. I never once took into consideration
profit, sales, revenue, and balance sheets also being included with
accounting. There is so much more involved with accounting, and had
I not taken this course I would have never known. Accounting is a
very important part of running a business. I feel that it is imperative
to all people thinking of opening a business should take some type of
accounting class to become more aware of how to run the
accounting part of a business.
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ACCT 504 Week 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
Business Plan
By
Kamilah T. Crooms

The name of my business is called DestinyWear. DestinyWear is
a urban fashion clothing company for woman, men and youth.
DestinyWear specializes in making clothing for every occasion. My
name is Kamilah Crooms and I am the owner and CEO of
DestinyWear.My goal is to ensure that my company will be succesfull
in all areas and in each department. In order for me to make sure
that the company was going to begin in the right direction I had to
priortize what was most important in establishing my business plan.
The main priority is that I had to first choose the appropriate business
structure, a high demanding product, and most of all an outstanding
accounting team.
Business Structure
Upon establishing DestinyWear I had to decide which business
struture that I felt was best for me to pursue. I decided that as a
Entreprenuer the best choice for me abd the direction of the company
would be for me to be sole proprietorship. Sole proprietorship
allowed me to be the sole owner of DestinyWear. The first and most
important reason that I wanted sole proprietorship is because it is

much easier to start a business as sole proprietorships. Sole
proprietorship takes all the profit that and doesn't have to split it
between any other owners or corporations. I also want the power to
make and change decisions along the way without having to first
consult anyone else.
DestinyWear Products
DestinyWear products will range from jeans, shirts, accessories and
shoes. The company will first start off with its most profitable product
and that will be the DestinyWear designer jeans line. The jeans line
has over twenty different jeans designs
from straight leg, baggy, cargo, overalls, shorts and much more. The
jeans line will provide services within the United States and Canada
and will eventually service International customers. The DestinyWear
jeans line will have its own building. In this building the bottom floor
will consist of the factory and the top floor will have the different
departments such as management, marketing and most importantly
the accounting department.
DestinyWear Accounting Department
The accounting plays a major role in establishing my company
DestinyWear. The accounting department does more than managing
and reporting the company’s financial documents it is the greatest
tool in establishing my business. The key to a powerful accounting
department here at DestinyWear is applying the principles of internal

control. These principles consist of establishment of responsibilities,
segregation of responsibilities, documentation procedures, Physical,
mechanical, and electronic controls, Independent internal verification
and other controls such as Bonding of employees. In order to ensure
that this business plan works DestinyWear has to hire nothing but the
best qualified employees.
DestinyWear Accounting Staff
DestinyWear accounting team of fine employees will all be
hired through the company. There are several requirements that
have to be met in order for myself as the owner and Human Resource
department to even consider the applicant for accounting. We looked
for characteristics, education and work history experience. The first
and far most important qualifying requirements are education. The
applicant has to have a Bachelor BA/BS in accounting degree a plus if
he or she has a master’s.
The second requirement is experience. The applicant must have the
minimum of five years of experience working in accounting. He or She
must have knowledge and employment experience of working with
financial statements, cash management and internal control.
Employees must be experienced in Invest idle cash, planning the
timing of major expenditures, delay payment of liabilities keeping
inventory levels low, and increasing the speed of collection on
receivables. In the category of experience we had to hire applicants
according to the position that had to be filled in accounting. For
example, if a position in accounting such as management or
supervisory needed to be filled, then we would look for years of
experience in management or supervisory positions. I personally

prefer that every employee have some type of management
experience.
Last but not least, the employees characteristics. It is a must that
every accounting staff member has and applies professionalism,
great ethic and moral skills, accuracy, and most importantly
punctuality, and reaching company deadlines. These characteristics
are very important to have at DestinyWear.
DestinyWear Accounting Management Team
The DestinyWear accounting management team will be
reporting to me and to the other head staff each week to report
updates and any new changes. The management team is responsible
to have all the different types of budgeting reports that includes
Sales, Labor, etc. Management must follow the responsibility
reporting system for each department. The managers will use the
company’s financial information to predict outcomes of the business.
I require a report from each responsibility center, cost center, profit
center and investment center to be reported each month.
Management is responsible to ensure that the company does not
over or under budget and if any changes it must be reported
immediately.
Conclusion
DestinyWear will be a very successful team not only because of
the products that we produce but because of having a great
accounting team. With the help of accounting team I DestinyWear
products will be in every wardrobe in America.

REFERENCES
//http:yourdictionary.com /CVP.org Retrieved 3/20/2010
http://enwikipedia.org /wiki/costcenterprofits. Retrieved
3/21/2010
Thomas, Y. 2005-08-27 “Accounting 101 pg. 52 Statements.
March 19, 2010
Drucker, P. Managing in the next society 2002. retrieved march
19,2010.
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ACCT 504 Week 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.
Costco Wholesale Corporation
If we look at the financial statements of the company we can find that
the company is financially strong. Its strength are:
1. It has enough amount of current asset to repay its current
liability. The current ratio of the company 8.18 indicates that the
company has $8.18 liquid asset to repay its $1 of current liability.
2. The operating cost of the company is increasing because the
company is able to reduce its expenses.
3. Cash from operating activity has increased for the company.
Apart from this strength the company also has some weakness in its
financial statement:
(i) Increasing inventory indicates that the company inventory
conversion period is increasing.
(ii) The cash from investing activity shows that the company cash
outflow is more in the short term investment i.e. in non operating
activity.
(iii) The overall has for the year 2008 has declined for the company.
Net Income:
If we look at the trend in net income of the company we can find that
the company net income looks fluctuating but it has improved it net
income in 2008 as compared to 2007.

Debt ratio as a percentage of total assets:
If we look at the debt ratio as percent of total asset we can find that
the debt ratio is declining in 2008 as compared to 2007 i.e. the
company is increasing equity to finance debt.
Debt as a percentage of total equity:
As we can see that the debt as percent of total equity is declining in
2008 as compared to 2007 i.e. the company is increasing equity in its
capital structure.
As we can see that there is nothing negative in 2008 for the company
and this is the reason it has positive trend as compared to 2007.
Hence there is no need to correct anything for the company.
-------------------------------------------------------------------
ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)
www.acct504mart.com
ACCT 504 Week 5 Course Project Draft Spreadsheet (Devry)
Week 1 DQ 1
Due Tuesday, Day 2
Go to the U.S. Securities and Exchange Commission’s Web site
at http://www.sec.gov and the Financial Accounting Standards Board’s
Web site athttp://www.fasb.org. Identify the mission and main activities of

each organization. Then, analyze the similarities and differences between
the roles of each entity. Which entity has more influence over financial
statement reporting? Explain your answer.
According to the SEC website their mission is to protect investors, maintain fair, orderly, and
efficient markets, and facilitate capital formation. The SEC also requires public companies to
disclose meaningful financial and other information to the public. This provides a common
pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or
hold a particular security. The SEC is concerned primarily with promoting the disclosure of
important market-related information, maintaining fair dealing, and protecting against
fraud.
According to the FASB website the mission of the FASB is to establish and improve standards
of financial accounting and reporting that foster financial reporting by nongovernmental
entities that provides decision-useful information to investors and other users of financial
reports. Since 1973, the Financial Accounting Standards Board (FASB) has been the
designated organization in the private sector for establishing standards of financial
accounting that govern the preparation of financial reports by nongovernmental entities
The major difference in the SEC and the FASB is that the SEC deals with reporting of financial
statements for all industries while the FASB deals mainly with the private nongovernmental
entities. Both are concerned with the fairness of financial reports and work in the interest of
the public. I believe that the SEC has more influence over financial statement reporting
because they can bring civil action against companies and individuals for violations of
securities laws. Although according to the FASB website, “the Commission’s policy has been
to rely on the private sector for this function to the extent that the private sector
demonstrates ability to fulfill the responsibility in the public interest.
Response 2
Go to the U.S. Securities and Exchange Commission’s Web site
at http://www.sec.gov and the Financial Accounting Standards Board’s Web site
athttp://www.fasb.org. Identify the mission and main activities of each organization.
Then, analyze the similarities and differences between the roles of each entity. Which
entity has more influence over financial statement reporting? Explain your answer.
U.S. Securities and Exchange Commission (SEC)
According to the SEC’s website “The mission of the U.S. Securities and Exchange
Commission is to protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation”(U.S. Securities and Exchange Commission, 2010, Para. 1).

The main activities of the SEC are to interpret federal securities laws; issue new rules
and amend existing rules; oversee the inspection of securities firms, brokers, investment
advisers, and ratings agencies; oversee private regulatory organizations in the securities,
accounting, and auditing fields; and coordinate U.S. securities regulation with federal,
state, and foreign authorities. (U.S. Securities and Exchange Commission, 2010)
Financial Accounting Standards Board (FASB)
According to the FASB’s website “The mission of the FASB is to establish and
improve standards of financial accounting and reporting that foster financial reporting by
nongovernmental entities that provides decision-useful information to investors and other
users of financial reports. That mission is accomplished through a comprehensive and
independent process that encourages broad participation, objectively considers all
stakeholder views, and is subject to oversight by the Financial Accounting Foundation’s
Board of Trustees” (Financial Accounting Standards Board, n.d., Para. 3).
The main activities of the FASB are to identify financial reporting issues based on
requests/recommendations from stakeholders or through other means. The FASB
Chairman decides whether to add a project to the technical agenda, after consultation with
FASB Members and others as appropriate, and subject to oversight by the Foundation's
Board of Trustees. The Board deliberates at one or more public meetings the various
reporting issues identified and analyzed by the staff. The Board issues an Exposure Draft
to solicit broad stakeholder input. (In some projects, the Board may issue a Discussion
Paper to obtain input in the early stages of a project) The Board holds a public roundtable
meeting on the Exposure Draft, if necessary. The staff analyzes comment letters, public
roundtable discussion, and any other information obtained through due process activities.
The Board redeliberates the proposed provisions, carefully considering the stakeholder
input received, at one or more public meetings. The Board issues an Accounting Standards
Update describing amendments to the Accounting Standards Codification (Financial
Accounting Standards Board, n.d.).
Boththe SEC andthe FASBhave the same goalsof fairness,accuracy,andunderstandabilityof
financial accountingandreporting.Bothagenecysaccomplishthesegoalsinthe bestinterestof the
overall public.
The differencesbetweenthe SECandthe FASBis thatthe FASBregulatesfinancialreportinginthe
private sectorof businesses(butare subjecttothe rulesandregulationsof the SEC) and the SEC
dealswithregulatingthe financial reportingof publiclyheldcorporations.
I believethatthe SEChas the greatestinfluenceoverfinancial statementsreportingbecausethey
have the final approval onall changesof the rulesandregulations.The Seccanalsobring civil or
administrativeenforcementactionsagainstindividualsandcompaniesinviolationof the securities
laws.
References
Financial AccountingStandardsBoard.(n.d.). FactsaboutFASB.RetrievedJuly15,2010, from
Financial AccountingStandards
Board:http://www.fasb.org/facts/index.shtml#mission

U.S. SecuritiesandExchange Commission.(2010,May 3). The InvestorsAdvocate:How theSEC
ProtectsInvestors,MaintainsMarketIntegrity,and FacilitatesCapitalFormation.RetrievedJuly
15, 2010, fromU.S. SecuritiesandExchange
Commission:http://www.sec.gov/about/whatwedo.shtml
Week 1 DQ 2
Due Thursday, Day 4
Search the Internet or the Online Library for information about the
Sarbanes-Oxley Act. A useful guide to some of these provisions is
located at http://www.soxlaw.com. Summarize at least two
provisions of the law, and discuss your interpretation of these
provisions with your classmates. Do you think this law will make
financial statements more reliable? Also, discuss how Sarbanes-
Oxley establishes boundaries to ensure ethical practices. What
does the law allow or prohibit, and why?
The Sarbanes-Oxley act has many provisions to give companies guidelines
for responsible, and ethical financial reporting. One of those provisions is
listed in Section 302 of the act. The provision is that periodic statutory
financial reports be certified that signing officers have reviewed the reports,
the report does not contain any untrue, or misleading information. The
financial statements fairly present the financial condition. The signing
officers are responsible for internal controls. A list of all deficiencies in
internal controls, and a list of fraud involving employees, and anything that
could negatively affect the internal controls.
Another provision pertains to the "management assessment of internal
controls". This provision ensures that information is published in annual
reports regarding the adequacy of internal controls, structure and
procedures.

The Sarbanes-Oxley act is designed to help companies promote ethical
accounting procedures. The act gives guidelines as to how financial
statements are reported. The act requires verification that officers within
the company have checked the information in the reports for accuracy and
true. The act also requires that the companies have internal controls in
place to ensure ethical reporting practices. The main thing that the
Sarbanes-Oxley promotes is transparency in reporting.
Response 2
Section 802 of the Sarbanes-Oxley Law defines the penalties that may be
assessed against individuals who failed to comply with the Act. An
individual could be subject to 20 years in jail for altering, destroying,
mutilating, concealing, falsifying records, documents or tangible objects.
Guilt is define by the intent to impede a legal investigation. This part of the
law gets to the heart of how Arthur Anderson reacted by destroying
documents important to Worldcom. The law further defines that any
accountant who knowingly violates their ethics by wilfully violates the
requirements of maintenance of all audit or review papers. These papers
are subject to review up to five years.
The second Section that I reviewed was the Section 302. This actually is
my favorite part of the law because it directly holds the officers and
directors accountable for the accuracy of reporting in their financial
statements. It defines that the management must review and understand
the financial statements and sign that they are true and accurate. It also
holds the management accountable for the internal controls, requiring any
deficiencies to be reported. In the past directors of companies relied
heavily on the internal officers, management, to report the company
performance without questioning the accuracy or taking their role on
oversight committees seriously. They could hide behind a veil of trust of
the key leaders. This Section clearly puts the responsibility for the Board to
remain independent of the executives and function more effectively on the
respective oversight committees they serve. The example I would share is
what happened in WorldCom. The company leaders shared what they
wanted to with the Board, who trusted implicitly the top leaders. Had they
questioned their legal representation or auditors, they potentially could
have uncovered the fraud that was committed by the creation of shell

companies, with WorldCom employees as stockholders.
I would love to think this law would protect the investing community.
Financial reporting has improved to some extent. Unfortunately the scams
still continue. Example would be Barney Madoff or what happened in the
financial mortgage industry. These unethical practices were conducted
after Sarbanes Oxley was implemented. Madoff was able to provide false
financial information to investors. Financial industry was allowed to get to
aggressive in underwriting and product suite. Fines and penalties are
deterrents. Ethics still must be inherent in an individual and company.
Laws and requirements are a guide. There will never be enough auditors,
inspectors or oversight boards to catch all of the fraud in the corporate
community.
The law prohibits falsifying information, failing to notify of material changes,
and destruction of records.
-------------------------------------------------------------------
ACCT 504 Week 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 Lucent Technologies
Axia College of University of Phoenix

Lucent Technologies is a company based on networking for service
providers, government, and enterprises worldwide (Lucent
Technologies, n.d., Para 1). The products and services they work with
are separated into three categories; service and maintenance,
wireless mobility networking, and wire line networking. Lucent
Technologies is backed by Bell Labs, which does research and
development in networking technologies.
During the years of 2001 to 2003 this company has experienced a
decrease in demand because of other companies’ loss or capital used
toward spending. This is mainly due to a downturn in the economy.
As an investor this information is necessary to know because it
explains the decrease or increase in sections of the balance sheet. In
order to compare the growth or decline of the company’s profit, an
investor must change a balance sheet into a common-size balance
sheet. First when looking at the balance sheet an investor will see
that the amount of paid in capital has increased from the year of
2003 to 2004, the assets have increased, but the liabilities have
decreased. When running a debt/asset ratio it is noticed that this
ratio drops from 1.2 in 2003 to 1.0 in 2004. This shows the company’s
risk is low when concerning financial leverage, usually when the debt
ratio is less than one percent it is financed mainly by company equity,
so this company is close to being debt free from creditors.
After changing the balance sheet to a common-size balance sheet
there are several factors an investor will look at. The current assets
have dropped to .48 from .49 in 2004. This does not show harm to
the company because only the accounts receivable dropped while the
rest of the current assets increased. This means the company is not in
as much danger of default on money owed to it. It does have a rise in

marketable securities. The one concern in the assets is the increase of
prepaid cost of pensions and goodwill. Goodwill can be used for tax
breaks but prepaid pensions cannot benefit the company.
When looking at the liabilities section an investor will see a drop in
pension and liabilities and an increase in long term debt, both of
these could be affected because of the drop in the economy. Long
term liabilities are often increased to help a company control interest
rate increases so as an investor cutting back on pension liabilities cuts
back cost to the company and watching interest rate increase show
the company is concerned with its earning and investors. This would
be encouraging or an investor. The stockholders deficit shows a drop
in accumulated deficits from -1.43 to -1.22 and total deficits of -.26 to
-.08. This shows the company is working to control any money loss
and turning it to the company’s advantage. Overall it shows the
company is still earning a profit although small. With an increase of
assets and a drop in liabilities the company is showing it is working in
a low risk capital.
After reviewing this information, a creditor or investor must be able
to compare this company to the industry totals. By comparing how
this company compares to other companies similar to it, a person can
see if it is competitive and worth taking a risk. Running ratios will also
show if the company is capable of paying off any debts it has or if it
can acquire the needed cash in case of emergencies. Overall as an
investor, I would say this company would be worth investing in.

Reference
Axia College. (2007). Understanding Financial Statements. Retrieved
May 10, 2010 from Axia College, Week 2 Assignment, ACC/230.
-------------------------------------------------------------------
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
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.
-------------------------------------------------------------------
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 transactions:
Preparing an Income Statement
The companies’ net income is profitable when the sales exceedthe 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 sellingit for, there is no profit to be made. So, I think
it should all start there.
-------------------------------------------------------------------
ACCT 504 Week 7 Course Project JCP Kohls (Devry)
www.acct504mart.com

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 additionalpaid 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/dividendpayoutrati
o.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 additionalpaid 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=Spotti
ng+Creative+Accounting+On+The+Balance+Sheet&submit=Search

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