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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 companys 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 companys assets. Bonding of employees who
handle cash protects the company by insuring that the
employee is or isnt 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
Donalds 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. Todays 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 companys
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 dont 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 Management Matrix
Directions: Using the matrix, list how each of the principles of internal control works, and give an
example for each. Next, list how each of the principles of cash management works, and give an
example for each.
Principles of Internal Control How it Works
Establishment of responsibility Happens when the company assigns My job, Our Sa

one person to be in control of a specific the only one th
job or have authority to make restocking fee
decisions.
team to be in c
customers retu
Segregation of duties This is when the company has more A church- You ha
than one person to control a task or job the offering and
someone who w
what was receiv
Documentation procedures Evidence or proof of all company My job we delive

transactions customers, and
sign prior to lea
customer sign a
form
Physical, mechanical, and electronic controls Allows the company to control assets Our job has a sy
through physical or electronic based this tracks the e
systems or programs. lunches. Also, m
CSR have been r
Physical control
guard, they requ
to entry.
Independent internal verification Any information that can be reviewed , My job has a wa
compare, and reconciliation by a employee inventory and w
they were short
can go back and
and compare th
system and a ph
determine if the
incorrect
Other controls Bonding of employees, company Our company fir

protects against abuse of assets. because she had
card business ca
was not work re
Principles of Cash Management How it Works E
Invest idle cash Occurs when any excess funds or cash My fathers com
needs to be invested, investments and
favor
Plan the timing of major expenditures A company wants to make sure that During the reces
there is money set aside for major cash lower than expe
needs companies pulle
Delay payment of liabilities When a company pays the bills at an Ok, when times
appropriate time not late and not too bills are due I or
soon. which bills need
soonest, becaus
early I will cut o
could be used fo
Keep inventory levels low Happens when a company keeps the Sees Chocolate
inventory low so that it will continue to sure that they a
bring profit or making too m
the company wi
Increase the speed of collection on Money that is owe to the company by When a custome
receivables other people or customers is money product and has
that can not be counted towards the company can no
companies funds theirs until it is
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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 competitors
shares face value. It is also a sound strategy to increase treading of
shares. If the face value of share is too cheap in comparison to
competitors, the investors will be discouraged for investment. For
increasing the confidence of investors, the management uses this
method (Mladjenovic, 2009).
For example, an investor holds 100 shares of XYZ Company and the
face value per share is $50. If the management go for reverse stock
split option and declares one share for 10 shares then the holding of
the individual will reduce 9 shares for every 10 shares. Thus the new
holding of the investor will be 10 (100/10) shares but the face value
per share will be $500. It is also important that the total market
capitalization will remain as same as before reverse split. The
example of the reverse split is take form below mentioned link:
http://www.sec.gov/answers/reversesplit.htm.
References
Baker, H. K. (2009). Dividends and Dividend Policy. John Wiley and

Sons.
Kennon, J. (2009). All About Dividends. Retrieved May 31, 2010,

from
http://beginnersinvest.about.com/od/dividendsdrips1/a/aa040904_2.h
tm
Mladjenovic, P. (2009). Stock Investing for Dummies. Dummies.
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ACCT 504 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
Discussion Question 1: Post your response to the following:
How would you describe the difference between financial and

managerial accounting? What are the distinguishing features of
managerial accounting?
There are many differences between financial and managerial

accounting. The financial accounting statements are available to
external users such as employees, stockholders, creditors, investors,
etc. This is available to them so that they can monitor the company's
performances quarterly or annually. Managerial accounting provides
financial information for managers and other internal people or
department. Managerial accounting is confidential so it is only
observed by internal users such as management, owner, and will
provided to external users such as the public. Management uses this
for budgeting purposes or to monitor profit loss/gain within the
company. Managerial accounting can be available to them as often as
needed. Managerial accounting statements is a great way for
management to make decisions based on what has been reported.
Another response
The differences between managerial accounting and financial

accounting are distinct. Managerial accounting reports are for those
in managerial and decision making positions. The managers use the
financial report to answer questions, which would advance the
company and its employees. The manager would want to know if
certain investments should be made and should the company advance
an employee's salary. The manager needs the report to decide if a
factory is built or if a certain stock is brought. The financial
accountant has the job of showing the external users such as creditors
and stockholders a picture of the company's stability.
The manager's purpose is to manage by making stable plans, delegate

duties, motivate the workers, and control the atmosphere.
Distinguishing features of managerial accounting are the fact no cpa
will audit the report, and there is no specific frequency of the report.
The reports are done in a need to know basis and for a specific
reason, which is for business purposes. The reports are detailed and
pertain to specific business decisions. The financial accountant need
only be concerned with the company's finances.
DQ2
Discussion Question 2: Post your response to the following:

Select a management function (planning, directing and
motivating, or controlling) and explain how that function relates to
business as a whole. Next, select a different function listed by a
classmate. Discuss with your classmate how the functions you each
selected complement each other.
The management functions that I choose was controlling. Controlling

job is to make sure that the each department/person is keeping the
company's activities or plans on track and in order to achieve that
they must work closely with Management planning function.
Controlling continually compares the company's performance to
make sure that the planned standards are being met. In my opinion
this is known as the "dirty work". Controlling operations have to
know what to look for and how to keep track of all the company's
activities. They have to take actions and quickly correct any errors
and make sure that the company goals are being achieved in a timely
matter or the time that it was planned. If there are errors it is job of
the controlling operations to take quick action. The controlling
operations not only correct errors after it happens but they also are in
charge of foreseeing any potential errors and act quickly to get that
resolved.
Another response
I chose Controlling as part of the management function. The

controlling function relates to business as a whole because it helps
monitoring the firms performance to make sure the planned goals are
being met. Managers need to pay attention to costs versus
performance of the organization. let say, if the company has a goal of
increasing sales by 10% over the next two months, the manager may
check the progress toward the goal at the end of month one. If they
are not reaching the goal the manager must decide what changes are
needed to get back on track.
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ACCT 504 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. Its a mixture of sale
items when more than one product sold the sales will
remain the consistent.
Based on the formulas you have reviewed, what

happens to contribution margin per unit when unit
selling prices increase?
Contribution margin is the amount of revenue left over
after subtracting the variable cost. So basically Unit
sales price subtracting or minus variable cost.
Illustrate your explanation with an example from a
fictitious company of how an increase in unit selling
prices might affect contribution margin.
Kellys Sweetheart Flowers
The owner of Kellys Sweetheart Flowers is selling their

bouquet of flowers for $10 per unit. The Variable Cost
per unit is $4.00. The contribution margin will be ($10-
$4) = $6. If the sells price increases to say $15, then
the contribution margin will be ($15-$6) = $9 per unit.
When fixed costs decrease, what does this do for sales?

Illustrate your explanation with an example from a
fictitious company.
Kellys Sweetheart Flowers
When the fixed cost decreases, the contribution margin

ratio the net income and sales will increase.
For example,
The flowers are $10 per unit. The variable cost per unit
is $4.00. The contribution margin will be ($10-$4) = $6.
The fixed cost is $3. We subtract Contribution margin
Fixed Cost= Net income. The net income is $3.00.
Define contribution ratios
The contribution margin ratio is the contribution margin
per unit margin divided by the unit selling price.
What happens to contribution ratios as one of the

components changes?
Shown in the example above, if one or more of the
components changes is will cause the net income to
increase or decrease.
eference
statements.suite101.com/article.cfm/cost_volume_profi
ts*the_p_l. Retrieved 2/28/2010
//http:yourdictionary.com /CVP.org Retrieved 2/26/2010
Thomas, Y. 2005-08-27 Accounting 101 pg. 52 St
-------------------------------------------------------------------
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 Desc
Sales budget Estimate of the expected sales for The sales budg
the period. All of the other budgets units. This will
depend on the sales budget. This is see how many
where all the other budgets will produced for th
start from
Production budget A production of units needed to be Shows manage

produced in order to meet the will be produce
projected sales period and wha
to fulfill invent
Direct materials budget Is the estimated quantity or cost of Shows manage

the raw materials that is needed in materials that
order to produce the units required and or that nee
to fulfill inventory meet inventory
Direct labor budget A estimate of cost and quantity of Shows how ma

direct labor needed in order to laborers neede
meet production units for that b
Management w
be the right am
needed and if t
able to meet th
Manufacturing overhead budget An estimated expected amount of This list all ove
manufacturing cost for the budget cash disbursem
period
Selling and administrative expense budget Anticipated selling and Shows area of b
administrative expenses in the are not listed o
budget period manufacturing.
marketing, pro
the budget per
Budgeted income statement Estimate of expected profitability of Is a very impor

operations in a budget period shows the com
for the budget
Cash budget A projection of expected cash flows Cash budget he

in and out of the business. keep a tally or
balances.
-------------------------------------------------------------------
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
Discussion Question 2: Post your response to the
following:
What are some of the different types of
budgets?
Describe in detail one type of budget covered in
the text.
Describe what the budget is used for and what
information it provides a business.
Then, as you respond to your classmates,
discuss how the budget you described relates to the
budgets they described.
Discuss how a business benefits from each of
the budgets.
There are many different types of budgetting. For

example, there sales budget which allows management
to see how many units that need to be produced,
production budget which will allows everyone to see
how many units are going to be produced in or needed
to be produced in order to meet the inventory for that
budget period. One budget that I can describe in detail
is called the direct labor budget and this budget shows
how many people, hours is needed in order to meet the
required budget for that period. This will give
management an idea of how much money is needed
such as paying the cost of labor. The company benefits
by each of these budgets because it will help manage
just how much money it will cost the company during
this period. Management can also see if there are
different ways to cost the company out of pocket cost
down during this period.
Another response
I chose to write about the Production Budget. The
Production Budget shows the cost of each unit needed
to produce an item or manufacture a product. The
formula used by the Production Budget :
Budget sales units + Desired ending finished goods

units - Beginning finished goods units = Required
production units.
An example would be, every Easter the bakeries in the

Bronx loads up on Hot Cross Buns. My mother and
grandmother would buy these tasty sweet breads,and
eat them for breakfast. I personally would like to eat
them every week but, they are only sold during the
Easter season. Maybe, it has something to do with the
glazed cross on the top.
Every Easter Holiday, there appears these Hot Cross

Buns and the bakeries production department allows
for the purchases for items needed to make the buns.
After Easter has gone, Hot Cross Buns are not included
in the budget.
-------------------------------------------------------------------
ACCT 504 Week 3 Case Study 1 Flower

Landscaping Corporation (Devry)
www.acct504mart.com
The Entire Case Study is due Sunday at Midnight Mountain time at
the end of Week 3.
This Case Study is worth 100 points or 10% of your final course
grade.
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 additional activity within the

appropriate range
The information found on a flexible budget cannot begin with

the master budget. The flexible budget uses the same guidelines the
original budget. The budget consists of Sales, Cost of Goods Sold,
Selling Expenses, General and Administrative Expenses, Income
Taxes, and finally the Net Income.
The information on the budget is a great tool to be used for

evaluation performances. The flexible budget can be used for monthly
comparison purposes. Also during the process that management is
identifying the activity index and the range of activity it will allow
them to see the cost of direct labor hours for that budget period.
-------------------------------------------------------------------
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.
-------------------------------------------------------------------
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 companys
financial documents it is the greatest tool in
establishing my business. The key to a powerful
accounting department here at DestinyWear is
applying the principles of internal control. These
principles consist of establishment of responsibilities,
segregation of responsibilities, documentation
procedures, Physical, mechanical, and electronic
controls, Independent internal verification and other
controls such as Bonding of employees. In order to
ensure that this business plan works DestinyWear has
to hire nothing but the best qualified employees.
DestinyWear Accounting Staff

DestinyWear accounting team of fine employees
will all be hired through the company. There are
several requirements that have to be met in order for
myself as the owner and Human Resource department
to even consider the applicant for accounting. We
looked for characteristics, education and work history
experience. The first and far most important qualifying
requirements are education. The applicant has to have
a Bachelor BA/BS in accounting degree a plus if he or
she has a masters.
The second requirement is experience. The applicant
must have the minimum of five years of experience
working in accounting. He or She must have knowledge
and employment experience of working with financial
statements, cash management and internal control.
Employees must be experienced in Invest idle cash,
planning the timing of major expenditures, delay
payment of liabilities keeping inventory levels low, and
increasing the speed of collection on receivables. In the
category of experience we had to hire applicants
according to the position that had to be filled in
accounting. For example, if a position in accounting
such as management or supervisory needed to be
filled, then we would look for years of experience in
management or supervisory positions. I personally
prefer that every employee have some type of
management experience.
Last but not least, the employees characteristics. It is a
must that every accounting staff member has and
applies professionalism, great ethic and moral skills,
accuracy, and most importantly punctuality, and
reaching company deadlines. These characteristics are
very important to have at DestinyWear.
DestinyWear Accounting Management Team
The DestinyWear accounting management team
will be reporting to me and to the other head staff each
week to report updates and any new changes. The
management team is responsible to have all the
different types of budgeting reports that includes Sales,
Labor, etc. Management must follow the responsibility
reporting system for each department. The managers
will use the companys financial information to predict
outcomes of the business. I require a report from each
responsibility center, cost center, profit center and
investment center to be reported each month.
Management is responsible to ensure that the company
does not over or under budget and if any changes it
must be reported immediately.
Conclusion
DestinyWear will be a very successful team not
only because of the products that we produce but
because of having a great accounting team. With the
help of accounting team I DestinyWear products will be
in every wardrobe in America.
REFERENCES
//http:yourdictionary.com /CVP.org Retrieved
3/20/2010
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.
-------------------------------------------------------------------
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 Commissions Web site

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

at http://www.sec.gov and the Financial Accounting Standards Boards Web site
athttp://www.fasb.org. Identify the mission and main activities of each organization.
Then, analyze the similarities and differences between the roles of each entity. Which
entity has more influence over financial statement reporting? Explain your answer.
U.S. Securities and Exchange Commission (SEC)
According to the SECs website The mission of the U.S. Securities and Exchange
Commission is to protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation(U.S. Securities and Exchange Commission, 2010, Para. 1).
The main activities of the SEC are to interpret federal securities laws; issue new rules
and amend existing rules; oversee the inspection of securities firms, brokers, investment
advisers, and ratings agencies; oversee private regulatory organizations in the securities,
accounting, and auditing fields; and coordinate U.S. securities regulation with federal,
state, and foreign authorities. (U.S. Securities and Exchange Commission, 2010)
Financial Accounting Standards Board (FASB)
According to the FASBs website The mission of the FASB is to establish and improve
standards of financial accounting and reporting that foster financial reporting by
nongovernmental entities that provides decision-useful information to investors and other
users of financial reports. That mission is accomplished through a comprehensive and
independent process that encourages broad participation, objectively considers all
stakeholder views, and is subject to oversight by the Financial Accounting Foundations
Board of Trustees (Financial Accounting Standards Board, n.d., Para. 3).
The main activities of the FASB are to identify financial reporting issues based on
requests/recommendations from stakeholders or through other means. The FASB
Chairman decides whether to add a project to the technical agenda, after consultation with
FASB Members and others as appropriate, and subject to oversight by the Foundation's
Board of Trustees. The Board deliberates at one or more public meetings the various
reporting issues identified and analyzed by the staff. The Board issues an Exposure Draft
to solicit broad stakeholder input. (In some projects, the Board may issue a Discussion
Paper to obtain input in the early stages of a project) The Board holds a public roundtable
meeting on the Exposure Draft, if necessary. The staff analyzes comment letters, public
roundtable discussion, and any other information obtained through due process activities.
The Board redeliberates the proposed provisions, carefully considering the stakeholder
input received, at one or more public meetings. The Board issues an Accounting Standards
Update describing amendments to the Accounting Standards Codification (Financial
Accounting Standards Board, n.d.).
Both the SEC and the FASB have the same goals of fairness, accuracy, and
understandability of financial accounting and reporting. Both agenecys
accomplish these goals in the best interest of the overall public.
The differences between the SEC and the FASB is that the FASB regulates
financial reporting in the private sector of businesses (but are subject to the rules
and regulations of the SEC) and the SEC deals with regulating the financial
reporting of publicly held corporations.
I believe that the SEC has the greatest influence over financial statements
reporting because they have the final approval on all changes of the rules and
regulations. The Sec can also bring civil or administrative enforcement actions
against individuals and companies in violation of the securities laws.
References
Financial Accounting Standards Board. (n.d.). Facts about FASB. Retrieved July
15, 2010, from Financial Accounting Standards
Board:http://www.fasb.org/facts/index.shtml#mission
U.S. Securities and Exchange Commission. (2010, May 3). The Investors
Advocate: How the SEC Protects Investors, Maintains Market Integrity, and
Facilitates Capital Formation. Retrieved July 15, 2010, from U.S. Securities
and Exchange Commission: http://www.sec.gov/about/whatwedo.shtml
Week 1 DQ 2
Due Thursday, Day 4
Search the Internet or the Online Library for information about the
Sarbanes-Oxley Act. A useful guide to some of these provisions is
located at http://www.soxlaw.com. Summarize at least two
provisions of the law, and discuss your interpretation of these
provisions with your classmates. Do you think this law will make
financial statements more reliable? Also, discuss how Sarbanes-
Oxley establishes boundaries to ensure ethical practices. What
does the law allow or prohibit, and why?
The Sarbanes-Oxley act has many provisions to give companies guidelines
for responsible, and ethical financial reporting. One of those provisions is
listed in Section 302 of the act. The provision is that periodic statutory
financial reports be certified that signing officers have reviewed the reports,
the report does not contain any untrue, or misleading information. The
financial statements fairly present the financial condition. The signing
officers are responsible for internal controls. A list of all deficiencies in
internal controls, and a list of fraud involving employees, and anything that
could negatively affect the internal controls.
Another provision pertains to the "management assessment of internal

controls". This provision ensures that information is published in annual
reports regarding the adequacy of internal controls, structure and
procedures.
The Sarbanes-Oxley act is designed to help companies promote ethical

accounting procedures. The act gives guidelines as to how financial
statements are reported. The act requires verification that officers within
the company have checked the information in the reports for accuracy and
true. The act also requires that the companies have internal controls in
place to ensure ethical reporting practices. The main thing that the
Sarbanes-Oxley promotes is transparency in reporting.
Response 2
Section 802 of the Sarbanes-Oxley Law defines the penalties that may be
assessed against individuals who failed to comply with the Act. An
individual could be subject to 20 years in jail for altering, destroying,
mutilating, concealing, falsifying records, documents or tangible objects.
Guilt is define by the intent to impede a legal investigation. This part of the
law gets to the heart of how Arthur Anderson reacted by destroying
documents important to Worldcom. The law further defines that any
accountant who knowingly violates their ethics by wilfully violates the
requirements of maintenance of all audit or review papers. These papers
are subject to review up to five years.
The second Section that I reviewed was the Section 302. This actually is
my favorite part of the law because it directly holds the officers and
directors accountable for the accuracy of reporting in their financial
statements. It defines that the management must review and understand
the financial statements and sign that they are true and accurate. It also
holds the management accountable for the internal controls, requiring any
deficiencies to be reported. In the past directors of companies relied
heavily on the internal officers, management, to report the company
performance without questioning the accuracy or taking their role on
oversight committees seriously. They could hide behind a veil of trust of
the key leaders. This Section clearly puts the responsibility for the Board to
remain independent of the executives and function more effectively on the
respective oversight committees they serve. The example I would share is
what happened in WorldCom. The company leaders shared what they
wanted to with the Board, who trusted implicitly the top leaders. Had they
questioned their legal representation or auditors, they potentially could
have uncovered the fraud that was committed by the creation of shell
companies, with WorldCom employees as stockholders.
I would love to think this law would protect the investing community.
Financial reporting has improved to some extent. Unfortunately the scams
still continue. Example would be Barney Madoff or what happened in the
financial mortgage industry. These unethical practices were conducted
after Sarbanes Oxley was implemented. Madoff was able to provide false
financial information to investors. Financial industry was allowed to get to
aggressive in underwriting and product suite. Fines and penalties are
deterrents. Ethics still must be inherent in an individual and company.
Laws and requirements are a guide. There will never be enough auditors,
inspectors or oversight boards to catch all of the fraud in the corporate
community.
The law prohibits falsifying information, failing to notify of material changes,

and destruction of records.
-------------------------------------------------------------------

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 companys profit, an investor must
change a balance sheet into a common-size balance
sheet. First when looking at the balance sheet an
investor will see that the amount of paid in capital has
increased from the year of 2003 to 2004, the assets
have increased, but the liabilities have decreased.
When running a debt/asset ratio it is noticed that this
ratio drops from 1.2 in 2003 to 1.0 in 2004. This shows
the companys risk is low when concerning financial
leverage, usually when the debt ratio is less than one
percent it is financed mainly by company equity, so this
company is close to being debt free from creditors.
After changing the balance sheet to a common-size
balance sheet there are several factors an investor will
look at. The current assets have dropped to .48 from .
49 in 2004. This does not show harm to the company
because only the accounts receivable dropped while
the rest of the current assets increased. This means the
company is not in as much danger of default on money
owed to it. It does have a rise in marketable securities.
The one concern in the assets is the increase of prepaid
cost of pensions and goodwill. Goodwill can be used for
tax breaks but prepaid pensions cannot benefit the
company.
When looking at the liabilities section an investor will
see a drop in pension and liabilities and an increase in
long term debt, both of these could be affected
because of the drop in the economy. Long term
liabilities are often increased to help a company control
interest rate increases so as an investor cutting back
on pension liabilities cuts back cost to the company
and watching interest rate increase show the company
is concerned with its earning and investors. This would
be encouraging or an investor. The stockholders deficit
shows a drop in accumulated deficits from -1.43 to
-1.22 and total deficits of -.26 to -.08. This shows the
company is working to control any money loss and
turning it to the companys advantage. Overall it shows
the company is still earning a profit although small.
With an increase of assets and a drop in liabilities the
company is showing it is working in a low risk capital.
After reviewing this information, a creditor or investor
must be able to compare this company to the industry
totals. By comparing how this company compares to
other companies similar to it, a person can see if it is
competitive and worth taking a risk. Running ratios will
also show if the company is capable of paying off any
debts it has or if it can acquire the needed cash in case
of emergencies. Overall as an investor, I would say this
company would be worth investing in.
Reference
Axia College. (2007). Understanding Financial
Statements. Retrieved May 10, 2010 from Axia College,
Week 2 Assignment, ACC/230.
-------------------------------------------------------------------
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
products useful life, such as three years is 3 + 2 + 1 = 6, then a
person would divide the depreciation amount by 3/6 the first year, 2/6
the second and finally 1/6 for the final year. So the amount of
depreciation expense is larger to smaller with accelerated and equal
amounts for straight line.
The advantages of straight line method are it is easier and faster to

figure. The advantage of accelerated method is it is more accurate
when figuring depreciation expense. The accelerated method has an
advantage and disadvantage concerning taxes. A company can use
the accelerated method to take advantage of bigger tax breaks at the
beginning of an assets life, but since this amount drops during the
lifespan if the company needs added tax breaks it will not receive
them from these assets in the future. With the straight line method the
amount of tax breaks are even through the life of the product. Most
companies choose this form of depreciation for reporting purpose on
taxes but will use the accelerated method to figure taxable income.
As mentioned before the advantage of straight line depreciation is it is

easier to figure and uses the same total each year for deduction of
depreciation expense but the disadvantage is that if use for taxable
income and reporting a company does not get a bigger tax break at
the beginning of the assets life when they have just put out the cost for
the item and may need a bigger tax break.
-------------------------------------------------------------------

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

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.
-------------------------------------------------------------------
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 additional paid in capital. Management uses the
statement of stockholders equity to ensure they are reaching their
goal of maximizing shareholder's equity. The use of market ratios
help with the analysis of the statement of stockholders equity, such as
earnings per share, price-to-earnings, dividend payout, and dividend
yield. These ratios will help both management and investors in
analyzing the company. For example, if I were looking to invest in a
companys stocks I would utilize all of the financial ratios, as well as
the market ratios. The earnings per share ratio is calculated before
the price to earnings ratio, P/E, because the earnings per share ratio
is used in the second. If a company pays dividends, the dividend
payout ratio will come in handy. It tells us The percentage of
earnings paid to shareholders in dividends (Investopedia, 2010, p.
1).
References
Investopedia. (2010). Dividend Payout Ratio. Retrieved August 3,
2010, from
Investopedia:http://www.investopedia.com/terms/d/dividendpayoutrat
io.asp
Response 2
Explain what can be found on a statement of stockholders equity.
The major elements of stockholders' equity include capital stock,

paid-in capital, retained earnings, treasury stock, unrealized loss on
long-term investments, and foreign currency translation gains and
losses.
How might the information contained within the stockholder equity

statement be used for management and investor decision-making?
Provide specific examples of situations in which the stockholder
equity information might be used.
Management may look at the stockholders equity statement retained

earnings section to determine if company should borrow money for
capital investments or finance it through various forms of equity. It
may also be used by the stockholder to evaluate the compensation
paid to the company officers. Investors may also look at the statement
for cumulative net unrealized gains and losses before purchasing
stock in the company. Investors are also interested in the paid in
capital because they can compare it to the additional paid in capital
and the difference between the two values will equal the premium
paid by investors over and above the par value of the shares.
DQ 2
Week 3 DQ 2
Due Thursday, Day 4
Provide an example from the text or the Internet that demonstrates a

situation in which a companys net profits appeared good in the
statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the
following question, addressed in Problem 3.6 on p. 109 (Ch. 3):
Why is the bottom-line figure, net income, not necessarily a good
indicator of a firms financial success? Look for indicators like
liquidity or solvency to answer this discussion question.
An example that demonstrates the situation is Enron. Enrons
financial statements did not show all the expenses and costs. Instead
of showing them on the income statement they made entries so the
cost and expenses would post in the balance sheet. The same was
done with the revenues. This way it would be less expenses and the
net profit appeared good. Many debts and losses were not reported in
the financial statements. From the third quarter of 2000 through the
third quarter of 2001, the directors fraudulently used reserve
accounts within Enron Wholesale to mask the extent and volatility of
its windfall trading profits, particularly its profits from theCalifornia
energy markets; avoid reporting large losses in other areas of its
business; and preserve the earnings for use in later quarters. By early
2001, Enron Wholesale's undisclosed reserve accounts contained
over $1 billion in earnings. The head of the company improperly used
hundreds of millions of dollars of these reserves to ensure that
analysts' expectations were met. In addition, Skilling and others
improperly used the reserves to conceal hundreds of millions of
dollars in losses within Enron's EES business unit from the investing
public.This would show the creditors that Enron was making profits
and its position was solid.
The net income is not necessarily a good indicator of a firms
financial success because the income statement only shows the profit
or loss at a period of time and does not show the whole picture of the
company. The Balance Sheet, Statement of cash flow, Statement of
shareholders equity and the Income Statement all together give the
real picture of the business. Each one of them shows different aspects
of the business. These statements show where the income is actually
coming from; is it from sales or from loans the company is
borrowing? If the company is selling a building or any other asset but
that does not mean that it is selling more products and making profit.
Looking at the Income Statements the company might be making
profit but at the same time it is extremely leveraged.
Response 2
A companys net income is not the whole picture, just part of it. There
are lots of things that contribute to the net income that may not be
significative to the companys success. If the value of a dollar has a
sudden change that can affect the bottom line if the company happens
to hold the medium of exchange that can benefit by the change that
might occur. The company can falsely inflate the bottom line. A
companys net income is coupled with liabilities, cash flow, and
selects financial ratios. Looking at it this way is a much better way of
seeing what the companys success is like. A company can change up
many things to make it look like their income is better. These things
that can be changed are single sales events, cash infusion, or false
financial statements. Some things like debt that a company has, the
companys cash on hand, their capital assets conditions, or even their
sales trends. To figure the success of the company, you must look at
the whole picture. One thing cannot tell you all the facts of the
companys affairs. You cannot tell the net income of the company just
from the bottom line. Look at all the financial records.
Response 3
Provide an example from the text or the Internet that demonstrates a
situation in which a companys net profits appeared good in the
statements, but the gross or operating profits presented a different
picture. Discuss how this might have occurred. Respond to the
following question, addressed in Problem 3.6 on p. 109 (Ch. 3):
Why is the bottom-line figure, net income, not necessarily a good
indicator of a firms financial success? Look for indicators like
liquidity or solvency to answer this discussion question.
Net income is not necessarily a good indicator of a firms financial
success because they have ways to manipulate it by increasing their
revenues or hiding some of their expenses. For investors trying to
decide where to invest their money, they need to look more into
assessing how the company came up with the numbers they presented.
An example of this situation is when Laribee Wire Manufacturing Co.
exaggerated in recording their inventory value which allowed them in
acquiring loans from six banks totaling to about $130 million using it
as collateral. At the same time, they reported $3 million in net income
for the period, but in actuality they lost $6.5 million.
This company showed a higher net income by reporting fake

inventory in which its value was overstated and transferred over to
their income statement. When the banks assessed their financial
statements, it was enough to sway them into lending the loans they
needed.
Reference:
Investopedia. (2010). Spotting Creative Accounting On The Balance

Sheet. Retrieved
fromhttp://www.investopedia.com/search/searchresults.aspx?
q=Spotting+Creative+Accounting+On+The+Balance+Sheet&submi
t=Search

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